In a leaked briefing, UK Prime Minister David Cameron's energy adviser warned him that British carbon abatement policies would raise electricity prices by 30 per cent.
The briefing addresses questions raised by Cameron about the merits of these policies.
European Union climate action commissioner Connie Hedegaard has no such misgivings. She says the EU policies drive job growth and innovation without sacrificing the economy.
Inauspiciously, this week US solar power industry poster child Solyndra went bankrupt, shedding 1000 jobs. Even though it received $US535 million in low-interest government loans -- half a million dollars per job -- this was insufficient to tilt the playing field in its favour. Australia's experiences with subsidies for turbine blade facilities in Victoria have similarly failed.
Subsidies and taxes can force production into high-cost and more labour-intensive directions but even when they do, this doesn't bring net job creation. If it did, we would benefit from taxes to replace tractors on farms with hand ploughing. That would require a tenfold increase in employment but would simultaneously lower productivity by nine-tenths.
Unfortunately, the job increases would be offset by job losses. Net job creation from discriminatory taxes or subsidies is only possible with reduced living standards.
Electricity from wind in Australia costs three times as much as from coal or gas. Forcing the adoption of wind farms for electricity supply can no more increase jobs than if we required labour-intensive, pedal-powered turbines for generating electricity.
As a recent Productivity Commission report demonstrated, Australia is no slouch when it comes to wasting money and raising costs in its energy policy. The commission showed that Australian spending on greenhouse gas abatement, while not reaching the giddy heights of the EU, was higher than in China, the US, Japan and South Korea.
And our industries carry a far greater burden than those in rival primary product-exporting countries. The commission estimated the cost of Australian emission-reduction programs at $473 million to $694 million in terms of total subsidy equivalent.
The largest component of this, the 20 per cent renewable energy requirement, is still gearing up and will cost $4 billion a year by 2020. Moreover, the commission estimates exclude Australia's direct government subsidies in 93 programs, which cost $1 billion in 2009-10.
Australian carbon abatement taxes and subsidies mean lower competitiveness, exports diverted to rival suppliers and job losses, with no effect on global emissions.
ADVERTISEMENT
No comments:
Post a Comment