Axing the Tax Carbon Tax Torn Asunder Down Under

Axing the Tax Carbon Tax Torn Asunder Down Under

Did you hear that last night? The sound of a million green activists crying out in terror? Australia just abolished its tax on carbon on a 39 to 32 vote. Prime Minister Tony Abbott campaigned on this repeal, and after two years of debate, he can now claim victory on the issue. The FT reports:

The senate voted by 39 to 32 on Thursday to repeal carbon pricing following months of bitter wrangling between opposition parties and the government over the measure, which was introduced two years ago.

“What’s gone today is not a policy to reduce emissions. What’s gone today is the world’s biggest carbon tax,” said Mr Abbott, who campaigned in last year’s election to “axe the tax”.

The green agenda was toxic for the government that brought it in and materially contributed to Abbott’s victory. The biggest consequence for the green movement won’t be the relatively trivial amount of carbon emissions that repeal of the law entails; it’s the political shadow over the green agenda worldwide. The core green strategy is to tax and harass “bad” energy sources ranging from coal to oil and so forth, while showering subsidies on “good” energy technologies like solar and wind. This will drive investment away from “bad” (but relatively efficient) methods of energy generation to “good” (but inefficient and expensive) ones.

What the aborted Australian experiment with this system shows is that consumers really, really hate the higher energy bills that this approach involves. Very affluent voters may not notice the size of their energy bills, but the hard pressed middle and lower middle classes emphatically do. That (and the effects on job creation of higher taxes and energy prices) made opposition to the Australian green program a huge vote winner for Abbott’s party.

That suggests that the green agenda in developed countries worldwide is in deep trouble—that Europe isn’t a trendsetter but an outlier. And it suggests that Canada and the U.S., two other large energy producing economies whose politics and culture aren’t all that dissimilar from Australia’s, could be heading the same way. Without the energy titans of the English speaking world on board, the conventional global green program is DOA.

From our point of view, this strengthens the case we’ve been making all along: Greens who seriously care about the future of the planet need to shift their ground, embrace the information revolution, and look for ways to help a new and more energy efficient economy to emerge. That, in turn, will accelerate the world’s transition to a more sustainable—and more affluent and faster growing—economy.

Published on July 17, 2014 11:42 am