High risks in carbon gamble

by Richard Denniss in The Canberra Times

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Originally published in The Canberra Times on April 15, 2011

The only thing that big business in Australia wants more than certainty is the certainty that they will get their own way. When they aren’t certain about that, it’s amazing how much uncertainty they are willing to tolerate. It seems it’s better to have a chance of a win than be certain of a loss. Take the carbon price. It is interesting how silent both the Government and the big polluters are about one of the main strengths of a carbon tax, namely, it delivers price certainty. Emissions trading schemes rely on uncertain market forces that generate uncertain carbon prices. A carbon tax, on the other hand, provides businesses and consumers with certainty about the price of pollution. In short, you can be certain about the price of pollution or the quantity of pollution, but you can’t be certain about both. So if the big polluters are so determined to have certainty why do most of them prefer the volatile carbon prices we have seen in the European emissions trading scheme to the price certainty offered by a carbon tax?

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