Haste makes waste in the carbon countdown

Countdown For Climate Change Vote is the banner on the ALP web site.  It explains that only five days remain before Parliament's climate change vote.

Canberra's Carbon Pollution Reduction Scheme (CPRS) would eventually require 90 per cent of electricity to be derived from renewable sources, with perhaps 10 per cent from gas.

It gradually outlaws the coal-generated electricity which provides 95 per cent of Victoria's supplies.

The Brumby Government is murmuring uneasily about the state's vulnerability to electricity shortages that this entails.  The state government is also conscious that the CPRS means closing the generators that provide the world's lowest cost electricity.

But it appears solidly behind Canberra in promoting that outcome.  Indeed, Victoria took the lead in seeking to displace coal-based electricity with the Victorian Renewable Energy Target (VRET).

Some argue that the carbon-abating taxes and charges on electricity to households in the CPRS are affordable.

This is based on a Utopian view that renewable electricity costs only twice as much as electricity from coal.

As poles and wire costs account for half of total electricity costs, the arithmetic might suggest that substituting renewable energy for coal means a mere 50 per cent electricity price increase.

The debate's leaders are comfortable with such an imposition on households.

Fanciful though it is to imagine that the electricity price would increase by only 50 per cent, and that this is acceptable, the major concern is not the increased price to households.

Far more important is the effect on the competitiveness of the industries using electricity.

Unless the carbon penalty is also adopted by Australia's rivals, the ETS means curtains for Alcoa's Portland and Point Henry aluminium refineries.

Although these employ less than 2000 people these are the most productive jobs in Australia.

And the low-cost aluminium from the smelters provides major exports as well as the foundation of the competitiveness of many manufacturing plants.

Forcefully substituting costly green energy for commercially produced energy increases business costs.

This means lower wages and lost jobs, which can, at best, be replaced by less well paid jobs to compensate for the increased energy costs.

Kevin Rudd has "pledged" to create 50,000 new green jobs through the CPRS.  This won't happen.

The state government said its own VRET subsidies would create new jobs in manufacturing windmills, but none emerged.

Spain, with the world's most heavily subsidised green economy, has lost 2.2 real jobs for every artificially created green job.  Spain now has the highest unemployment in the Western world.

With only five days left in the climate change countdown, Mr Brumby needs to talk quickly to his brethren in Canberra to head off Australia's electricity tax if he wishes to prevent the demise of the Victorian economy.

Mr Rudd says the Copenhagen conference in December will deliver a meaningful carbon reduction agreement.

If he is right and the world does move to reduce carbon emissions, that would dampen Australia's loss of competitiveness from a carbon tax

Waiting four months for that outcome before legislating for a carbon tax seems the obvious policy.

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