The carbon tax is holding us back

At last we have clear evidence that the most effective way to reduce carbon emissions is not to have Kyoto style schemes or carbon taxes but rather to invest in technology to reduce the cost of low carbon sources of electricity.

This is exactly what the United States has done and the latest figures indicate its emissions have fallen far more dramatically than Europe, which used carbon taxes and emissions quotas. This contributed to Europe's economic problems.

Rather than a carbon tax, Australia needs to follow the US example. Across my desk has come at least some evidence that we are starting to wake up to what is really required to reduce carbon emissions.

Thanks to the so-called Copenhagen Consensus (A group of Nobel laureates and other top experts) we now know just how successful the US has been.

The Copenhagen Consensus says carbon dioxide emissions in the United States have dropped to their lowest level in 20 years. In the first five months of 2012, expected CO2 emissions have declined by more than 800 million tons, or 14 per cent, from their peak in 2007.

US carbon emissions have dropped some 20 per cent per capita, and are now at their lowest level since Dwight D. Eisenhower left the White House in 1961.
Readers may remember that when on August 21 I published a commentary entitled Why the carbon tax doesn't work the carbon tax advocates in the community howled me down.

The Copenhagen Consensus believe that the world's emphasis on emissions reductions via carbon pricing and similar mechanisms is simply not going to work. They now propose we should spend more money researching renewable power generation with the aim of reducing renewable electricity generation costs to levels that are lower than carbon.

Australia has one of the world's largest carbon taxes, which is being combined with big rises in power costs.

Accordingly, we are a global leader in trying to reduce emissions via high electricity pricing. The Copenhagen Consensus believes our strategy is not economic and while electricity consumption may reduce, the cost of that reduction will be out of proportion to the emissions cuts.

The US was too smart to fall for the carbon tax trap and instead spent three decades doing what the Copenhagen Consensus advocates -- investing in technology. In the US case most emphasis was not on wind and solar technology but rather the technology of "fracking”. This enabled the US to extract huge reserves of gas from coal and shale seams. This gas is now rapidly replacing higher cost coal and is the main force slashing emissions.

However the next round of global technology spending is likely to be on renewables, which is what the Copenhagen Consensus is advocating.

There are many projects in the pipeline but an Australian one has caught my attention -- the air conditioning work being undertaken by the Australian National University backed Endless Solar group.

Solar hot water systems are almost a mature technology. Solar electricity is rapidly evolving in a commercial sense. However, there are no commercially feasible solutions for solar air conditioning.

The main reason is the high capital cost of such systems due to the requirement for a large solar collector. Under the Endless technology (called "CoolSolar") a solar collector is used for solar cooling in summer, solar heating in winter and solar hot water all year. Providing three solar services offsets the cost of the collector.

The technology has clear benefits to Australia because it will reduce capital expenditure on upgrading electricity grids and peak loading may be reduced in summer.

The Endless project will make sense if it reduces the total cost of power to create air conditioning. There are similar renewables projects in Australia and around the world and if they can repeat the "fracking” success they will be the model economic carbon reduction. Meanwhile we can point to "fracking” as the technology which showed us how science can be much more effective than carbon taxes.

Of course Australia could have followed the US but we decide to export our gas and to export more gas than we could develop (Australia's slow-motion energy train wreck, September 6).

We spent so much time on carbon taxes that we allowed the main global carbon reduction game to pass us by.