Carbon Tax Thoughts – “That’s not a tax – it’s an ETS”

What a lot of people haven’t seemed to understand about the carbon tax is that it’s not a tax. It’s actually a way to transition from a “pollute-all-you-want” model to a capped-permit model – the ETS.

In order for an ETS to work, you need to have permits to pollute, issued by the government at a price. In order to developed a market for the permits (the ‘T’ stands for trading, after all), you need to have a finite number of these permits, so that companies can sell the permits that they don’t need. You also need penalties for the people who pollute without the permits.

The ‘carbon tax’ is an introduction of a uncapped permit scheme. With no upper limit on the number of permits, there’s no secondary market, but what this does do is help the government work out how many permits are required. Then, in 2015, the government is going to limit the number of permits it issues each year. Companies will still be able to buy them from the government – until the permits run out. After that, they can either buy them from the general market, OR pay the fine for polluting without a permit (this will set an upper-cap on the market price).

Labelling it a carbon tax is largely an exercise in both smear politics and lazy journalism (and it doesn’t help that the politicians have accepted the term ‘carbon tax’ as a moniker).

For a summary – in the government’s own words – see the Clean Energy Future site.

Author: Robert Watkins

My name is Robert Watkins. I am a software developer and have been for over 20 years now. I currently work for people, but my opinions here are in no way endorsed by them (which is cool; their opinions aren’t endorsed by me either). My main professional interests are in Java development, using Agile methods, with a historical focus on building web based applications. I’m also a Mac-fan and love my iPhone, which I’m currently learning how to code for. I live and work in Brisbane, Australia, but I grew up in the Northern Territory, and still find Brisbane too cold (after 22 years here). I’m married, with two children and one cat. My politics are socialist in tendency, my religious affiliation is atheist (aka “none of the above”), my attitude is condescending and my moral standing is lying down. View all posts by Robert Watkins