Carbon Price To Knock $30bn Off Economy

13 Mar

A new study commissioned by the Minerals Council doubtless has about as much credibility as Treasury modelling (ie, none).

Nevertheless, it is only logical that with EU carbon permits trading at under 10 Euro per tonne with little hope of price improvement, Australia’s “carbon price” starting at a fixed $23 per tonne and rising over 3 years, before changing to a full emissions trading scheme with a fixed floor price of $15 per tonne, is going to hurt.

From the Australian:

AUSTRALIA faces a $30 billion hit to growth by 2018 if domestic carbon prices remain higher than the European price, according to new economic modelling that will add to business pressure to bring the $23 starting price closer to Europe’s $10.

The modelling, by the Centre for International Economics consultancy, warns that keeping the $23 fixed price regime and the floor price of $15 a tonne – key elements of the current package – will have almost twice the impact on economic growth by 2018 as allowing the Australian price to track international prices.

A higher price in Australia than in comparable international markets could also cost the mining industry a cumulative $4bn and durable manufacturers $1.5bn over six years, the CIE modelling predicts. In a blow to the Coalition’s direct action policy alternative, leading CSIRO researcher Michael Battaglia has warned that the abatement figures in Tony Abbott’s alternative policy are “ambitious”. The centrepiece of the policy – sequestering 85 million tonnes of carbon in soil by 2020 – might only achieve abatement of between 5 million and 20 million tonnes, he said yesterday.

The CIE research, commissioned by the Minerals Council of Australia, comes amid projections that slow growth in Europe will mean international carbon prices will not rise significantly above the $10 around which they are currently sitting.

When Australia’s carbon package was announced, Treasury assumed an international carbon price of between $29 and $61. But the European credit crisis caused prices to slump. The research will amplify calls by key business backers of carbon pricing, including the Australian Industry Group’s Heather Ridout and the Business Council of Australia’s Jennifer Westacott for the policy to be rewritten.

Last week, Ms Ridout said the difference between the Australian and European prices was effectively “a tax on industry”, while Ms Westacott described the disparity as a concern for the competitiveness of Australia’s industries.


As regular readers know, here at we have clearly demonstrated – from the government’s own documents – that the Orwellian-named Clean Energy Future legislation is little more than 1,000 pages of babbling legalese designed by bankers, for bankers, to disguise two (2) tiny little clauses that are the key to the entire scam.

A CO2 derivatives scam:

How can I be so sure?

Because not one of [the] claimed “Objects of the mechanism” requires laws that specifically permit bankers to create unlimited quantities of wholly unregulated “financial weapons of mass destruction” called derivatives (or “securities”).

They are completely unnecessary. Moreover, the ongoing GFC turmoil proves that unregulated derivatives markets represent a clear and present danger to our government-propped banking system, and thus are a sovereign risk.

And yet, this is just what our Green-Labor government is doing right now in the Senate.

Carefully buried in their Clean Energy Bill 2011 we find the ticking time bomb (underline added):

109A Registration of equitable interests in relation to a carbon unit

(1) The regulations may make provision for or in relation to the registration in the Registry of equitable interests in relation to carbon units.

(2) Subsection (1) does not apply to an equitable interest that is a security interest within the meaning of the Personal Property Securities Act 2009, and to which that Act applies.

In other words, while the regulations may make provision for registration of equitable interests in a carbon unit, they specifically (subsection 2) do not make provision for registering a “security interest” in a carbon unit.

[A “security interest in” a carbon unit is, quite simply, a derivative or “security” that is based on the underlying “value” of the carbon “unit”]

It is clear then, that the government does not want to record carbon derivatives creation and trading.

They want to permit it. Just not record or regulate it.

Indeed, they wish to ensure “avoidance of doubt” that banks are legally allowed to immediately pull the pin on creating and trading these (wholly unregulated) financial weapons of mass destruction (underline added):

110 Equitable interests in relation to a carbon unit

(1) This Act does not affect:

(a) the creation of; or

(b) any dealings with; or

(c) the enforcement of;

equitable interests in relation to a carbon unit.

(2) Subsection (1) is enacted for the avoidance of doubt.

And just in case you missed the point – and your missing the real point is, in fact, the whole point of their using such opaque language – then the truth is spelled out more clearly elsewhere.


Way down in the fine print, of course. In the Explanatory Memorandum tacked on to the end of the Bill (underline added):

3.36 The bill does not affect the creation or enforcement of, or any dealings with (including transfers of), equitable interests in carbon units. [Part 4, clause 110] This provision has been included for the avoidance of doubt. In addition, the bill does not prevent the taking of security over carbon units.

Now I ask you, dear reader.

How does the scheme’s granting permission for banks to create a secondary carbon securities trading market (ie, “security over” carbon units) help to reduce CO2 emissions?

Indeed, how does a wholly unmonitored and unregulated shadow banking market in carbon derivatives help to create a single cent in extra government revenue, for the Senator Milne-championed Clean Energy Finance Corporation to pour down the toilet of otherwise commercially unviable “green” energy projects?

Answer: It doesn’t.

The government will never see any of the profits generated by banks from their multi trillion dollar trading in wholly unregulated carbon derivatives.

But you can be certain that they (and we) will hear all about it when the banks’ multi trillion dollar derivatives betting on movements in the market price of thin air blows up too. Because that’s when – just as with the global mortgage derivatives trade that triggered GFC1 – the bankers will (again) come running to government for a bail out.

Rest assured, dear reader.

Even if this latest round of calls for changes to the legislation are acted upon by government, of one thing you can be certain.

Just as the current legislation specifically allows for unlimited, unregulated creation of CO2 derivatives by banksters for trading and profit in international ‘shadow banking’ markets – and from Day 1, not just when an ETS begins – so too any new or revised legislation will still specifically allow this ticking time bomb hidden in the carbon tax to be created.

Because that is the ONLY reason why the legislation exists.

To allow the creation of wholly unmonitored, unregulated derivatives-on-thin-air by Big Finance, in unlimited quantities.

The fuel-air mixture for the biggest shadow banking financial bomb ever devised:

3 Responses to “Carbon Price To Knock $30bn Off Economy”

  1. JMD March 13, 2012 at 5:11 pm #

    This sounds like the wool board in the 1980’s. Putting a floor under the wool price led to a massive stockpile & eventually failure of the floor price with massive losses, something like $8 billion, for the government.

    The $23/tonne price must be guaranteed by the government so it looks like another big loss for taxpayers. Of course the tax won’t be direct but through further devaluation of the currency.

  2. Kevin Moore March 14, 2012 at 7:29 am #

    The Crown – City of London


    FT means London is the Carbon Trading centre of the Universe:

    City of London: Carbon Trading and Carbon Offsetting- A Beginners Guide
    To buy permits customers need to go to a broker. The world centre for this
    type of trading is the City of London, and the Carbon Markets are one of the
    City’s fastest growing areas of business. As other countries set up their own
    trading schemes this market is likely to become the largest commodities
    market in the world.
    The Price of Carbon
    Obviously for trading to be effective, the price of carbon has to be sufficiently
    high. Unfortunately, during the first period of the EUETS, countries were less
    than frank regarding their emissions, and a s a result their was over allocation
    of EUAs. As a result the price of carbon crashed. In the second period, allocation has been tightened up, and the price of carbon has risen
    substantially, thus making the scheme far more effective…
    Why is the City of London Corporation an Expert in this Area?
    The City of London Corporation, the body which looks after the square mile,
    was instrumental in founding the Carbon Markets. It conducted the research
    which spotted the opportunity in 1999, and lobbied the government to set up
    the UKETS, which established the registers and expertise that enabled the
    City to become the world centre for Carbon Finance.

    Click to access SUS_carbontradingguide.pdf

  3. Tomorrows Serf March 14, 2012 at 8:44 am #

    As stated previously & ad nauseum, this ETS/CO2 SCAM is a 100% deliberate con job. (1000 plus pages of gobbldygook legislation doesn’t just write itself).

    The science is BOGUS!! The economics is even worse.

    The “Financial Strip Mining” of the Australian economy is about to begin in earnest..

    I trust & hope the Australian people “do not forgive and do not forget” just who presided over the introduction of this treacherous legislation. (those from all sides)

    However, I suspect the population will never work out who, why and how our economy was hollowed out from within by its own elected officials (the very same people who just gave themselves a 40% payrise at our expense) in collusion with their bankster accomplices.

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