Lessons from the Death of the Aussie Carbon Tax

Lessons from the Death of the Aussie Carbon Tax - Reason.com: "
But contrary to green expectations, the tax didn't prompt companies to rush toward renewable sources, because they are far costlier.

Rather, utilities passed their costs to households—whose energy bills soared by 20 percent in the first year. Other industries that face hyper-competitive environment such as airlines suffered massive losses. (Virgin Australia alone reported $27 million in losses in just six months.) The tax also made Australian exports globally uncompetitive, deepening the country's recession economic slump.*

This spawned a backlash that brought down the Labor government and catapulted into office the Liberal Party's Tony Abbott, who made a "blood promise" to ditch the tax, which he did promptly once elected, despite warnings that Aussie lowlands are more vulnerable to rising sea levels and other dire consequences of global warming than other countries.

Europe's cap-and-trade program has managed to hang on, but only by neutering itself. The program hands companies an annual emission allowance. If they exceed it, they have to buy more on the open market or invest in clean technologies.

But the program handed out far too many allowances for free initially, causing their price to repeatedly crash. Worse, the European Parliament last year refused to scale back the allowances as planned for fear of prolonging the recession.

 The upshot is that despite spending $287 billion, Europe has little to show for it. (Australia's tax at least reduced its carbon emissions 1.5 percent in the first year). According to a study by UBS, Switzerland's biggest bank the program has had "almost zero impact" on emissions—challenging the much more rosy assessments of the European Commission."