Understanding Climate Risk

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Archive for July 10th, 2011

Oz clean energy package released

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The government has released the Clean Energy Package along with the Treasury modelling assessing the general architecture of a carbon price mechanism. The plan is large, complex and very comprehensive. It will be a test for the media to see whether they can lift their game in reporting and analysing this package, or whether it will be a typical retreat to point scoring behind already erected barricades.

Links to the plan are here:

http://www.treasury.gov.au/carbonpricemodelling/content/default.asp

www.cleanenergyfuture.gov.au

http://www.cleanenergyfuture.gov.au/clean-energy-future/our-plan/

A couple of quick thoughts. It has a biodiversity fund (yay) but at much lower rates than being sought ($946 million over six years instead of around $1 billion per year). The Treasury modelling shows the overall costs are not onerous, but I have some concerns about their scenarios (not the modelling of cost per se, but the nature of the task).

There is a personal household calculator here:

https://www.cleanenergyfuture.gov.au/helping-households/household-assistance-estimator/

I had a go (of course). It reckons that my personal costs would be $745 per year or $14 per week, $3 of which would come back in tax relief. This is generic of course, but interesting in that:

  1. It is a lot less than I am paying now to reduce or offset my emissions, although I am way ahead in the petrol that I don’t buy. Some of that goes on bike running costs.
  2. I also will not stop these current activities, so am assuming that I will get hit by double counting unless power companies do not pass through costs to green energy buyers (and do I believe that?)
  3. I hope that some of the good and services that I buy, which have external costs priced into them become relatively cheaper compared to those that don’t via increasing economies of scale. (It’s the cost of environmental goods that are probably the most expensive element of my budget, compared to buying the cheapest substitute)

I’ll be taking a closer look and hopefully will modelling some of the aspects that Treasury were unable to, in order to articulate the benefits of the plan in more detail. If I can get hold of their numbers, all the better.

A general discussion thread can be found on Larvatus Prodeo. Update on the CAP and risk perception paradox

Written by Roger Jones

July 10, 2011 at 2:14 pm