Almost on cue, Möbius Ecko drew our attention to an article in The Australian which stated:

“THE carbon tax cost $5310 for every tonne of emissions abated during its two years of operation, new government analysis shows.

Environment Minister Greg Hunt leapt on numbers in Australia’s National Greenhouse Gas Inventory declaring the carbon tax an expensive failure.

He said the 2.9 million tonnes in carbon dioxide emissions reductions during the carbon tax’s operation came at a cost of $15.4 billion in gross carbon tax revenue, or $5310 a tonne.

When the land sector is included, as is the case under Kyoto accounting, Australia’s emissions fell from 567.1mt in 2012-13 to 563.5mt, a drop of 3.6mt. Between 2011-12 and 2013-14, emissions fell 0.5 per cent or 2.9mt.”

Let’s have a closer look at this.

“Land sector” refers to deforestation and reforestation activities.  Under the Kyoto Protocol, deforestation is defined as the direct, human-induced removal of forest cover on land that was forest on 1 January 1990. Emissions result when cleared vegetation is burned or left to decay, and as soil carbon levels decline over time.

Net emissions due to deforestation had been declining since 2005 but increased in the last two years.  Annual emissions over 2013-14 are estimated to be 37.8 Mt CO2-e, 3.9% higher than the previous year.

Under the Kyoto Protocol, the afforestation and reforestation sector covers new commercial and environmental forest plantations by direct human action on land not forested in 1989. Net emissions are typically negative, as sequestration of carbon in biomass of growing trees outweighs emissions from harvesting activities.

On an annual basis, net sequestration was lower by 13.3% to -16.8 Mt CO2-e over 2013-14. The main cause for the decline in afforestation and reforestation credits in 2013-14 is a decline in sequestration rates due to the post 1990 plantation estate reaching harvestable age.

In other words, over the last two years we have been cutting down too many trees.  Imagine how much worse it would be if Hunt got his way about logging Tasmanian World Heritage forests.

As the carbon tax did not affect the forestry industry, it should hardly be included in calculations as to whether the tax has been effective.

The Clean Energy Regulator published a list of 293 companies and organisations that were liable to pay a charge of $23 for every tonne of carbon dioxide they emitted (or the equivalent amount from greenhouse gases such as methane and nitrous oxide)

In reality many of these companies are subsidiaries of much larger corporations so this probably overstates the extent of the impact. For example, BHP Billiton has at least eight subsidiaries listed as separate liable entitites, AGL has six and the relatively small Energy Developments Limited (EDL) lists five.

The companies that were liable, many of whom received up to 94.5% free permits in 2012-13, belonged to the following categories:

1)     Chemicals

2)     Building and construction materials

3)     Paper and packaging

4)     Food processing

5)     Glass packaging

6)     Manufacturing general

7)     Mining and waste services

8)     Oil and gas

9)     Petroleum refining

10)  Metals processing

11)  Mining

12)  Coal Mining (Held liable because methane is inadvertently released in extracting the coal. They are not held liable for emissions associated with combustion of the coal)

13)  Gas distribution (held liable for any leakage of methane from pipelines)

14)  Power generation and gas retail

15)  Waste disposal (mainly local government councils responsible for managing local rubbish tips)

Excluding land sector, annual emissions for 2013-14 are estimated to be 542.6 Mt CO2-e3. This represents a 1.4% decline in emissions when compared with the previous year.

Over 2013-14, annual emissions from electricity generation fell by 4.0%. This was partially attributed to a decrease in demand in the National Electricity Market (NEM), 2.6% lower than the previous year, registering the lowest level seen since Tasmania joined the NEM in 2006.

Changes in the fuel mix used to generate electricity have also contributed to the recent decline in emissions. Over the year to June 2014, generation in the NEM from black coal decreased by 5.1%, brown coal generation decreased by 3.0% and gas generation decreased by 1.2%. Hydroelectric generation grew by 1.8% and generation from wind and other renewables continues to grow, increasing by 27.5%, from a small base.

Australia cut carbon dioxide emissions from its electricity sector by as much as 17 million tonnes because of the carbon price and would have curbed more had industry expected the price to be permanent, according to an Australian National University study.

The ANU report, which used official market data to the end of June, found the drop in power demand attributed to the carbon price was between 2.5 and 4.2 terawatt-hours per year, or about 1.3 to 2.3 per cent of the National Electricity Market serving about 80 per cent of Australia’s population.

Emissions-intensive brown and black coal-fired power generators cut output, with about 4 gigawatts of capacity taken offline. The emissions intensity of NEM supply dropped between 16 and 28 kilograms of carbon dioxide per megawatt-hour of supply, underscoring the role of carbon pricing rather than slumping demand in curbing pollution, the paper said.

However, investors’ doubts that the carbon tax would last – fostered in part by then opposition leader Tony Abbott’s “blood oath” to repeal it if the Coalition took office – meant high-emissions generators were mothballed rather than permanently closed.

“We’d expect the impact of the carbon price would have been larger, perhaps far larger, if there had been an expectation that the carbon price would have continued,” Professor Jotzo said.

The repeal of the carbon tax will see a partial reversal of emissions reductions, particularly on the supply side as generators switch back to coal. Rising gas prices, unrelated to carbon pricing, will add to demand for coal-fired power generation.

The other factors that Mr Hunt ignores are that the population has grown by about 780,000 and the economy by about 6% in the last two years yet we have had an overall reduction in emissions – not a decline in the increase – a real decrease despite our growth.

Yes, I think we can chalk this one up to propaganda and marketing along with so many other examples of Liberal Party perfidy outlined in this excellent article by Greg Jericho which should be compulsory reading for all maths teachers and students on how to make misleading graphs.

PS  Whilst on the subject of perfidy, the latest MYEFO predicts the free trade agreement with Japan will reduce revenue by nearly $1.6 billion over the forward estimates.