Et tu Quiggin?

John Quiggin has an op ed in the AFR today (not yet online) asking the Coalition to think of the Great Barrier Reef and to pass the CPRS. He points out (correctly) that the Great Barrier Reef is in grave danger from climate change. So what may save it is a global agreement on carbon emissions and you can add that to the list of compelling reasons to get that agreement. But the problem is that it is only a symbolic and not a real factor in whether Australia passes the CPRS now or not.

First of all, the CPRS itself doesn’t target sufficient emissions reduction in the absence of a global agreement. Second, while passing the CPRS would be a good thing for Australia to have done to show some level of commitment, it is not at all clear that it will, by any stretch, lead itself (even in more than a very marginal way) to that agreement and so ’cause’ the saving of the Great Barrier Reef. We see these ad hoc political arguments from climate change scientists and they annoy me. I was surprised to see John taking the same line.

Look the reasons to pass the CPRS are more straightforward. First, we need to get working on implementation so we can ramp up when the time comes. Second, business needs some certainty over what the operation of the scheme is going to look like. Third, it is useful to overcome the political hurdles of compensation. Finally, this will allow us to get cracking on innovation. Saving the Great Barrier Reef — while something we want to do — has little to do with our short-term debate.

5 thoughts on “Et tu Quiggin?”

  1. Your analysis seems faulty to me. Granted, passing the CPRS (or some other ETS/tax scheme for that matter) will not guarantee a global agreement, and failing to pass it won’t prevent one. But it is the only step we can take that will have any influence on the process, and therefore it is the only step we can take that will have any chance of saving the GBR.
    Finally, as regards marginality, the number of significant participants is not all that large. The EU will present a common position, and is already committed in any case. Obviously the US has to be on board or the whole process is doomed. After that, the positions of the remaining developed countries (Australia, Canada, Japan, NZ and a few others) will make a big difference. Canada and NZ are backsliding, so Australia needs to step up.

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  2. The strategic issues associated with devising a hglobal climate change agreement go beyond ‘free rider’, Prisoner’s Dilemma situations. There are elements of being an Assurance Game for example so unilateral commitments matter.

    Garnaut suggests that Australian policy actions will have an effect on the mitigation stance of Asian countries.  More generally there are a fringe of low aggregate emitters (countries like Australia) who contribute about 20% of global GGE emissions.  This is significant.

    If a number of developed countries like Australia with high per capita emissions opt out of stringent mitigation agreements this will exert negative moral suasion effects of developing countries with low per capita but high aggregate emissions.

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  3. The idea that “business needs some certainty” is stretching matters.  What certainty does “business” have regarding currency fluctuations or interest rates?  What certainty did corporations having heading into 2008?  Did they foresee a near collapse of global finance? – of course not.  Any carbon intensive company that hasn’t seen a carbon price coming since at least Kyoto (now 2 decades ago !!) is lead by fools and incompetents.  Business certainty is the least of our worries.

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  4. From a ‘normal form game’ perspective, we want an international agreement to transform the prisoner’s dilemma into an assurance game. From an ‘extensive form game’ perspective we want an international agreement, and the process in which it is negotiated, to have a subgame perfect equilibrium that corresponds to a ‘socially optimal’ cooperative outcome.

    The question is what can Australia do to increase the likelihood of a cooperative outcome. While passing legislation could help (mainly indirectly through encouraging the US to pass legislation), what is more important is Australia’s targets. Financing of mitigation and adaptation in developing countries is also important. Australia is doing some useful work by making constructive proposals on the legal form of a post-2012 agreement.

    The risk is that because developed countries are imposing high external costs (through climate change) on developing countries, major developing countries will not make binding commitments and the talks will collapse. This is why targets and financing are so important.
    One thing that worries me about the CPRS is that the ‘scheme caps and gateways’ approach to setting the trajectory could make ramping up difficult.

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  5. ‘Business needs some certainty’ so they can buy machinery that will be operating for the next 20 years. They want to know they are not going to be slugged by taxes that appear from nowhere and they want to take advantage of all rebates and subsidies they are entitled to.  Most businesses can plan if they know that an ETS will be introduced in 2012 initially with these tax bands but rising to these levels in 2020 etc.  Do they buy a cheaper petrol motor or spend more on a solar motor that is cheaper to run?

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