How the carbon price works

Via Grog’s Gamut, a transcript from Hansard of our PM describing both the mechanism and the goals:

Ms GILLARD–Let me explain in detail our mechanism for pricing carbon. The first proposition is an incredibly simple one. At the moment carbon pollution can be released into the atmosphere for free. There is no disincentive for doing that. We will put a price on carbon, a price on every unit of carbon pollution. It will be paid for by businesses and as a result, because our business community is smart and adaptable and innovative, they will work out ways of pursuing their business and generating less carbon pollution. They will work out ways of making sure they pay less of a price when carbon is priced.

Then they will enter into contracts, they will make investments on the basis of understanding the rules and understanding that carbon will be priced. And as they go about making those transitions, innovating, making the new investments of the future, we will work with those businesses in transition to a clean economy.

Having priced carbon and seen that innovation, yes, there will be pricing impacts; that is absolutely right. That is the whole point: to make goods that are generated with more carbon pollution relatively more expensive than goods that are generated with less carbon pollution. But because we are a Labor government this will be done in a fair way. We will assist households as we transition with this new carbon price.

What that means is that people will walk into a shop with money in their pocket, the government having provided them with assistance. They will see the price signals on the shelves in front of them—things with less pollution, less expensive; things with more pollution, more expensive—and they too will adapt and change. They will choose the lower pollution products, which is exactly what we want them to do. Between the business investment and innovation, between households who have been assisted in a fair way by a Labor government responding to price signals, we will see a transition to a cleaner economy, to a low-pollution economy.

So yes, it’s not any sort of secret that this policy is aimed at changing behaviour, both of producers and consumers. Apparently, some folks think that governments should never, ever aim to change people’s behaviour: that legislating and regulating systems of incentives and disincentives is beyond the pale, or at least the scope, of the proper government role. I don’t get this. It makes me wonder whether they think we’d be better off without traffic rules.



Categories: education, environment

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8 replies

  1. “It makes me wonder whether they think we’d be better off without traffic rules.”
    Wouldn’t we?
    I mean: they do, don’t they?
    /snark

  2. Those are the people who don’t believe in climate change, and don’t think that anything we do causes it, so anything we do to reduce pollution isn’t going to stop/slow down climate change in their eyes. By the time they realize that climate change is real, it will be too late for them to change and adapt to a greener way of life (cynical beeyotch that I am, I see them as being in the majority and ruining the earth for those of us willing to change/adapt/go green). We’re seeing that here in the USA with the Republicans ripping the guts out of the EPA and not wanting to fund infrastructure such as water plants for clean water (most of our water plants are so out-dated it’s a wonder any of our water is safe to drink).
    What they don’t realize is that if their constituents don’t have a clean earth on which to live, work, play, eat, etc, neither do they, no matter how much money they have (and money isn’t going to be able to buy what doesn’t exist anymore).

  3. I think the causation, at least in some of the further-right quarters, might work in the opposite directly vesta44. The loudmouth libertarians core and the current Australian opposition party are wedded to the idea that regulation in general and taxes in particular are evil, whether for ideological or political pragmatic reasons. Any market failure that requires a regulatory response – such as global warming – consequently poses a threat to such a worldview. Rather than reacting rationally and altering their position on regulation and taxation it is much more convenient to denied away the “problem” of global warming.

  4. Apparently, some folks think that governments should never, ever aim to change people’s behaviour: that legislating and regulating systems of incentives and disincentives is beyond the pale, or at least the scope, of the proper government role.

    Oddly enough, there seems to be a rather strong overlap between these people and the ones who would like to see the return of corporal and capital punishment. Funny, that.

    • Too true, Meg – and well noticed. I’m sure that there’s a strong overlap with those who approve of detention camps for asylum seekers because they “send a message” too.
      The counterargument will be that because the carbon price is indeed a price, rather than another form of disincentive, that the government is supposed to let the market sort it out.
      Because (of course) we are all living in cloud-cuckoo Invisible Hand land, where all consumers know all background information about every single choice competing for their dollar, and where everybody (including corporations) are Rational Actors (i.e. no such thing as Greed, Secrecy or Deliberate MisInformation exists). Y’know,Galt’s Gulch.

  5. Great re-posting of that Hansard speech. I can hardly bear to discuss this issue because of all the economic ignorance around and about.. but these things need to be said and said again or we will never turn the ignorance around.

  6. They will choose the lower pollution products, which is exactly what we want them to do.
    Really? somehow I doubt it, most labels one reads on almost anything is simply not true it seems, made in australia? oh yeh, the jar maybe, heart tick? yep, cos they paid for it is all. Write ‘lite’ on the label and give a donation to the heart foundation and you have your heart tick. It’s all so much bulldust!
    There will be so much blurp on products it’ll be like reading a novel and no-one will even bother. And the consumer will pay for it all.
    If they want to cut global warming ban cars, speedboats, recreational motorized boats, trucks, planes and those great big 4wd’s that both country and city people think are so neccesary these days.
    Taxing everything that moves helps the climate not one iota.

    • It’s very clearly explained that the lower pollution products will be cheaper, not that they will have stuff on the label, and that is why people will choose them.

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