Business Spectator - The true cost of emissions trading

One of the problems of being a sceptic about Australian carbon price policy – as opposed to a denier about greenhouse gas science – is that the Canberra bureaucrats seem unable to perceive, let alone concede, the central fallacy of their “it won’t really hurt” advice to the Rudd government.

Advice, it would seem from his Brisbane speech last Thursday, that has been swallowed hook, line and sinker by Treasurer Wayne Swan.

The latest modelling from the Treasury keeps rolling right along the yellow brick road laid down by Ross Garnaut in asserting that the net economic effect of introducing emissions trading will be benign.

However, as polling is starting to show, at least some voters are beginning to understand that the eagerness of ETS brigade to look way out to 2050 for positives might gloss over some real pain in the here-and-now.

They would be even more concerned if they understood that a very large pothole in the yellow brick road is the need for a carbon price of $70 to $90 per tonne to drive conventional coal-fired electricity generation out of the domestic market – and this, taken with the other costs (much higher gas prices in response to demand, for one), must lead to a marked downturn in energy-intensive, trade-exposed (EITE) manufacturing in this country if there is not a similar burden imposed on rivals in the global markets.