"Political agreement is OK - as long as you live up to it afterwards. So make the political agreement as far reaching as possible." - Peter Westerman, Australia
"The world's future is up to you. Please use the chance and act wisely NOW." - Mira Kapfinger, Austria
"Dear World Leaders, I am praying for you all at this critical time. Let's do the right thing for the poor and the environment." - Carl, UK
Those are just four messages out of 3,860 posted on the Copenhagen Climate Change Conference website.
Reading just a handful of those messages - all in favour of world leaders "doing something" of course - it's no wonder bureaucrats and politicians of the world believe they've got a mandate to rip billions of dollars from the hip pocket of the world's taxpayers.
As we've written on several occasions in Money Morning, we've no idea whether climate change is genuine. And we've also got no idea whether it's man made. After all, it's been quite a while since we studied science.
Over twenty years actually. But what we do know is this...
It isn't possible for the talking heads in Copenhagen to do anything about it, whether it exists or not.
Time and again we've seen governments cause more problems than they cure. And not only that, but it inevitably costs the individual taxpayer thousands of dollars for the privilege.
Why should we believe that this time will be different? That suddenly government has found the one thing that it's good at - solving a problem that may or may not exist.
But you only have to look at the "How this affects your household" document from the Department of Climate Change to see that the Carbon Pollution Reduction Scheme (CPRS) is little different from any other government wealth redistribution scheme.
It does what most other government schemes do, it takes money from one of your pockets hands it around various government departments and then deposits it in another one of your pockets, usually minus a few cents on the dollar.
Of course, if you happen to be "rich", such as a single income couple with two dependent children and you earn $120,000 per year then you can expect to pay an extra $1,027 per year thanks to the CPRS.
If you're an average wage earner on $65,000 in the same household formation then you may actually make a profit out of the scheme. According to the Department of Climate Change you'll receive total government assistance of $1,082 compared to a forecast increase in living costs of $767.
That's if you have any faith in the forecasting ability of any government department. More likely it will still cost you money - and lots of it.
If governments did want to do something about Climate Change then what they really need to do is get out of the market and let free enterprise solve the problem.
Think about it, almost every opinion poll shows that individuals are in favour of environmentally friendly practices. Clearly there is a will among the global population to reduce pollution.
After all, who wants to breathe in smoke and fumes? No one wants to do that.
And we're sure that contrary to popular opinion, "evil capitalist" businessmen don't have a preference for spewing out noxious fumes from their factories or for dumping dangerous chemicals in rivers.
And likewise individuals don't consciously choose or prefer to do something that causes more pollution instead of something that causes less pollution.
The fact is it's the very people and organisations - politicians and governments - who claim to be the saviours of the planet that ensure the problems of pollution will last even longer.
For instance, 'green' energy provider Jackgreen Ltd proudly boasts that 190,000 households in New South Wales are signed up to one of its 'green' services.
These are services that allow you to receive either 10%, 50% or 100% 'green' power. For the 10% option you pay nothing extra, for the 50% option you pay $3.30 per week extra, and for the 100% green power option you pay $6.60 extra per week.
That's just a total of $343.20 per year added to the cost of a fuel bill. That doesn't seem like much if you really are concerned about saving the environment.
And remember, the opinion polls tell us that around 80% of Australians believe something needs to be done.
But then you look at the numbers again. 190,000 New South Wales households isn't quite as impressive a number as it first seems.
According to the 2006 Census there were 2.7 million households in New South Wales. That means only 6.9% of households in the Premier state choose to use the 'green' option through this particular company.
But maybe that's not a fair representation. What about a bigger energy provider such as Origin Energy?
Well, the numbers are better but still not mindblowing. In 2008 Origin Energy claimed to have over 423,000 customers signed up for its 'green' options, more than double those signed up through Jackgreen.
But still that only represents 14% of its national customer base of three million customers.
So, what does that tell us? Does it suggest that say, three-quarters of the population couldn't care less about the environment and pollutions, or does it suggest there are other reasons why more households don't participate?
We'd go for the latter option.
When you consider the amount of money remaining in the taxpayer's pocket after they've paid taxes, food, mortgage/rent, bills, and travel, there isn't that much left to spend on optional items.
It's no wonder individuals feel they need for governments to do something, because most individuals don't have the spare capacity to do something about it for themselves.
But surely the better and more efficient option is to allow the individuals to make their own choices.
I mean, do we think that in a free market, individuals would choose to support a polluting industry at the expense of a 'green' industry?
Or course, we don't know for sure, but the odds are that with more money in their pockets, individuals would make a rational decision to support 'green' at the expense of 'black' energy.
The idea that individuals only have short time horizons and are unable to make decisions based on a long-term payback doesn't hold true. People make long term decisions all the time. To suggest that only a government which has a three or four year election cycle to contend with is the only one capable of thinking about the long term is false.
We're pretty sure that left to a free market, individuals wouldn't artificially support polluters at the expense of 'green' energy just to save jobs in one particular industry.
In a free market, individuals would know that jobs lost in a dirty industry would result in jobs gained in a 'green' industry. The presence of government and its manipulation of markets prevents this adjustment from happening.
As for the Copenhagen Summit, the one saving grace you have as a taxpayer is that in the short term it's unlikely to achieve anything. But that doesn't mean you should drop your guard.
A global tax scheme looks to be inevitable, and it's something to be avoided at all costs. As I wrote in Money Morning a few weeks ago, when the European Union began it was nothing more than a free trade organisation covering coal and steel.
Fifty years later, it's a gigantic bureaucratic undemocratic monster, as decisions effecting the people are made ever further from the people.
The fear from the Copenhagen Summit is that national governments will cede power to a global organisation which can never be recovered.
Kris Sayce
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
Related Articles:
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About the Author
Kris Sayce began his financial career in the City of London as a broker specializing in small cap stocks listed on London's Alternative Investment Market (AIM). At one of Australia's leading wealth management firms, Kris was a fully accredited adviser in Shares, Options and Warrants, and Foreign Exchange. Kris was instrumental in helping to establish the Australian version of the Daily Reckoning e-newsletter in 2005. In late 2006, he joined the Melbourne team of the leading CFD provider in Australia.
Comment by Ray on 7 December 2009:
I am a climate change sceptic as through my lifetime of 70 years there have been panics of both warming and cooling , in 1977 there was talk of attempting to melt part of the ice cap to increase temperatures , Time magazine had a front cover "How to survive the coming iceage" .
About 20 years earlier than that submarines were surfacing at the North Pole ...For example, one crew member aboard the USS Skate which surfaced at the North Pole in 1959 and numerous other locations during Arctic cruises in 1958 and 1959 said:..... “the Skate found open water both in the summer and following winter. We surfaced near the North Pole in the winter through thin ice less than 2 feet thick. The ice moves from Alaska to Iceland and the wind and tides causes open water as the ice breaks up. The Ice at the polar ice cap is an average of 6-8 feet thick, but with the wind and tides the ice will crack and open into large polynyas (areas of open water), these areas will refreeze over with thin ice. ....
If we had that same situation now then the warmers would achieve there goal , so there you go , it has all happened before and we are still here .
In my personal opinion the types of ets's that are proposed will not reduce pollution ,pollution must be fixed at the source whether it is the chimney stack , exhaust pipe or the spraying of insectides .
Comment by MadJak on 7 December 2009:
Good Call Ray,
"Pollution must be fixed at it's source". Agree 100%.
This whole ETS thing looks like a great opportunity to introduce a tax on everyone - supposedly with the masses sanctioning it. Likewise, a similar group of people who brought us CDOs and derivative markets appear to be chomping at the bit to have a go at running the trades for an ETS scheme.
They've managed to over complicate the simple mechanisms of lending money, and now they're going to have the complexities of science to hide behind as well.
Too many people at the trough with this one for my liking.
Comment by Greg Atkinson on 7 December 2009:
I with you Ray and MadJak. We need to fix problems at the source, not via some overly complex tax and transfer of power to Government and the U.N. How exactly is an ETS for example going to solve the problems of poor farming practices in China and government corruption in Africa? Will the talks in Copenhagen stop North Korea trying to develop weapons to blow us all up while millions of people there struggle to get enough food to live?
I would also like to know how many tonnes of CO2 will be pumped into the atmosphere getting all the talking heads to Copenhagen so that can come up with some useless non-binding agreement just like they do at the G20 leaders meetings.
Comment by Fred on 8 December 2009:
I don’t profess to fully know the science of climate and I expect I never will, but I do understand the science of propaganda and we’ve been ‘educated’ for many years now. We’ve been acclimatized to accept that there is a climate problem and that it’s our fault. We are shown on the idiot box ridiculous but dramatic ‘real life examples’ that tug our fears & emotions and stick in our memories to help us conclude for our selves, as we have been taught. (eg; images of an apartment falling into Sydney Harbour – it must be rising seas caused by global warming!! – don’t mention bad foundations). We are taught by TV, paid for by ?????, to believe that consumers & industry are so hopelessly unable to mend our ways, the only way to save the world is to hit us in the hip pocket with carbon taxes. And if we were educated right; we’ll soon be happy to pay a modest price to do our bit.
If governments really wanted to do something about reducing carbon dioxide production, then they really should allow interest rates to rise immediately and stop stimulating. But then that might cause a few problems for some shaky big banks and governments that stand to make bucket loads from carbon trading & taxing schemes.
Agree we should not pollute the world, or even small areas of it, but carbon dioxide is not pollution. “Haaaaaa” here have some.
Comment by tar and feathers on 8 December 2009:
Climategate is an issue especially with Aus media propaganda. Isn't it strange that there is not one Labor dissenter....the left wing media is corrupt and they are going to be caught out in 2010 Fed election.
CO2 is not the problem pollution of heavy metals and carcinogens etc is. The world leaders are sequestering CO2 into higher population growth, how can that make sense. We are not even going to be burning coal in 10-15 years, what a farce. But by all means treat the world citizens like children and give us something to stamp our feet about.
Comment by MadJak on 8 December 2009:
Kris,
It's probably worth spending a few hours looking up climategate on the net - you won't get anything in the Lamestream media on this, but it really does drive a truck through the entire C02 causing global warming theory.
FYI - the contents of the hack has been confirmed to be genuine (by the authors) and it isn't just the emails. They also included the source code for the now debunked hockey stick graph. The source code for this model shows them reducing the climate before 1960 and then artificially adding to the temps after 1960. It also showed them changing their graphing technique after 1960 in the same graph - i.e. the data before 1960 was what they wanted, but there was a decline afterwards, so they supplimented the figures after 1960 with some other data to "hide the decline"
In summary the hack shows the intent to deceive, the instructions to decieve, the actions taken to deceive and the defence of the deceipt. It's a closed loop.
Also, there are outstanding requests for information in the second of the three climate data sets - Nasa. Some scientists want the data from Nasa as they are tired of Nasa changing their mind (3 times I think) over when the warmest years of the 20th century were.
Of course, if you do this and come to the conclusions I have, you will need to be prepared to be called a "Denier" by Kevin Rudd and Julia Gillard.
Comment by peterg on 8 December 2009:
at least the SMH has covered the CRU's hacked email scandal,
http://newsstore.smh.com.au/apps/newsSearch.ac;jsessionid=A4B88C5EF41AF11864212AA318EB555F?page=1&sy=smh&sp=nrm&so=relevance&dt=selectRange&kw=east+anglia&dr=1month&pb=all_ffx&rc=10&sfx=headline&sfx=text&submit=Search
as has the ABC's science show
http://www.abc.net.au/rn/scienceshow/stories/2009/2758445.htm
and ABC'scounterpoint
http://www.abc.net.au/rn/counterpoint/stories/2009/2757619.htm
for my part, overall it seems like GW is true and man made. but I am downright cynical about pollies, NW order control freaks, or the mainstream media. If it is panic stations, then a WW2type response is called for. that is, not our beloved free market, rather a Putin style authoritarian scenario (where he cleaned up the gangster capitalists). In my dreams though, the opposite should happen, a world for all, global coordination with democratic practice from the ground up, free market except where it fails. I was pissed off since the early 90's being ignored on the GW issue, but now that the pollies and pwb are taking it up, I am even more alarmed, given the potential for so much (market/power) abuse for little gain.
I hope it's a con, but it's almost sure to be a scam.
Comment by TG on 8 December 2009:
An interesting article:
Seems some in the scientific community don't agree with the computer whiz's, climatologists and meteorologists who espouse climate change...
http://www.abc.net.au/unleashed/stories/s2764827.htm
Comment by Joe on 8 December 2009:
Krys,
Sorry not 4 messages, I only counted 3.
See, inflation is a problem after all that money printing !
Comment by Joe on 8 December 2009:
"let free enterprise solve the problem", why would anybody start a "green energy" company, if it was required to compete in the open market with cheaper fossil fuel alternatives? They wouldn't, fossil fuel energy currently gets an advantage because it doesn't have to pay for polluting the atmosphere - it therefore, currently isn't an open economy - they don't compete on a fair playing field!
"that only represents 14% of its national customer base .. choose to use the 'green' option", that is 14% of people have decided to pay MORE for a green option, when if "all things were considered" should in fact be cheaper! "All things considered" being, the cost of polluting the atmosphere - what does it cost? And how can any reasonable person place that cost at $0? If people had to pay extra to get energy from coal power stations, I bet a lot less than 14% would pay.
Consider it another way, if I didn't want to pay for a sewerage connection to my house, in an open society that would be my choice. However, if I then decided to cr@p on your lawn, or your kids or grandkids lawn, I should have to pay. Polluters should have to pay for cr@ping on the world of future generations, and they only get away with it because too many people are concerned with saving a few bucks for their hospice care rather than doing anything useful.
P.S. Kris, please have an original thought or article, being a butt kisser will only get you so far. I'm sure it's not written into your contract that you must agree with Dan on every one of his sometimes idiotic opinions.
Comment by Bertie on 8 December 2009:
Ya get better coverage in the Tele!
http://www.dailytelegraph.com.au/
Comment by Ned S on 8 December 2009:
Write another article on Oz house prices if in doubt - That'll give all the munchkins plenty to chew on - And regurgitate in all the varied colours of the rainbow!
I don't envy you though - Bill Bonner reckons "me dunno?" Ben Bernanke reckons "ditto!" Hey if those two blokes haven't got a clue, why would anyone else.
Comment by MikeO on 8 December 2009:
The USA EPA has of today classed all GHG gases as pollutants no doubt being such good little citizens Australia will too. Being carbon based life forms which breath out nearly a KG of CO2 per day I and you are a pollutant and don't die and decay! The most potent GHG is water vapour so it is also a pollutant. The last important pollutant on this basis is methane, that is flatulence. So repentant sinners and stop it now.
The most important countries in this debate are 1 China, 2 USA and 3 Russia. We must insist they bring their emissions per capita down to 3 tonnes, Somali can do it so why can't they? If they don't lets set up tariff barriers, if that does not work let us declare war! Wonder what a solar powered army tank looks like?
Of the 29 tonnes we each emit per year only 10% comes from the home the other 90% is industry, transport and city buildings. Talking houses served in this context is pointless. Government must calculate how dear energy will have to be so that we each reduce our footprint by 26 tonnes and set that as the price! Easy just ask Bob Brown.
Comment by Cameron H on 8 December 2009:
Response to Joe, There is still much scientific debate about Carbon Dioxide being a pollutant. Carbon Dioxide is essential for life on earth and is what plants use to grow. As a scientist I have spent the last 12 months since my retirement last year, I have not, as yet, seen any scientific paper that shows a clear link between CO2 and climate change.
Regardless of what a lot of people believe most renewable energies are not really renewable. You still need to use materials to manufacture the solar panels and the windmills. There is also a significant lost oportunity cost associated with the thousands of square kilometers needed for the solar array and the wind farms. The power grid stability is also seriously affected by the on/off nature of wind power with the average availability factor for wind energy at about 25% compared with about 90% for coal stations. I ususally find with people who bang on about solar and wind is that they have no idea how all these things work and are usually practically challenged with changing a light bulb.
Comment by Anonymous on 8 December 2009:
Here is the draft of what these maniacs are trying to push through in Nopenhagen.
http://unfccc.int/resource/docs/2009/awglca7/eng/inf02.pdf
It's a long, complicated document that reveals things like The "scheme for the new institutional arrangement under the Convention" that starts on page 18 contains the provision for a "government."(global) The aim is to give a new as yet unnamed U.N. body the power to directly intervene in the financial, economic, tax and environmental affairs of all the nations that sign the Copenhagen treaty.
Clause after complicated clause of the draft treaty requires developed countries to pay an "adaptation debt" to developing countries to supposedly support climate change mitigation. Clause 33 on page 39 says that "by 2020 the scale of financial flows to support adaptation in developing countries must be [at least $67 billion] or [in the range of $70 billion to $140 billion per year]."
And how will developed countries be slugged to provide for this financial flow to the developing world? The draft text sets out various alternatives, including option seven on page 135, which provides for "a [global] levy of 2 per cent on international financial market [monetary] transactions to Annex I Parties." Annex 1 countries are industrialized countries, which include among others the U.S., Australia, Britain and Canada.
We are getting shafted and it won't do didley squat to help the enviroment.
Comment by Rocket on 8 December 2009:
Its a sad joke how the rich countries like the USA and the UK (who are actually in debt up to their eyeballs) want to give billions of dollars to corupt miltary regimes in Africa and Asia so they can continue to slaughter and starve their own people.
Comment by Joe on 9 December 2009:
MikeO,
Why would you ask those 3 nations you mention to reduce their footprint percapita down to 3 tonnes.
Australia (percapita) emits more emissions than either of these countries.
And yet, the goal posts keep moving (in the eyes of the Coalition). All they look at is the 'unproductive cost' and the tiny contributions this country makes Globally when compared equally with these other nations.
Our contribution is so small, but, because there are so few of us, it is disproportionately high for each of us compared with any other nationals.
Comment by Joe on 9 December 2009:
By the way, other Joe on previous post to the one Cameron H replied to.
Popular name ain't it?
Comment by Joe on 9 December 2009:
Cameron H, I'm not sure what you've been doing for the last 12 months but ask any 10 year old and they'll explain to you that green-house gases (carbon dioxide being one of them) absorb the sun's radiation causing a warming of the planet (Arrhenius' theory). Do you dispute this theory?
Are you a climate scientist? I'm an engineer, but don't ask me anything about bridges, trains or fluid mechanics.
"You still need to use materials to manufacture the solar panels and the windmills." Are you suggesting that, the emissions used in creating this equipment in any way compares to the emissions caused by coal fired power plants???
"The power grid stability is also seriously affected by the on/off nature of wind power". Wind power has a cost, undeniably, but this is factored into the cost of production. Coal power has a cost, "global warming", this is not factored into the cost of production.
Comment by Joe on 9 December 2009:
Joe replies to Joe (Not confused yet but if this caries on I will be).
The Green house effect does not involve Carbon Dioxide absorbing the Sun's radiation.
Go check your facts.
The glass in a greenhouse doesn't absorb the sun's radiation either.
It allows it through. It is absorbed by the Earth beneath the CO2 atmosphere or glass ceiling, warms up, and the canopy of glass or C02 enriched atmosphere insulates the resultant heat trapping it and accelerating natural air, land and sea temperatures.
It is a known principle. It is in play. Has been proven, and the effects on our natural climatic temperature variances has been detected.
I will from this point on go by the monica Joe of Geelong to avoid further confusion.
Comment by Joe on 9 December 2009:
Joe of Geelong,
"Greenhouse gases effectively absorb thermal infrared radiation, emitted
by the Earth’s surface .. greenhouse gases trap heat within the
surface-troposphere system. This is called the greenhouse effect".
Whether or not my definition is completely accurate is probably irrelevant to the broader argument: Green house gases are a pollutant that need to be accounted for.
Comment by Joe on 9 December 2009:
http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_appendix.pdf
Comment by tar and feathers on 13 December 2009:
The climate is something that we have changed, the intermediaries of atmosphere, soil, water ~ the laws of thermodynamics – we have eliminated much of our forests – we have polluted our environment with populous consumption – we have reduced our flora and fauna diversity - but what is the most disturbing is we are blaming it on a harmless CO2 gas, a gas that will not be produced when we switch to alternate technologies on the near horizon…………. we humans have corrupted the science and so markets and high taxing bureaucratic Govts take over - the 3rd world lingers for its share of the tax – in the face of the dissent of climategate will the truth be revealed on what we need to do…..Depopulate humans, repopulate diversity, repair our planet (and make it better than before)?……. No eg Aus Treasury will tell Abbott that if the Libs can the planned ETS tax they will have to increase other taxes, we, the world is grossly in debt, at the end of the day does it matter where the tax comes from (I think it does most thinking people would. Conclusion is that Copenhagen is a consensus on tax and the establishment of a new Carbon stock market…..