Don’t delay carbon trading: RBA director
From The Australian newspaper: Don’t delay carbon trading: RBA director
Leading economist and Reserve Bank director Warwick McKibbin yesterday warned the Asia-Pacific climate partnership was making a mistake by delaying a carbon-trading system until after the development of technology to slash greenhouse gases.
Environment Minister Ian Campbell told The Weekend Australian that while carbon trading would have a place in the future, the priority was to “bring forward breakthrough technologies”.
But Professor McKibbin said such a strategy left “the Government as the risk-taker in everything, and I don’t think that’s the way to go”.
“If the Government picks the wrong winners, it will be the Government’s fault. If it doesn’t put enough in, it’s the Government’s fault and if there’s an environmental catastrophe, it will be the Government picking up the pieces.”
The Government and the other five APP nations - the US, South Korea, Japan, China and India - are focused entirely on the supply of technology.
But Professor McKibbin said there was very little evidence that government subsidies ever directly led to breakthrough technology, with companies more likely to be inspired by high prices for commodities.
“We know from the oil shocks of the 1970s that when we had a strong price signal, there was all sorts of innovation in the way energy was used and produced,” he said.
“We know that price signals work, but there is no evidence this is true of massive government-led spending.”
A carbon-trading scheme would allow companies that reduced their greenhouse emissions - or ran operations such as forestry plantations that cut global emissions - to sell carbon credits on an open market. Companies that can cheaply cut emissions could effectively profit from companies that cannot.
Companies, such as smelter operators, that cannot or will not reduce their greenhouse gas emissions would be able to buy carbon credits to meet mandated emission-reduction targets.
Professor McKibbin said rights to emit carbon would be worth trillions of dollars worldwide and would create the incentive to develop technology.
There is a lot more detail in the actual article but, put simply, the AP6 plan is a classic ‘cart before the horse’ scenario. We can’t wait for some magical new technology to save us - and emissions trading works and like the man says, will “create the incentive to develop technology“. Enjoy - DS.
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