Carbon Politics Down Under

The final word in my short recent series on the developments in carbon policy in Australia should be given to Clive Spash , who was there on the inside and, as an academic economist of the social-ecological position, in a strong position to analyse the policy outcomes from a planetary perspective.

Spash has produced a paper describing how Julia Gillard was able to depose the previous Prime Minister Kevin Rudd, also of the Labour Party, because of the unpopularity of his carbon emissions trading scheme. The powerful mining sector lobbied strongly against this and the opposition thus generated, most on the basis of untrue claims about the effect on ordinary Australians, allowed Gillard to successfully challenge Rudd and create a new government with support of Green and independent MPs.

Spash describes how the political compromise involved a temporary carbon tax for three years, to be followed up by an ETS very similar to that which had been proposed by Rudd and at considerable political cost:

'That cost extends to allowing major emitters to make guaranteed windfall profits from pollution permits. The emission trading scheme suffers numerous problems, but the issues raised show taxes can also be watered down and made ineffectual through concessions. Taxpayers will get no assets from the billions of dollars to be spent buying-off the coal generators or other polluters. The scheme hopes to stimulate private investors to create an additional 12 percent in renewable electricity generation by 2020.'

Spash sets a much more stringent target of a wholesale shift to 100% renewable energy within a decade, the only proposal he considers 'serious' given the urgent nature of the issue of climate change. His working paper explores the difficulties of implementing meaningful greenhouse gas taxes in Australia.
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Defending Dissent

In support of the courage of dissenting economists I posted the news that Clive Spash had been forced to resign from his post at Australia's publicly-funded research body CSIRO almost exactly two years ago. The political disagreements over how Australia, one of the greatest carbon emitters per head of population, should address its climate sins, has resulted in the carbon tax also discussed recently on this blog.

The behaviour of CSIRO has now reached the Australian parliament, with questions raised over CEO Megan Clark's involvement with financial organisations involved in carbon trading and the fact that Simon McKeon, executive chairman of Macquarie Bank’s Melbourne office, was appointed as CSIRO’s chairman. In connection with the paper 'The Brave New World of Carbon Trading' that was at the heart of the dispute, Senator Colbeck asked:

'CSIRO’s internal review concluded that the original paper did not report new research or present empirical evidence to support all of the authors’ conclusions. The paper was also viewed as offering opinion on matters of government policy by applying a critique of neoclassical economic theory to the ETS. Therefore it was not approved for publication. Were those issues to have been rectified as CSIRO strived to do with Dr Spash, CSIRO would have supported the publication of that paper and any public comments that related to the papers findings.'

As Peter Earl notes in his post on the Real World Economics blog:

'This organisation apparently rejects institutional analysis, historical analysis, descriptive analysis and policy analysis . . . it is now evident that the fact that [Spash's] critique was levelled against the use of neoclassical economics as foundations for the policy was the heart of the problem. Their statement explicitly supports neoclassical economic theory and rejects anything critical of that theory because it is being used to support carbon emissions trading. According to the CSIRO this was not about the content or politics!'

This is a rare explicit statement of the role that neoclassical theory plays, much more one of catechism than of scientific theory. As the global economy spawned by four decades of neoclassical theory founders between the Scylla of ecological disaster and the Charybdis of the renewed credit freeze, we need thoughtful pragmatic economists like Spash more than ever.
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One Cheer for Australia's Carbon Tax?

During our summer of discontent there was a very discontented debate happening on the other side of the globe over whether or not Australia, one of the world's worst carbon offenders in terms of emissions per head of population, was going to be the first member of the OECD to introduce a national carbon tax. In spite of the lobbying, lies and loss of three leading politicians, a carbon tax was introduced. That in itself seems to me to be worth celebrating.

It has also led to the production of some trite but rather useful short videos, made available via the Australian government's website. In typical aussie style, these make the points without any fuss - a far cry from what we could expect from our own DECC. These could be useful to share with friends and colleagues who find the rather abstract idea of 'pricing carbon' difficult to grasp.

The carbon tax is a policy proposal emanating from the Australian Greens, who are celebrating its acceptance by the ruling coalition. The fight over whether to control emissions through a trading system, which effectively gives the value generated by the right to pollute to companies - the sort of system we have in the EU - or through a carbon tax, where the value goes to governments and can be shared with citizens who will pay higher fuel prices, has been a bitter one, with Bob Brown becoming a hate figure amongst Australia's huge mining companies and in the Murdoch press.

Due to the power of this lobby, there are a large number of accommodations and compromises, limiting the effectiveness of the tax. The price of carbon, at around £15 per tonne, if massively too low, and the money raised has been used to buy off both citizens facing higher bills, but also the very companies that are guilty of producing the pollution. The target for emission reductions - at 5% by 2020 - is also totally unrealistic.

But Julia Gillard has looked weak since she knifed her own party's leader PM Kevin Rudd, and in that context this is a significant political victory. It also represents a historic victory for the Australian Greens, who first proposed a carbon tax for their country. We should build on this start and argue for carbon taxes in our own countries.
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Shooting the Messenger

As the political and economic implications of climate change become clearer, the response from the politicians and the corporate elite who dominate politics will be to pressurise scientists not to blow the whistle. On Monday I was at a public policy seminar in London where Professor Kevin Anderson from the Tyndall Centre publicly admitted that he and his colleagues had spent years sweetening the pill on climate change so as not to cause political offence and damage his chances of receiving research funding. 'Nobody would be funded to find that globalised capitalism is the cause of the problem', he said, a view which I was able to support based on my personal experience.

And now another leading climate academic has had to leave his job for telling the truth about the sorts of changes that are needed to protect the human species from the corporate machine that is destroying our planet. Dr Clive Spash resigned yesterday from his job at Australia's CSIRO so that he would be free to seek the truth about the economics of climate change.

His excellent report 'The Brave New World of Carbon Trading' is due to be published in a peer-review journal early next year and so has already been subject to academic scrutiny. But because he finds that carbon trading will not be effective in addressing the problem of CO2 emission - and in fact doesn't really make sense in terms of economic theory – his employers demanded that he change his findings.

Spash was told that he was in breach of CSIRO policy, which restricts its scientists from making statements about public policy. Put together with the limitations on research funding for academics identified by Kevin Anderson this removes livelihood options from environmentally focused academic researchers unless they are prepared to toe the corporate line.

The climate change debate is hotting up in Australia, having nearly caused an emergency election last week, so Spash's claims that he was being censored forced his boss, Megan Clark, to publish the report on November 26th, but only on the condition that the scientist would be punished for refusing to change his findings. Under intense pressure, Dr Clark publicly released the report on November 26 but warned Dr Spash that he would be punished for his behaviour and his refusal to amend it. Spash, who has been suffering from stress as a result of his mistreatment, consequently decided to resign.

To find out what all the fuss is about read Clive's paper. Tweet