There is a fundamental problem with most carbon-trading schemes. They are fairly good at coping with emissions (at least in theory), but not so good at coping with natural abatement. One way of looking at the Greenhouse issue is to argue about whether we have an emissions problem or not. Another way of looking at it is to say it’s not an emissions problem, but a population problem.
If you look at Australia’s emissions you find that per capita we are one of the highest emitters. At 16.2 tonnes of CO2 per capita, we rank just under Norway (19.1), Canada (20) and the USA (20.6). There are reasons for this. One of them is that we are a large sparsely populated continent, so transport emissions are a bigger issue here than elsewhere. That sparesness also means that emissions are not an issue overall. As the Global Footprint Network spreadspread shows, Australia has a large enough share of the world compared to its population that all we emit is absorbed.
As we export more CO2 (embedded in products like Alumumium, which is very energy intensive to refine) than we consume, that means that we are providing abatement for our export markets as well.
By adopting a one size fits all approach which takes no account of the ecological footprint of each nation, the Garnaut approach actually rewards countries who have a population in excess of what their landmass can sustain, given current technologies, and assuming that the UN assessments of what are globally needed, are correct. That is a perverse way to organise a market.
We also simultaneously risk damaging our economy at a time when wealth is becoming war by other means. If resources are insufficient to global needs, then someone is going to miss out, and in extreme cases, die. This will be determined largely by who has the least wealth. Dollars become the new bullets.
Which is not to say that I’m opposed to energy taxes. I think we need to encourage alternative energy development, for reasons unconnected to Greenhouse. But we need to be careful how we apply them, and how drastically.