Cutting carbon emissions leads to wasting energy

ECONOMISTS can and do get it wrong. The lead-up to the sub-prime mortgage crisis being an obvious case in point. While some economists and regulators were convinced all was well, many people were alarmed at a system that enabled people to buy expensive houses with loans that were beyond their means of repaying. It just didn't pass the common sense test. But have we learned our lesson about relying on complex economics that nobody really understands? In the context of climate change legislation, it would appear not.

Consider the following. If the government's Carbon Pollution Reduction Scheme is introduced, it will actually be cheaper for the coal industry to burn the natural gas that is produced by coal mines than to use that same gas to generate electricity.

The problem is that it costs a bit more to turn gas into electricity than it does to simply set fire to it. While the electricity that is generated can be sold into the grid, without some form of government assistance it can't compete with the very low price of power generated from burning coal. Australian firms are at the cutting edge of this industry, with their technology and skills in demand throughout Asia where this gas exists in abundance and is being converted to fuel for communities in dire need of energy. Already they are employing hundreds of people turning natural gas, that would otherwise be wasted, into electricity.

It's an efficient use of a natural resource and it means that less coal needs to be burned elsewhere. Most important of all, however, is the fact that it is the existing policy framework, not the CPRS, that makes the expansion of this industry viable. Australia needs a comprehensive national approach to tackling climate change, but that does not mean we need the CPRS as it is proposed.

It is the government's fault that the proposal is so flawed and it is the government's job to fix it. Read full from the Austalian
No not that Austalian ;-)