Saturday, 28 May 2011

We don’t need either a carbon tax or emissions trading

In the midst of Liberal governments refusing to do even the most basic things to improves Australia’s dreadful performance on greenhouse gas emissions, The Business Spectator is trying to suggest that emissions trading may be just as good a solution as the unpopular carbon tax flouted by Gillard. It argues that an emissions trading scheme may actually be effective in capping carbon emissions. However, the difficulties of measurement, as more radical commentators have noted, make this in my view an unlikely scenario.

More than that, I can easily sympathise with those who see problems in a carbon tax for its ability to reduce the living standards of the majority of Australians, who could lose quite a lot in living standards if the government is unable to do something to eliminate the causes of the problem, that is, coal-fired electricity and fuel-inefficient cars. A carbon tax is almost certainly an extremely regressive tax, because the poorest people in rural areas generally have the least ability to rely on public transit or higher cost renewable energy. For this reason, it is very hard to push a carbon tax on the populace of a spread-out, low-density country like Australia.

The real solution – one advocated by radical socialsts but to my mind amenable to more moderate views – is the mining tax which was so unpopular at recent elections.

People think that a windfall tax on wealthy mining companies will ruin Australia’s economy, but such articles as Quarry Vision really show that is not the case. People in Australia need to be informed that Australia’s mining industry is quite largely non-competitive. This is because the combination of a hot climate and extremely thick cratonic crust means that Australia has been entirely immune from the tectonic and glacial upheavals that have destroyed the lithophile mineral wealth of Eurasia, the Americas and New Zealand. (“Lithophile” means the reactive metals that form strong bonds with silicon and oxygen like aluminum and titanium, as distinguished for the more easily extracted but greatly rarer “chalcophile” and “siderophile” metals like copper and gold.)

Paleopedological records show that most of the present-day soil types of Eurasia, the temperate Americas and New Zealand were non-existent or nearly so until the appearance of the Greenland Ice Sheet in the late Pliocene five million years ago. Combined with the growth of the Himalayas and Rockies/Cascade Ranges, the repeated growth of the Laurentide and Scandinavian Ice Sheets in Europe and North America, the Patagonian Ice Sheet in South America and the Himalayas and their glaciers in Asia has produced new soil on a scale probably never known before in the 4,500,000,000 years since the Earth formed. This formation of new soil has been accompanied by the decomposition of FePO4 and AlPO4 to soluble phosphorus to form soils of a chemical fertility not known for at least 280 million years.

In Australia, because most of its continental crust (overlain by high-density iron rich rocks) is as much as fifty five kilometres thick as against twenty for typical crust, none of these processes have occurred at all. The result is that all the lithophile metal ores that in almost all the rest of the world have been largely destroyed remain. Even today, after two hundred and twenty three years of European settlement, new deposits of lithophile metals are still being discovered. The result is that Australia’s established mining companies, as extensively documented by Guy Pearse, have since the 1950s been able to establish a super-tight control over the country’s energy and transport policy. Because of Australia’s very flat topography, there is no tendency for even those regions most remote from the main mineral deposits in the Pilbara to rebel against this power, especially as it gives Australians electricity prices one-sixth those of the Enriched World.

Another far more important and potentially significant result is that, unlike most other industries where high taxation simply leads to inefficiency, if Australia’s masses were to realise the potential use of a mining tax to fund the exceptionally high-quality public transport that such an old and fragile continent absolutely must have (as I have stressed many times before, acceptable standards of public transport in Australia would be greatly higher than in Eurasia, the Americas or New Zealand) and the revegetation and conservation of at least the exceptionally biodiverse South West Botanical Province there could be many improvements in conservation without efficiency loss, simply because there is no alternative source for lithophile metals. This would mean that, rather the destroying the most critical and fragile environment, Australia’s metal ore resources are used to preserve it in a rigorous manner.

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