Thursday, September 16, 2010

Kloppers should try his theories in South Africa

Should Marius Kloppers believe so strongly in a carbon tax he might return to his native South Africa to convince that country of the merits of them leading the world.

Considering South Africa formed part of the group who scuttled the Copenhagen conference, I don't like his chances.

He might also enlighten us on the status of his citizenship including any joint status.

It should further not be lost on the community that when Rudd lost the revenue of an ETS he immediately turned to a mining tax and it requires little analysis to establish were Kloppers priority lie when choosing between the two.

As I have previously stated any form of tax response to carbon emissions, is a Pay to Pollute scheme and from his words, Kloppers is quite willing to pass that cost on to consumers even at the lowest social level. 

Whilst he may be highly skilled in managing an international mining conglomerate he seems to have no understanding of the principle of discretionary spending.

 To the extent that the price of electricity to rise, it is in direct relationship to the continuation of the emissions of carbon.

The electricity generation sector knows full well that consumers will continue to buy their product and are quite willing to pay the tax and pass the cost onwards howsoever many times that might be.

Certain energy sensitive industries such as aluminium will of course just move off shore to where for whatever reason they can  continue in business.

In China and Korea however, they will be able to purchase hydro and tidal energy transmitted by highly efficient HVDC transmission systems already installed or nearing completion at competitive prices.  Australia could already be constructing the necessary highly efficient HVDC network to interconnect our large scale tidal and remote area solar and geothermal renewables to our areas of high consumption as similar cost to the Pink Batts fiasco.

During the election campaign, I drew to the attention of our leadership as to how at low cost to Government the 20% renewable target could be achieved. 

The precedent was provided by the late Sir Charles Court as Premier of WA when he negotiated take or pay contract to buy natural gas from the Woodside discovery which was going nowhere for want of a customer.  Charlie purchased much more gas than WA could use at the time and was criticised by the economic intelligentsia for his initiative.

The simple solution to achieve the 20% target is to call an international tender to supply the Australian Government with approximately 60 gwhs with approximately of electricity per annum from genuine renewable resources and for delivery during nominated periods.  In other words unlike the wind generation sector, the successful tenderer would not be paid to produce energy at times when it was not required.

The Australian Government would then wholesale this energy to the network at whatever price it decided.

The successful tenderer would be responsible for both generation and transmission to the established networks.

Obviously the Government would reserve the right to reject all tenders but offer a compensation package to those on a short list.

This process offers one of two results; firstly a supply of renewable energy to meet Australia's future international responsibilities or will provide the clear evidence to the Australian people of the true cost of this initiative.

Having studied the costing of the recently commissioned Xiangjiaba-Shanghia 2,000 km HVDC line, which loses only 7% of the power generated in  the trip, and the South Korean Sihwa tidal generation station, the capital cost of which is approximately half that of an equivalent coal fired station, I am confident that renewable energy prices can be competitive and like Charlie Court's initiative  will provide increased benefits as time goes by.

As history has proven Governments have only one solution to a problem which is to put a tax on it but I know of no area where such a response has corrected the problem.

The irony being that when a tax is applied to reduce consumption the subsequent budget shows the full value of the tax as revenue, proving that there will be no reduction in consumption.  The situation reaches high farce when one considers the Rudd ETS which was targeted to reduce consumption through higher cost but included compensation payments to offset the charge.

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