Emission impossible: the sad truth  

Posted by Big Gav

Ross Gittins in the SMH has an article on the sad truth about trying to reduce your personal carbon emissions - Emission impossible: the sad truth.

Permit me to ask you a personal question (as long as you don't ask it back of me): how are you going reducing your carbon footprint?

There's a host of things you could be doing, from turning off lights and appliances on standby and installing compact fluorescent bulbs, to taking shorter showers, using air-conditioners less or turning thermostats up a little in summer and down a little in winter.

If you want to get more committed you can install ceiling insulation, a solar hot water system or solar panels. This can be expensive, but the Government may* give you subsidies to encourage you in your good works (*conditions apply).

Then there's your consumption of fossil fuel for transport. Short of buying a Prius, you can buy any car that's more fuel efficient, use more public transport, ride a bike to work or even walk to the shops.

I suspect many people are trying to be more carbon aware and do the right thing. And many of those who haven't done much know they should be trying harder. (If you must know, I've bought a much smaller car, am doing better with lights and appliances and walk to work more often. But my use of an air-conditioner is less than exemplary.)

And remember, every little bit we do to reduce our personal consumption of electricity and petrol helps save the planet from global warming.

Or does it? I thought I knew a fair bit about Kevin Rudd's proposed carbon pollution reduction scheme, but I've been surprised and disappointed to discover it's impervious to voluntary efforts to reduce our emissions.

As Dr Richard Dennis, executive director of the Australia Institute, has been tirelessly explaining, nothing we choose to do for moral reasons will do anything to reduce the nation's total emissions of greenhouse gases.

That's because the nation's total emissions will be controlled by an annually reducing cap, designed to reduce our emissions by 2020 to between 5 per cent and 15 per cent (it's yet to be decided) less than our emissions in 2000.

And because, left to their own devices, our emissions would continue growing quite strongly, the cap serves not only as an upper limit on our total emissions but also as a lower limit. It's both a ceiling and a floor.

So when you and I voluntarily cut back our emissions we don't reduce the nation's total emissions, we just make more room for other, industrial polluters - say, the aluminium, steel or cement industries - to increase their emissions.

If you didn't know that, you could be forgiven. It seems you have a lot of mates. In a poll of 1000 people conducted for the Australia Institute, respondents were asked what effect it would have on Australia's total greenhouse gas emissions "if every household in Australia reduced their electricity use in the future". About 8 per cent weren't sure, but 78 per cent said our total emissions would go down. Only 13 per cent got the right answer, that total emissions would stay the same.

That's a seriously misinformed electorate - which is why I'm writing this piece. It gives me no joy to further complicate the life of an embattled Government that, in its own heavily compromised way, is trying to do something concrete to reduce climate change.

The pollies shouldn't be under any doubt that people want to be able to do their bit. More than 87 per cent of respondents agree that "households and individuals should be able to contribute to reducing Australia's greenhouse gas emissions". Unfortunately, the Government hasn't only failed to ensure people understand the workings of the scheme it's seeking to introduce, it hasn't resisted the temptation to actively mislead people.

In spruiking the part of his $42 billion stimulus package offering subsidies for ceiling insulation and solar hot water systems, Kevin Rudd claimed that this "energy-efficient homes initiative" could, once fully implemented, "result in reductions of greenhouse gas emissions by 49.9 million tonnes by 2020, or the equivalent of taking 1 million cars off the road".

As understanding has dawned about this hidden flaw in the trading scheme, the Minister for Climate Change, Penny Wong, has been quite tricky in her seeming rebuttal. There had been "misunderstanding" of the impact voluntary action by households can have under a cap-and-trade abatement scheme, she wrote in a newspaper article on Monday.

"Some argue that household action simply frees up carbon pollution permits for others to use," she said.

"In fact, individual and community action to be more energy efficient not only saves them money, it will contribute directly to Australia meeting our emissions reductions targets.

"Strong household action also helps make it easier for governments to set even more ambitious targets in the future."

That statement comes under the heading of literally true, but calculated to mislead. It's true that if you reduce your consumption of petrol or electricity you'll save yourself money.

It's true only in an arithmetic sense that anything we do "contributes directly" to Australia meeting its emissions target. Everything contributes to the bottom line of the sum. But, because the bottom line is controlled under the scheme, any helpful contribution we might make just leaves more scope for others to make unhelpful contributions.


I guess this is one area where a carbon tax would have an advantage to a cap-and-trade system - it provides an across-the-board incentive to reduce carbon emissions. I think this is one reason why many proponents argue that an emissions reduction program should implement both a carbon tax and cap-and-trade in conjunction.

Still, I am not sure Ross' conclusion (that the emissions ceiling is also effectively the emissions floor) is as bad as he makes it sound. If there appears to be room for industry to actually increase emissions due to voluntary reductions from others, then clearly the ceiling hasn't been set low enough.

From an economic standpoint, it seems that voluntary emissions reductions are certainly still beneficial - in addition to the direct money you would be saving from lower utility/fuel costs, you would be lightening the burden of industry to have to reduce their emissions. If you chose NOT to voluntarily reduce your own emissions, it would be up to industry to reduce the emissions, and almost certainly they would pass on down the costs to the consumer anyway. I suppose though in that case the cost would be spread out across all consumers, so voluntary emissions reductions that effectively "give industry a break" are altruistic actions, in that they help prevent all consumers from having to pay more to offset emissions.

I think you could look at voluntary emissions reductions as a charitable action - it should still make you feel good that YOU are the one doing the emissions reductions voluntarily, even if eventually the market would force people to make the equivalent reductions through force of the cost of carbon.

The only problem with households reducing their consumption of anything is that businesses then need to put up costs to maintain profits. IIRC one of the water utilities in Oz (might be Melbourne/Vic area) are putting up water costs because households are doing such a good job of rationing water. I find it hard to believe other utilities will not act the same way, so this would seem to make the money saving argument a bit of a dud over the long term.

Perhaps some form of dynamic cap would be the way to go? If households push their emissions down a certain amount then the cap reduces by that amount automatically so others cannot make use of the small victories?

Either that or some way to put a price on household reductions and have those industries making use of that bonus cough up to the households doing the good work? A user/abuser pays system?

The big problem is that if households see no gain in lowering their emissions this translates to greater demand on industries. The industries than have an argument supported by demand statistics to say that the population doesn't want excessive caps, so it's possible (perhaps?) that we could see the cap raised as a result, rather than lowered.

Tim Auld   says 12:48 PM

To believe this argument is to believe that pollution is an end to itself. Industry (and importantly agriculture) pollutes as a by-product in the construction of products that we buy! If we stop buying them they stop polluting! This is being proven in the dramatic collapse of demand for goods across the world. Consumption of fossil fuels is waning and therefore so is pollution.

I for one have reduced my consumption, saving a large amount of money in the process, and I give the finger to whoever thinks I'm wasting my time.

This sounds like one of those specious arguments injected into the debate by far right wing think tanks, trying desperately to maintain the status quo and keep consumption high.

I've always preferred carbon taxes to cap and trade systems (so long as the tax rate keeps going up over time).

It would be nice to replace income taxes with pollution / waste taxes as far as possible in fact.

Tim - there is nothing wrong with reducing your consumption (it is to be applauded in fact), however Gittins rightly points out that as long as we use caps to manage emissions, then we'll inevitably hit the cap (at least as long as coal remains the cheapest source of power).

He's not a dupe of some right wing think tank either - he's a very well respected economist with a social democrat bent (as someone once quipped, the Labor party outsourced their economic policy development to him years ago).

Tim Auld   says 9:07 PM

The cap is only relevant if demand to pollute exceeds it. If we starve industry of the incentive to pollute (i.e. profit) the cap won't be reached. Perhaps they will be cushioned for a period by the reduced cost of pollution, but cheap pollution will not make up for declining revenue; capacity must contract. We as consumers are responsible for the pollution and suggesting we're powerless to stop it is rubbish, ETS or not.

If reaching the cap is inevitable then you must think that Europe can not fall below its ETS cap during this "downturn". I would be interested to see data on that.

I'm not endorsing an ETS necessarily, I just think the logic is flawed and the message breeds complacency when we need to be taking personal and community action.

Tim, your argument is sound to the extent that everyone on earth gives a hoot about pollution/the environment.

If 90% of the population that cannot currently afford widgets suddenly find they can because we've reduced our consumption, and there is spare capacity for production-pollution, then that pollution will be generated.

Until we're all on board then the ETS logic presented here is sound.

Tim Auld   says 10:55 AM

Well mate, it's the only way we're ever going to make progress, so thanks for not contributing!

You seem to be completely missing the point Tim - that the ETS structure makes your contributions moot.

That's not saying you are doing the wrong thing, just that the ETS is flawed and should be fixed (or a lower cap introduced, which is the real end goal).

Tim Auld   says 7:24 PM

And you're missing mine. Reducing consumption is not just a nice thing to do, it's essential. Such widespread action would make a mockery of the ETS - and it's doing just that as the carbon price dumps in Europe whether it's voluntary or not. The argument given in this article says it's not possible! Reality doesn't agree with Gittins.

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