BHP calls for “big new tax” and breaks the back of the denial movement

When one of the worlds largest producers of coal calls for a direct tax on carbon, you know the debate over the reality of climate change is over.  

BHP CEO, Marius Kloppers, has just reshaped the climate change debate by urging the Australian government to “go it alone” and introduce a carbon tax sooner rather than later:

“THE world’s biggest mining company has urged Julia Gillard and Tony Abbott to act on climate change ahead of other countries, warning that Australia’s economy will suffer unless it looks to a future beyond coal. In a dramatic intervention into the stalled climate debate, BHP Billiton chief executive Marius Kloppers yesterday called for ”a clear price signal” on carbon dioxide emissions, possibly including both a carbon tax and a limited carbon trading scheme covering power plants.

Importantly, Klopper calls for a direct tax, not a complicated emission trading scheme. 

I tend to agree, believing a direct tax on carbon would be more effective as it would provide the market with the right “price signal” about the true cost of CO2.

To my mind such an approach is similar to that used for tobacco: as a product it is heavily taxed to both reflect the cost in additional health care services (all those smokers contracting cancer and other diseases are a heavy burden on the public health system) as well as discouraging the habit.

A tax on carbon would help break the “carbon habit”, much in the same way taxes on cigarettes encourage others to give up the “nicotine habit” because the a packet of smokes are “Just so damn expensive”.

I also think such a tax could be sold to the public with cuts to the personal income taxes.

The failed ETS was just too complicated and hard a package to sell.

A carbon tax would also be less expensive to administer, be less susceptible to exploitation and mirrors already existing taxes such as those on nicotine, fuel and consumption (Australia’s GST).

Kloppers voiced similar opinions in yesterday’s speech:

“Mr Kloppers said Australia, heavily reliant on coal for energy and export income, would need to look at other power generation solutions to avoid disproportionate penalties when there was eventually a global price on carbon.

“With about 90 per cent of the carbon emissions from our electricity sector coming from coal-fired power stations, Australia will need to look beyond just coal towards the full spectrum of available energy solutions,” he said.

But he warned against backing specific alternative energy solutions, saying the revenue from a carbon tax should not be used by government to pick “winning technologies”.

Mr Kloppers said funds raised from a carbon tax should be treated as revenue neutral and not be considered a windfall by government. He said those funds could be best returned to society through cutting taxes or giving lump-sum grants to those individuals heavily disadvantaged by the tax.

Putting a price on carbon would encourage investment in alternative sources of energy.

Klopper’s views are reasonably close to mine. Personally I’d like to see some government support for renewable energy. But that is a debate well worth having – time to move on from the silliness of debating the science.

BHP is a company taking the long view. Indeed I’ve known people who’ve worked at BHP and I know that they take risk very seriously.

From what I can tell, BHP have made an assessment and concluded failing to act on climate change and placing a price on carbon will hurt their bottom line. In their estimation it will hurt the Australian economy.

I’m not sure it could be spelt out any clearer, but here you go deniers:

Failing to act on climate change is a risk to our economy, life style and well being. BHP agrees.

So Prime Minister Gillard, what are we waiting for?

BHP breaks the back of the denial movement

Who would have thought that a coal mining executive could become a hero to the environmental movement?

According to Kloppers we should be “looking beyond coal“.

Not doing so will hurt Australia’s economy and make us less competitive according to BHP’s CEO:

“…Mr Kloppers stressed the need for a clear price signal on carbon emissions and recommended a combination of a carbon tax, land use actions and a limited emissions trading system, which could apply to electricity generators. He said Australia’s energy production was particularly carbon intensive and the highest among OECD countries in terms of tonnes of carbon emitted per unit of energy. Coal-fired power stations account for almost half of the country’s emissions.

”Australia will need to look beyond just coal towards the full spectrum of available energy solutions,” he said…”

Exactly the thing activists and those supporting action on climate change have been saying for years.

Not only does Klopper reshape the debate about pricing carbon, he has effectively broken the back of the denial movement.

When one of the world’s largest producers of coal suggests a tax on carbon, you know the debate has really moved past denial.

If climate change was a “scam” and a simple revenue grab by governments, socialists, scientists and/or the New World Order then BHP would be among the first to line up and deny climate change. That they suggest we tax carbon signals just how mature and forward looking they are as a company.

Personally, I’m delighted: we should applaud Kloppers remarks.

Yes, mining and the resources sector will have a future. All that is being asked is the business take into account the impact their products have on the environment. The CEO of BHP has just said as much.

Do the deniers really think adding BHP to the ranks of scientists, governments and environmentalists supposedly behind this “scam” makes them sound rationale?

“See! Even the miners are in on it!”

Now, even by their standards that’s just plain crazy. 

The list of those denying climate change is growing shorter by the day.

While many activists seem discouraged, I’d argue the opposite.

It may not be apparent, but the denial movement’s is fragmenting and falling apart.

Kloppers has just delivered a serious body blow to the denial movement by publicly abandoning their cause.

BHP, “The Big Environmentalist”?

Who’d of thought that!

10 thoughts on “BHP calls for “big new tax” and breaks the back of the denial movement

  1. Tim says:

    Well that is good news!
    I have to agree with you here – I was never a fan of the ETS. The more complicated, the more loopholes and the weaker the initiative. Make it direct and balanced, you force everyone to look at their activities and take real measures to lower their emissions accordingly or face the extra cost.
    Locally, we’ve seen the reality of such toothless authoritative measures with both water and pollution – the biggest polluters and water users are exempt from real action. The result; lead blood-levels in Pt. Pirie are on the increase again and the water savings from residential restrictions did little.
    You make another good point, and one that has left me a little stumped, resorting to becoming more bombastic in my approach – this stupidity we hear from deniers, “well they must be in on it…”
    Such nonsense cannot be properly addressed because it’s an ever growing conspiracy of impossible complexity.
    It is great that a major industry leader is showing more balls where our leadership lets us down and sees that by leading the way, we won’t be hurt economically, but rather be stronger – potentially gaining valuable investments along the way.

  2. adelady says:

    I’m very much in favour of the tax and benefit model quite apart from any other considerations.

    Governments and bureaucracies are experienced in administering income taxes, import duties and all kinds of imposts. Easy to duplicate or reframe for another kind of tax. As for income tax rebates, I’m more inclined to go with the American idea of the ‘green check’. (I even used their spelling!)

    Why? Because not everyone pays tax or receives government beneftis. And seeing an actual amount that is clearly for the purpose of offsetting energy costs is a big incentive to think about energy use and to try to reduce use further.

    And people soon forget about an amount they’re receiving for a reason. I once had a conversation with an exasperated shopkeeper who’d just dealt with a customer berating him about a price increase. He said “But they’ve had a wage increase!” I pointed out that the wage increase was a one time thing. But every individual price increase is seen as a burden. Maintaining the linkage between a benefit and any related price effect is good strategy.

  3. tomfarmer says:

    Interesting news.. timely in the sense that bigger wheels are beginning to turn.. instance Deutche Bank’s determination to do away with doh! debate which others have brought in order to traduce science and climate scientists..

    Kloppers will be very aware, too, of RWE’s (German) determination on future coal plants being uneconomic.. and the need for energy corporates to at least play along with democratic governments..

    In this case one suspects his vision of taking the lead lest Australia with its close-run Election and tight political majorities run itself into the dust of other nations’ doing the obvious. Thanks to good science.

  4. […] How Very Interesting.. September 16, 2010 by tomfarmer And SIGNIFICANT. […]

  5. DaveMcRae says:

    Great stuff.

    I don’t mind the theory behind the ETS – ie a tax determines price but not emissions, a cap determines emissions but leaves price to float to be determined by market. ETS will allow trade across international borders and I also don’t mind that.

    But, as almost every implementation of it has been, it’s been white-anted by lobbyists that have diluted impact or given huge handouts. (I say almost, Sweden did a tax/ets combo and it may be hard to work out what has been working best in reducing their emissions). And there’s a fear that pollution permits may become like or worse than Murray Basin water rights, something that will cost the public a motza to buy back.

    And so, like James Hansen, I’d prefer a tax. And like James Hansen I’d love it to be a dividend, but I think I may be dreaming there. Neutral then would be good. Such as British Columbia (which was a dividend at first but became a reduce Payroll Tax by same amount). That works for me – tax bad things in preference to taxing good things.

    Onya Kloppers – I am surprised he got printed in The Australian

  6. tomfarmer says:

    FYI the Deutsche Bank decision is here

    At this point I’m in two minds about adding why I came here to comment when perhaps another thread may be more relevant.. yet what want to say is kind of crossover,, and I hope you’ll bear with me..

    A ggogle for one, Richard S. Courtney, brought your url, where I noticed data inputs from the other links.. not least Eli Rabett..

    That said one of the backstory links to my subject related his somewhat stacked pov against windpower. In the course of his take a David Tolley acting as spokesman for an RWE – aforementioned – subsidiary in Germany was quoted in support.

    Strange how things work out, for we now know how RWE has been part of the country’s renewables revolution…

    On a lighter note responsible science might well argue that with antis and do-nothings like him around the feedbacks are most constructive… 🙂

  7. Ray says:

    BHP provides coal at cost plus a margin like any for profit company. Public Service Commissions or competition allow say 15% profit over all (including environmental) costs. A tax increases their cost but also their margin which are promptly passed on to consumers…that would be you. It also make it more difficult for small opperations to deal with red tape lessening the competition.

    Helluva deal!

  8. adelady says:

    Funnily enough, other people have thought of that, Ray. A carbon tax proposal only works if it compensates people for the increased costs of unavoidable purchases of carbon affected products.

    There is a distinct possibility that many consumers can be better off under such a system when they adjust their purchasing decisions. They get their “green dividend”, they spend less on power and related products, net gain to back pocket.

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