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Carbon Tax open-pit-mining-261092_1280

Published on July 22nd, 2014 | by Christopher DeMorro

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Why Australia’s Carbon Tax Repeal Is An Economic Backstep

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July 22nd, 2014 by  

open-pit-mining-261092_1280

If any country knows the dangers of global warming and climate change, it’s Australia. The Land Down Under has been feeling the heat, quite literally, from the ongoing climate crisis. Unfortunately for the citizens of Australia, their government has voted to repeal the nations carbon tax, and that could have dire effects for the nation’s economic prospects.

Abbott’s government claims that the repeal of the carbon tax will save Australian companies and consumers $9 billion annually, but the costs of this repeal will likely far outweigh the benefits. Australia is one of the world’s largest coal-exporting nations, with much of it sent to Asia and, specifically, China. Australia itself is highly dependent on coal power, getting as much as 80% of its daily power needs from burning coal despite being one of the sunniest places on the planet. The reliance on fossil fuels puts its at risk of being left behind as other nations move forward to cap and tax carbon emissions, and the market for coal power will likely peak within the next decade. It’s also been predicted that the carbon tax repeal will actually lead to higher energy costs, not lower ones.

Formerly, government feed-in tariffs helped jump-start a lucrative solar panel installation market that has as many as 4,500 different companies ready to install a green energy system. This has led to more than 1 in 10 homes in Oz having a  rooftop solar system, but with the Abbott government reducing feed-in tariffs, solar installation progress has slowed substantially. Individual Australian’s are forging ahead with plans to install their own green power system, and the Abbott government has promised more help for homeowners wanting to go solar, but the solar installation industry has seen its profit margins trimmed substantially. So while coal companies are saving billions of dollars, the nascent solar industry suffers.

The economic issues stemming from the repeal of the carbon tax will go far beyond Australia’s borders though. Much of Australia’s industry is directly or indirectly related to coal mining, an energy source that while still admittedly popular throughout the developing world, is becoming something of a global pariah. China, the world’s largest consumer of coal, has made it clear that it plans to steer its power generation needs away from coal power in the coming decades. Other growing economic players like India and Brazil are following suit, shrinking the market for coal.

This could leave few buyers for Australia’s coal as the world economy moves towards cleaner and greener energy sources, making Australia’s coal industry obsolete. Australia should be looking to export its booming solar power business to other nations, but instead Abbott has steered his country towards a future where coal remains both the dominant power source, and the economic engine of Oceania.

And let’s not forget about the health costs associated with mining and burning coal. Australia is one of the world’s foremost polluters, producing four-times as much emissions per person as the global average (49 kilos per person per day, compared to the average of 12). Doctors have raised warning after warning about the perils of mining and burning coal, but they have gone unheeded by Australia’s current government. If any nation needs a carbon tax, it’s Australia.

Unfortunately, it looks like the Land Down Under is back to square one on this issue.

 

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About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or esle, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



  • Roger Pham

    Fortunately, the sunny, hot summer and mild winter climate of Australia can benefit from the likes of Solar City and the Giga Battery factory soon to be able to deliver dispatchable solar energy 24/7 at costs competitive with fossil fuels.

  • Sandy Dechert

    Great piece, Chris. Two global points on Abbott’s policies that I’d like to see explored further: his recent touchy-feely overtures to Japan and BRICS; and the long-run climate effects of his abysmal carbon shortsightedness.

  • charlesjharper

    Charlotte . true that Melvin `s blurb is good, on thursday I got a top of the range Lancia since getting a check for $9122 this past 5 weeks and would you believe, ten/k this past munth . it’s by-far the most comfortable job I have ever done . I began this 6 months ago and pretty much straight away got minimum $71 per-hour . find more information C­a­s­h­f­i­g­.­C­O­M­

  • Larry

    Sounds like the people of Australia need a good air pollution crisis to wake them up– a la London, England in the 19th century

    • Bob_Wallace

      They’ve been hit with very hot weather, raging wildfire, and massive flooding.

      I hate to think what it would take to wake them from their stupor….

      • Larry

        Excellent point! Earthquake, Tsunami?

        • Bob_Wallace

          Perhaps Tony’s party could have a bit of an outing, get trapped by wildfires and set upon by a pack of roos driven mad by the heat.

          Survivors might get washed away in massive rainstorm.

          Then voters could enjoy a do over and the world could pray for a moment of sanity.

          • Larry

            I love your comments, Bob. You have a creative mind and amazing intellect. Some day I would like to meet you in person. Maybe some winter when I’m in Az I could drive over to your state and we could share a cup of coffee or something.

  • Andrew Eatough

    Re: the statement: “Much of Australia’s industry is directly or indirectly related to coal mining,” The Institute of Public Affairs (right wing) only puts total iron ore and coal mining in Australia at 7.8% of GDP. That’s less than manufacturing at 11%. Even the Minerals Council of Australia only claims 40,000 people directly working in the coal industry and a further 100,000 indirectly (which many would dispute). MCA also claims that 54% of electricity is generated from coal (much less than the 80% claimed in the article).
    The only reasonable explanation for politicians pandering to a minority group in the economy is lobbying and maybe corruption – much like the U.S.

    More positively, according to the Clean Energy Council, just under 15% of Australia’s electricity was generated from renewables in 2013. Not nearly good enough, but not quite as dire as this poorly researched article.

  • JamesWimberley

    Australia has turned itself into a guinea-pig – you know, the ones they used to strap into cages an force to smoke cigarettes. Can an established renewable industry make its way against a hostile government? Aussie solar has structural advantages – lots of sun and very high retail electricity tariffs. My guess is that Abbott will only be able to slow down wind and solar, not stop their advance, now driven by lower costs. He will also handily lose the next election, unless the ALP has another attack of suicidal mania.

    • Ronald Brakels

      His gun has one bullet left. The threatened destruction of the Renewable Energy Target. It’s enough to kill the solar installation industry as we know it. It will also kill people, we just won’t know exactly who they will be or exactly what share of the butcher’s bill from climate change Tony Abbott’s Coalition government will be responsible for. But solar will survive. People are now getting rooftop solar installed for about $2 US a watt before the Renewable Energy Target subsidy, which is enough to pay for itself, so solar can’t be killed off. But it can be very, very, very badly hurt and hundreds or thousands of people could be thrown out of jobs that are required to both stabilize the climate and save Australia money. But they are working on insane things like preventing people with solar from exporting their surplus electricity to the grid.

  • Alexander Dudley

    I am deeply embarrassed by my country’s federal government’s pandering to the fossil fuel industry and being Murdoch’s puppet. Fortunately, and surprisingly, the NSW government (which is of the same conservative party as the Federal government) is taking its own initiative on promoting and developing renewable energy.

  • Komanoff

    German solar installations generated 30 TWh of electricity in 2013. The U.S. only 9.3. (See table in http://bit.ly/1j0qeZD.) What was/is Australia’s annual solar-electric output?

    • Ronald Brakels

      Maybe 5+ terawatt-hours a year from rooftop solar in Australia at the moment? Australia currently gets 2+% of its electricity from solar and that is basically all from point of use solar on household roofs. South Australia gets over 5% of its electricity use from rooftop solar and at times it meets over a third of the states total electricity demand. Note this does not mean we are limited to getting only 15% of our total electricity from solar. We have the capacity to shift a significant amount of demand to daylit hours and provided it is cheaper than other alternatives, which it is, it is economical to overbuild capacity. And I paid 45.4 cents a kilowatt-hour on my last electricity bill and new solar now gets a feed in tariff of 6 cents, so household battery storage is looking awful attractive at the moment.

      • Matt

        Yes, in a weird way, this may push Oz on down the PV path. Electric cost going up, gas generation isn’t only going to cost more as exports take all the gas. So more people get PV and batteries. All those people get piss at the government being coal bitch, and vote out the bums.

        • Bob_Wallace

          As people use the AU grid less the price per kWh will rise. And the current government will likely not cut their losses by closing coal facilities, they’ll let the prices rise even more.

          • Ronald Brakels

            Yep. In Australia we have the fairly unique situation where whenever Australians decrease their electricity use distributors are allowed to raise their prices to make up their shortfall in revenue. This of course results in people using less electricity which is then met by further price rises. Electricity use has been declining for years now and one study puts about 20% of the decline on conservation resulting from higher electricity prices. It results in the two pants procedure where people would rather wear two pairs of pants than turn on the electric heater.

          • Bob_Wallace

            I would imagine that Tony is pissing off people on both sides of solar. Got-no-solar people are pissed because electricity prices are rising and Got-solar people are pissed because Tony is messing with them.

            That sure sounds like a good strategy to build votes.

          • Ronald Brakels

            A 7.5% swing to Labor from the Coalition since the election in September. That’s a huge slide in the Coalition’s standing by Australian standards. Labor’s Shorten is preferred Prime Minister for 46% of poll respondants to Abbott’s 41%. Abott’s status as preferred Prime Minister has fallen faster than any other Prime Minister with the exception of Keating who wasn’t preferred to begin with. (He became PM after a leadership challenge to Bob “I love the SLORC” Hawke, who was in the Guinness Book of Records for beer drinking, so you can understand a lack of enthusiasm for him at first.)

  • Craig Allen

    Regarding the government helping home owners to install solar: That policy has been scrapped. http://www.businessspectator.com.au/news/2014/5/13/solar-energy/government-dumps-election-promise-million-solar-roofs
    They have eliminated or plan to trash every single initiative of the former government supporting renewables. They have not a single pro-renewable policy of their own.

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