KRudd’s ETS in The Economist and FT

The Economist daily newsletter which hit my intray a couple of hours ago has pretty much given a big "thumbs-down" to the KRuddy Carbon Trading Scheme.

Australia plans to launch a carbon trading scheme in 2010. The details out of Canberra suggest that 30% of permits might be given away, and that heavy polluters might receive 90% of their carbon permits for free. The government also plans to offset increases in fuel prices by cutting fuel taxes, largely blunting the emission reducing impact of the scheme.

The Economist is highlighting the same kind of error that Europe made (and The Economist criticized for causing a collapse in the price) when it’s ETS started, and EU attitudes have "overwhelming support for auctioning of 100% of permits" (see LP "Wong All Wrong" 2008-07-16 which has more links comparing Oz and EU schemes and lessons-learned).  Another analysis worth reading is Joshua Gans‘ "Going Green on Trade" at CoreEconomics.

The Financial Times report is either wrong, or has a very low opinion of Australian voters.

Heading off potential voter backlash during the 2010 election year when the scheme launches, the government proposes to offset any resulting rise in fuel prices with cuts in fuel taxes.

The backlash from yours truly will be to push my ALP preference down really low, below any "Moster Raving Loony Parties", and just above the Libs (with Family First and Hansonesque parties below.

If the Oz public had half a collective brain, the backlash would be because the "environmental credentials" of the ALP, a major product differentiator from the Libs at the time of the election, have been blown away.

But then again, the FT probably has the Oz voter sussed out.

Where are the Dems when you need them?