AGL CEO Michael Fraser has a column in the Business Spectator on the need to transition to a clean energy economy - Our priceless dilemma.

The issue of climate change should be no different. We should be taking prudent, sensible and measured action today to ensure that the risks associated with climate change are managed properly. Given the risks, we would be failing as business and community leaders to ignore the quantitative evidence. It is a long-term issue that requires long-term solutions.

It is clear that all industries, including the energy sector, require a clear policy framework if we are to make that transformation to a low carbon future with as little disruption to the economy as possible.

There certainly appears to be a consensus around “community concern” over climate change when you consider that the Climate Institute and Auspoll recently found that 83 per cent of people are concerned that greenhouse gas emissions are making climate change worse.

However, there is not yet consensus among political, business and community leaders around the policy frameworks we need to establish to achieve the cuts required to manage the risks associated with greenhouse emissions.

Our government has agreed to a minimum 5 per cent reduction in emissions by 2020, relative to 2000 levels, or to a 2 per cent cut if countries collectively reduce emissions to achieve the objective of keeping temperature rises below 2 degrees Celsius.

If we take the midpoint – a 15 per cent reduction on 2000 levels – that would require a 29 per cent reduction in business-as-usual emissions, or about 190 million tonnes. Policy makers around the world believe the three main policy tools to address climate change are emissions trading, renewable energy targets and energy efficiency programs.

Australia’s 20 per cent renewable energy target can potentially achieve around 40 million tonnes of abatement. If energy efficiency measures manage to maintain a constant consumption of energy to 2020, it would save another 40 million tonnes.

This leaves a gap of 110 million tonnes still to cut. And this is where emissions trading, universally regarded as the least-cost way to reduce greenhouse gas emissions and a policy which had bipartisan support at the 2007 federal election, comes into play.

Reducing emissions is an economy-wide exercise. A market based solution will deliver a lower cost outcome. It is my firm view that a broad-based cap and trade emissions trading scheme is the best way to deliver least cost solutions for reducing emissions.

Emissions trading can achieve all of the abatement we would need to achieve our midpoint target of 15 per cent.

What is very clear, however, is that if we don’t put a price on carbon, as well as implement additional policy mechanisms, we won’t see the investment necessary to meet such a target.

We need a broad-based emissions trading scheme and the government should implement such a scheme as soon as a consensus can be achieved. But we don’t have much time.

The transition to a lower carbon economy is likely to take decades; but the earlier we begin, the greater the benefits and the lower the costs – a point that has been highlighted by the Climate Institute’s new report, which concludes that the lack of a price on carbon will cost Australian households an extra $2 billion a year in higher electricity prices by 2020.

I'll never be convinced that any sort of carbon trading scheme will be as effective as a straight carbon tax and compensating tax deductions / welfare payments for everyone, but I think Senator Cantwell is moving in the right direction with her latest proposal. The Economist reports - A refreshing dose of honesty.

On January 28th, America formally pledged to the UN that it would reduce its greenhouse-gas emissions by 17% (from what they were in 2005) by 2020. But there was a planet-sized catch. Meeting the target will depend on getting a climate bill through Congress, and that will be horribly hard. A bill to erect a cap-and-trade system to curb carbon-dioxide emissions squeaked through the House of Representatives last summer. But similar bills have stalled in the Senate, where nearly anything big needs a supermajority to pass.

Various obstacles block the way. First, Barack Obama has not yet decided what to do about health care, and he cannot wage two domestic wars at once. Second, cap-and-trade is a tough sell. An increasing number of Americans, like Mr Shimkus, doubt the science. The proportion who believe there is “solid evidence” that the earth is warming fell from 71% in 2008 to 57% last year. Among Republicans, disbelief is the norm: only 35% think there is solid evidence of warming, according to a Pew poll. The news that some climate scientists tried to muzzle dissenting voices has spread like the common cold on conservative blogs, fuelling widespread suspicion that global warming is an elaborate hoax. Many climate sceptics are furious. “My Carbon Footprint Will Fit Nicely in Your Liberal Ass,” reads a typical T-shirt. Even among Americans who believe in global warming, there is little appetite for tackling it. A hefty 85% told Gallup that the government should place a higher priority on fixing the economy, with only 12% saying the opposite.

Enter Maria Cantwell, the junior senator from Washington state. She is pushing a simpler, more voter-friendly version of cap-and-trade, called “cap-and-dividend”. Under her bill, the government would impose a ceiling on carbon emissions each year. Producers and importers of fossil fuels will have to buy permits. The permits would be auctioned, raising vast sums of money. Most of that money would be divided evenly among all Americans. The bill would raise energy prices, of course, and therefore the price of everything that requires energy to make or distribute. But a family of four would receive perhaps $1000 a year, which would more than make up for it, reckons Ms Cantwell. Cap-and-dividend would set a price on carbon, thus giving Americans a powerful incentive to burn less dirty fuel. It would also raise the rewards for investing in clean energy. And it would leave all but the richest 20% of Americans—who use the most energy—materially better off, she says.

Ms Cantwell’s bill is refreshingly simple. At a mere 40 pages, it is one-thirty-sixth as long as the monstrous House bill (known as “Waxman-Markey”, after its sponsors), which would regulate everything from televisions to “bottle-type water dispensers” and is completely incomprehensible to a layman. Instead of auctioning permits to emit, Waxman-Markey gives 85% of them away, at least at first. This is staggeringly inefficient: permits would go to those with political clout rather than those who value them most. No one is proud of this—Mr Obama wanted a 100% auction—but House Democrats decided that the only way to pass the bill was to hand out billions of dollars of goodies to groups that might otherwise oppose it. (There was plenty of pork left over for its supporters, too.) ...

Of all the bills that would put a price on carbon, cap-and-dividend seems the most promising. (A carbon tax would be best of all, but has no chance of passing.) Ms Cantwell has a Republican co-sponsor, Susan Collins of Maine, and says she is hearing positive noises from a few other Republicans, such as Lisa Murkowski of Alaska. The most attractive thing about the bill is that it is honest. To discourage the use of dirty energy, it says, it has to be more expensive. To make up for that, here’s a thousand bucks.

I normally only ever come across the Canada Free Press (I'm not sure what is "free" about a Canadian publication that worships America, but whatever) when people are spouting conspiracy theories about global warming and the apparently baleful influence of Canadian Maurice Strong. Today however I came across an article on Hubbert and the Technocrats and how their ideas about an energy based currency may be slowly coming to fruition via carbon credits - Carbon Currency: A New Beginning for Technocracy ?.

Critics who think that the U.S. dollar will be replaced by some new global currency are perhaps thinking too small.

On the world horizon looms a new global currency that could replace all paper currencies and the economic system upon which they are based.

The new currency, simply called Carbon Currency, is designed to support a revolutionary new economic system based on energy (production, and consumption), instead of price. Our current price-based economic system and its related currencies that have supported capitalism, socialism, fascism and communism, is being herded to the slaughterhouse in order to make way for a new carbon-based world.

It is plainly evident that the world is laboring under a dying system of price-based economics as evidenced by the rapid decline of paper currencies. The era of fiat (irredeemable paper currency) was introduced in 1971 when President Richard Nixon decoupled the U.S. dollar from gold. Because the dollar-turned-fiat was the world’s primary reserve asset, all other currencies eventually followed suit, leaving us today with a global sea of paper that is increasingly undesired, unstable, unusable.

The deathly economic state of today’s world is a direct reflection of the sum of its sick and dying currencies, but this could soon change.

Forces are already at work to position a new Carbon Currency as the ultimate solution to global calls for poverty reduction, population control, environmental control, global warming, energy allocation and blanket distribution of economic wealth.

Unfortunately for individual people living in this new system, it will also require authoritarian and centralized control over all aspects of life, from cradle to grave.

What is Carbon Currency and how does it work? In a nutshell, Carbon Currency will be based on the regular allocation of available energy to the people of the world. If not used within a period of time, the Currency will expire (like monthly minutes on your cell phone plan) so that the same people can receive a new allocation based on new energy production quotas for the next period.

Because the energy supply chain is already dominated by the global elite, setting energy production quotas will limit the amount of Carbon Currency in circulation at any one time. It will also naturally limit manufacturing, food production and people movement.

Local currencies could remain in play for a time, but they would eventually wither and be fully replaced by the Carbon Currency, much the same way that the Euro displaced individual European currencies over a period of time.

Sounds very modern in concept, doesn’t it? In fact, these ideas date back to the 1930’s when hundreds of thousands of U.S. citizens were embracing a new political ideology called Technocracy and the promise it held for a better life. Even now-classic literature was heavily influenced by Technocracy: George Orwell’s 1984, H.G. Well’s The Shape of Things to Come and Huxley’s “scientific dictatorship” in Brave New World.

This paper investigates the rebirth of Technocracy and its potential to recast the New World Order into something truly “new” and also totally unexpected by the vast majority of modern critics.

Background

Philosophically, Technocracy found it roots in the scientific autocracy of Henri de Saint-Simon (1760-1825) and in the positivism of Auguste Comte (1798- 1857), the father of the social sciences. Positivism elevated science and the scientific method above metaphysical revelation. Technocrats embraced positivism because they believed that social progress was possible only through science and technology. [Schunk, Learning Theories: An Educational Perspective, 5th, 315]

The social movement of Technocracy, with its energy-based accounting system, can be traced back to the 1930’s when an obscure group of engineers and scientists offered it as a solution to the Great Depression.

imageThe principal scientist behind Technocracy was M. King Hubbert, a young geoscientist who would later (in 1948-1956) invent the now-famous Peak Oil Theory, also known as the Hubbert Peak Theory. Hubbert stated that the discovery of new energy reserves and their production would be outstripped by usage, thereby eventually causing economic and social havoc. Many modern followers of Peak Oil Theory believe that the 2007-2009 global recession was exacerbated in part by record oil prices that reflected validity of the theory. ...

Conclusion

If M. King Hubbert and other early architects of Technocracy were alive today, they would be very pleased to see the seeds of their ideas on energy allocation grow to bear fruit on such a large scale. In 1933, the technology didn’t exist to implement a system of Energy Certificates. However, with today’s ever-advancing computer technology, the entire world could easily be managed on a single computer.

This article intended to show that

* Carbon Currency is not a new idea, but has deep roots in Technocracy
* Carbon Currency has grown from a continental proposal to a global proposal
* It has been consistently discussed over a long period of time
* The participants include many prominent global leaders, banks and think-tanks
* The context of these discussions have been very consistent
* Today’s goals for implementing Carbon Currency are virtually identical to Technocracy’s original Energy Certificates goals.

Of course, a currency is merely a means to an end. Whoever controls the currency also controls the economy and the political structure that goes with it. Inquiry into what such a system might look like will be a future topic.

Technocracy and energy-based accounting are not idle or theoretical issues. If the global elite intends for Carbon Currency to supplant national currencies, then the world economic and political systems will also be fundamentally changed forever.

What Technocracy could not achieve during the Great Depression appears to have finally found traction in the Great Recession.

The Australian reports that efforts to separate the renewable energy target from the emissions trading scheme continue to be promoted - Ministers could split energy bill.

RENEWABLE energy plans, including subsidies for domestic solar panels, could be in place much earlier than expected because the Rudd government is considering altering its climate change plans in the Senate.

Even as the government's Carbon Pollution Reduction Scheme was blocked in the Senate yesterday by the Coalition, the Greens and independent senators, ministers were considering breaking the legislative links between the emissions scheme and the bill covering renewable energy targets.

Until now, the government has insisted that the CPRS bill and the RET bill, which is designed to set renewable energy targets for Australia's electricity generation of 20 per cent by 2020, had to be linked and to be voted for together.

The Coalition, Greens and independent senators have urged the government to break the link between the bills so they could vote for the renewable energy targets, which they support. The government has been accused of delaying subsidy schemes and new energy projects for purely political gain.

The government has said the bills have to be linked because common compensation claims make them inseparable.

Yesterday, however, government sources suggested the defeat of the CPRS bill meant the government could consider its strategic options of breaking the link between the bills, or decoupling them.

The proposed legislation on renewable energy has been delayed but is expected to be introduced to parliament next week. If the government agrees to decouple the energy bill from emissions trading, the bill can be debated, amended and passed this session, otherwise it will be voted down and only reintroduced with the CPRS bill in November.

A compromise on renewable energy plans would allow the government to maintain the pressure on the Coalition to support the ETS in the Senate and pass it before the UN climate change conference in Copenhagen in December.

The SMH reports that Australia's emission trading scheme legislation has been rejected by the Senate - Senate kills emissions trading scheme bills.

The Senate has defeated legislation to establish an emissions trading scheme, forcing the Government to negotiate with the Opposition or persist with its bill with the threat of an early election.

Just after 11am, the Opposition, Greens, and the independents, Nick Xenophon and Steve Fielding, voted to defeat the package of 11 bills that sought to establish a scheme from 2011 onwards.

The Greens say the Government's 2020 emissions reduction targets - between an unconditional 5 per cent and a highly-conditional 25 per cent - are too timid.

The Coalition and independent senator Nick Xenophon want the Government to consider an alternative scheme, based on a model they commissioned from Frontier Economics.

Family First's Steve Fielding is yet to be convinced human activity is causing global warming.

In the end the Senate voted 42 to 30 to reject the bills.

The Government must now wait three months before reintroducing the same legislation.

If the bills are rejected a second time, Labor will have a trigger to dissolve both houses of Parliament and call an early election.

Both major parties need to put politics aside and cut the Renewable Energy Target (RET) bill free from the defeated CPRS for immediate passage or risk catastrophic damage to and job losses in Australia’s emerging clean energy industry.

The Rudd Government was elected nearly two years ago promising a 45,000 GWH or 20 per cent renewable energy target (RET) by 2020. Nearly two years later that promise remains unfulfilled.

Clean Energy Council Chief Executive Matthew Warren said this delay is now costing the clean energy industry more than $2 million a week. The price of Renewable Energy Certificates (RECs) saw a sharp fall following the Senate’s deferral of the RET bill in June and have stayed low, wiping millions off the value of existing renewable energy projects.

“Orders for solar PV have evaporated and staff are now being laid off or are idle in clean energy companies across an industry which is supposed to be gearing up to deliver 20 per cent of Australia’s
electricity in 11 years time,” Mr Warren said.

“This is an emerging industry that cannot bear these costs any longer. It is incomprehensible that the frontline response to the decarbonisation of Australia’s energy market is being allowed to atrophy in this
fashion.”

The RET will unleash around $28 billion of new investment and along with energy efficiency strategies will create more than 28,000 new clean jobs in Australia.

A recent survey by Newspoll commissioned by the CEC found 89 per cent of Australians want more renewable energy and increased government efforts to stimulate investment.

“The RET bill needs to pass, and quickly,” Mr Warren said. “The time for political games is over. The bill needs to be amended immediately to de-couple it from the CPRS. This is a simple amendment.”

“The clean energy industry asks both major parties to put political point scoring aside and support the swift and streamlined passage of an expanded renewable energy target in Australia.'

The Business Spectator has a pair of articles on the problems with carbon trading and why a carbon tax is preferable - Our carbon trading blunder.

It’s a tragedy that the climate change debate is being used to pull the Coalition apart and to possibly bring on a double dissolution, because the political skirmish is obscuring significant events that have occurred since the current set of policies were framed.

This week the change really came home to me when I discussed the latest developments with a state environment minister who seemed tantalised by the possibilities created by the new events. But with all policies virtually locked in, and the opposition in disarray, the widened debate is left to media commentators.

In today’s commentary I am ignoring the rising number of climate change sceptics which are a hidden force bubbling below the surface. A majority of Australians want to slash our use of carbon in a way that creates the least disruption to the economy. If we are not very careful, the present track will lead us to a carbon reduction policy that does the economy great harm.

As I have explained many time before, the discovery of huge reserves of gas – which burns with much lower carbon emissions than coal – in Queensland and NSW in North West Shelf quantities, gives Australia the opportunity to combine gas and renewable energy sources to slash emissions at a manageable cost (New energy can't wait, July 15). The United States is in a similar situation and the high-profile political figure Robert Kennedy Jr has woken up to the new paradigm.

To justify the investment in low carbon fuel sources, it is necessary to make carbon emissions a cost. In essence that’s what the emissions trading scheme is all about.

The trouble is that the proposed Australian version is complex and traps people and organisations that the community does not want to trap.

Many moons ago politicians on both sides of federal parliament and in most states abandoned the idea of a carbon tax because they reckoned it would be unpalatable to voters. But in those days they had budget surpluses and did not believe they needed an extra tax. Now they desperately need additional tax revenue to cover their huge deficits and are looking around for all sorts of nasty taxes.

So why not re-visit a carbon tax at a rate set at on the basis of an international formula? This would require a rebate for all export industries and a tax on the carbon content of imports. In other words, the price of carbon is lifted no matter where in the world it comes from. It's simple and it's easy to understand a tax and with wide community acceptance it would become the new GST to reduce the deficit. Fans of carbon trading will protest that selling carbon permits can raise just as much revenue for the government if the price is set correctly – however, the way the government's carbon trading plans are already being manipulated by interest groups suggests that in practice this would not happen.

A decade ago, when the accountants were debating a new set of accounting rules, business was too busy to be active in the discussions. The result is an international mess. We could never have imagined our accountants would get it so wrong. Similarly with sub-prime, who could have imagined American bankers being so stupid?

When it comes to carbon trading, we are once again too busy running our businesses to realise what is happening. I fear that the greatest legacy of the 'ute-gate' affair will soon be a that it did not give Malcolm Turnbull and the coalition the breathing space to step back from the carbon trading issues and devise a better way to achieve the government’s objective, rather than simply raising questions.

And there is a much better way to achieve the government’s carbon reduction objective. The best place to start such an examination process is the Conversation section of Business Spectator where we have been deluged with some wonderful commentaries – including commentaries from people who question whether carbon is the issue. I urge all my readers and all politicians to be updated on how much the carbon facts have moved since the Coalition government first proposed carbon trading.

When I initially raised the issue I was tentative because I knew that I was probably too late to have an impact on the debate, but the Conversation contributions have convinced me of the virtues of a carbon tax. And two private emails have added a new dimension: one from Clunies Ross award winner and Cosmos magazine founder Alan Finkel; and a second from a Sydney merchant banker who knows just how much money his sector will make from carbon trading. This merchant banker, who has asked that his name be withheld, gives a new perspective on a carbon tax.

Finkel in the June issue of Cosmos says that of the $23 billion expected to be raised via carbon permits in the first two years in Australia, ”every dollar will be returned in handouts, with not a cent allocated to technology research or investment in building infrastructure capacity”.

“Cunning traders” will exploit the scheme’s complexity as they did with the complexity of mortgages and derivatives created over the past 10 years, wreaking havoc on the global financial system.

Finkel says: “Do we really need to create a whole new market employing hundreds of highly paid lawyers, traders, brokers, analysts, bookkeepers and others just to buy and sell permits – or hoard, speculate or profiteer from them?”

A carbon tax can raise money “simply and fairly” because governments already have agencies that collect taxes efficiently. “No matter how small the price impact, it would stimulate more behavioural change than if there were no price increase at all.

“At a modest $10 per tonne, the annual revenue in Australia would be $6 billion. This would help pay for measures such as phasing out coal-fired electricity – replacing it with lower emissions sources such as gas-fired power, or near-zero emission options such as wind, solar and nuclear.

“It could pay for research into new technologies to improve energy efficiency and behavioural change, and mitigate the coming impacts of climate change”.

But the merchant baker has a different way of using a carbon tax.

“We could ‘do something’ about reducing Australia’s greenhouse gas emissions by taxing them fairly heavily, encouraging pass-through of the costs to consumers and using the tax proceeds to compensate consumers by cutting income taxes and raising social benefits, with the net effect being revenue neutral", he says.

”This would increase the costs of energy, transport and other CO2 intensive goods and services enough to stimulate and accelerate research, development and introduction of non-polluting alternatives (by the private sector).

“It would give consumers the ability to pay the new higher prices and would reward everyone who, in the past or future, did or does something to lower their greenhouse gas emissions."

Reuters report that PM Kevin Rudd is still showing some spine over introducing carbon trading by 2010, ignoring frenzied wailing from the fossil fuel industry - Market chaos won't slow carbon scheme: Australia PM.

Australia's plans to launch a carbon emissions trading scheme within two years will not be derailed by the global financial crisis, Prime Minister Kevin Rudd said on Tuesday.

Australia's second-largest oil and gas producer, Woodside Petroleum Ltd, this week told Rudd's center-left Labor government that global market volatility and bank credit paralysis should put emissions trading on hold.

Rudd said the worst international financial crisis since the 1930s did not eclipse the danger of climate change, expected to have a greater impact on Australia's $1 trillion coal and energy reliant economy than almost any other developed nation.

"On emissions trading, our ambition remains 2010," Rudd told journalists while unveiling a A$10.4 billion ($7.3 billion) emergency stimulus package to protect Australia against any global recession. Part of the government's thinking is the calls from business for consistency and predictability in the future. Climate change is not going to go away," Rudd said.

Business Green Blog has a look at Shell's sabre ratting at the EU about being warned it might have to pay for emissions permits in future (Heaven forbid - what sort of pollution tax makes the polluter pay ?).

It is easy to understand Shell's nervousness over the EU's plans, because ultimately they are designed to eradicate its oil-based business model. The whole point of the polluter pays principle is to accelerate the development of low carbon technologies and business models and wean us off of fossil fuels. Shell is part of a dying industry, it is just that it has no intention of going quietly.

What Europe's politicians and business leaders need to remember is that while many firms may threaten to leave as a result of the EU's climate change plans few actually will, particularly if the games of international diplomacy currently being played ensure that there is no competitive advantage for them to gain by doing so.

Moreover, where those firms that fail to adapt do end up declining - we're looking at you Shell - it is worth remembering that the jobs that are lost will be largely replaced by the emerging clean tech industry. It is worth noting that as Shell threatens to take jobs overseas the German government is reporting that by 2030 its renewables sector will be as big as its car industry.

Managing the decline of an industry, and the job losses and economic pain that go with it, is one of the ultimate tests of a politician's skill and strength and it looks like leaders across Europe are about to get tested.

How well they perform will determine both the entire bloc's credibility as a leader in the fight against climate change and all our chances of transitioning to a low carbon economy.

We can only hope they realise this and tell Shell and its supporters precisely what they can do with their rattling sabres.

One story from last week that I missed while I was on holiday was local refiner Caltex Australia calling for a carbon tax to be introduced.

While I think carbon taxes are a great idea, it appears Caltex were more interested in shielding themselves from the cost of carbon trading schemes than in good policy. Caltex's preferred policy option is for refiners to be exempt from any future carbon trading market - with drivers instead paying a direct carbon tax on petrol.

The claimed benefit of this policy is that it would shield refiners from "unacceptable" levels of risk - with the Caltex spokesman further recommending that the tax on petrol be "clearly identifiable at the fuel pump", as this would be "more effective at changing driver behaviour" compared to the costs of carbon trading which would have "much less carbon price visibility" and that this "hidden" tax would be "far less environmentally effective".

Just in case your head isn't spinning yet with all this balderdash, the spokesman went on further to whinge that under an emissions trading scheme exposed them to a risk that "middlemen", such as "financial institutions and offshore speculators" would become involved in the market and push carbon prices higher. Who knew that the oil industry was openly afraid of markets. What next - calls for the government to regulate the price of petrol ?

John Connor of the Climate Institute said that this proposal would set a dangerous precedent, and that other groups would also demand exclusions. The RACV dubbed the idea "very cheeky", further noting "It is far too early for Caltex to be calling for this burden to be put on motorists when we are already struggling with record high petrol prices, in a country that is devoid of an alternative fuel policy".