Revisiting the Carbon Tax


I have written a number of times on how the carbon dioxide producing industries are getting a free ride by not being charged for the CO2 they produce – in particular for Gippsland the brown coal generators in the Valley and the loggers in the bush. For the latter with a nominal price of $30 per ton of CO2 emitted I have calculated that each hectare logged on average has at least a $50,000 subsidy (see The Burning Issue below).  Recently one commentator has suggested that a carbon price of $100 per ton of CO2 may be required to achieve the moderate goals of the Paris Agreement. There are a number of different proposals in the mix as to how to tax CO2 including the straight carbon tax, cap and trade and James Hansen’s Fee and Dividend.

We have already had a carbon tax of sorts under the Gillard Labor government. With hindsight this attempt failed for a number of reasons. It gave special treatment to certain industries, such as the brown coal generators, and the CO2 production of motor vehicles was in the ‘too hard’ basket and not taxed at all. But probably the main reason it failed was the completely inept sale of the ‘tax’ hardly mentioning climate change at all. The government would have done far better with a well-funded apolitical campaign educating the public on the greenhouse effect and the problems we all face with increasing CO2 rather than the justifications they used – now completely forgotten. It enabled the Opposition leader to dominate the campaign against the tax with the strong support of the Murdoch media.

The Guardian noted of ‘cap and trade’ that “a cap on emissions is set and then permits are created up to the level of this cap. The companies or other entities covered by the scheme need to hold one permit for every tonne of pollution (CO2e) they emit.” A form of this was first posed by the Rudd government in 2008 and supported by Turnbull as opposition leader, but was defeated when Turnbull was ousted from his position by Tony Abbott. Abbott with the support of reactionaries and climate science deniers in the Liberal Party rejected the emissions trading proposals and so Federal parliament sadly lost the opportunity for bipartisan action on climate change.

The ‘fee and dividend’ has been advocated by James Hansen for many years. Basically it taxes all forms of fossil fuels at the mine, well-head or port (the fee) which is then distributed equally on a regular basis to all the citizens of that country. In particular Hansen advocates that the collected ‘fees’ be paid out in their entirety meaning that it is not a tax as the government gets no part of it. It is a ‘carrot and stick’ approach where those who use more fossil fuels pay more and those that use less are rewarded. In theory at least this should appeal to people of all political persuasions, assuming, of course, that they accept the science of climate change.