One thousandth of one degree

What if the cli­mate alarmists are right and the glob­al aver­age atmos­pher­ic tem­per­a­ture emerges from its cur­rent pause to climb at a sus­tained rate that is unprece­dent­edin the past cen­tu­ry and a half? Head­ed for an increase of, say, 4° cel­sius by 2001? How will the Gillard Car­bon Tax help avoid that out­come? The short answer is: not at all.

Even if we assume that the pro­posed tax actu­al­ly leads to the gov­ern­men­t’s tar­get of a 5% cut in Aus­tralian car­bon-diox­ide emis­sions and we assume the U.N. sce­nar­ios for a large pos­i­tive cli­mate sen­si­tiv­i­ty to emis­sions is cor­rect (implau­si­ble), a 5% cut in our 1% share of glob­al emis­sions will shave three-quar­ters of one-thou­sandth of a degree from the glob­al tem­per­a­ture by the year 2100 (the time-frame of U.N. esti­mates). Details of my esti­mate over the fold. UPDATE: Dr David Evans, for­mer­ly a car­bon-account­ing mod­eller for the Aus­tralian gov­ern­ment has released a more sophis­ti­cat­ed esti­mate that arrives, how­ev­er, at the same val­ue as I do (about 0.0007°C)

Although use­less, Ms Gillard’s car­bon tax might not have a huge impact on Aus­tralians’ eco­nom­ic wel­fare in the short term. But there is a much more impor­tant long-term loss that con­cerns me.

A com­pen­sat­ed tax will com­prise trans­fers between Aus­tralian income groups (depend­ing on the design of the tax-fund­ed con­sumer off­sets) and from house­holds to firms if the pric­ing behav­iour dis­cov­ered in Europe also applies in Aus­tralia. These trans­fers are social­ly unnec­es­sary but can­not be count­ed as an eco­nom­ic loss.

Actu­al eco­nom­ic loss­es are like­ly to com­prise trans­fers from Aus­tralian man­u­fac­tur­ing and farm/food sec­tors to for­eign com­peti­tors whose imports will be untaxed; the tax on resources exporters that they will not be able to pass-on to cus­tomers and may or may not be restored in the form of com­pen­sa­tion and, inevitably; dis­pro­por­tion­ate trans­ac­tion costs owing to waste­ful lob­by­ing, bureau­crat­ic empire-build­ing, col­lec­tion costs etc. etc. 

But the biggest costs of Ms Gillard’s u‑turn on a car­bon tax may be that it diverts gov­ern­ment focus at a cru­cial point in our eco­nom­ic his­to­ry. The car­bon tax debate is frit­ter­ing away polit­i­cal ener­gies that should be devot­ed to urgent­ly need­ed growth reforms on indul­gence of a mad Greens’ agen­da that can only make us poor­er and less able to meet the real demands of the future.

A rough esti­mate:
Cut in Aus­tralian emis­sions: 0.05
… and glob­al emis­sions (giv­en our 1% share): 0.0005
Assum­ing (with the U.N.) a cli­mate sen­si­tiv­i­ty of 3°C to a dou­bling of CO2 equiv­a­lent, the impact of the Aus­tralian emis­sion cut on glob­al tem­per­a­tures : 0.0005/2 * 3 = 0.00075degrees.

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