The e-season

The e-season is upon us, in which politicians ensure they are seen to being doing something positive to combat climate change.

We are entering the e-season, in which federal and state politicians will be rushing out a series of initiatives related to emissions, energy and elections.

The initiatives are motivated by targets for climate change management (at the theoretical level), and in practice will transform the economy, by altering the levels of investment in vehicle production, manufacturing, the mining and energy supply chain and waste management technologies.

Opposition Leader Kevin Rudd has pledged $500 million towards hybrid car development, John Howard has promised to remove barriers to the nuclear industry and John Brumby is handing out 40% reductions in stamp duty for vehicles between $35,000 and $45,000 from May 1.

Naturally, the new regime brings with it new jargon, so here’s a primer. Watch for mentions of GHG (greenhouse gas), AFVs (alternative fuel vehicles), EVs (electric vehicles), and E85 (ethanol blended fuel) or M85 (methane) creep into campaigns for governments to shift from direct subsidies to the oil companies towards hidden subsidies for mates in the nuclear and rural industries threatened by Rudd’s move to support alternative energy sources and hybrid car production in Australia.

What is not clear is the extent to which any of the parties — Green, Liberal or Labor — are prepared to tell us about the inflationary impacts of higher water, power and food prices, or how the tax subsidies to selected sectors will add to the basic costs of doing business.

As the e-season gets into full swing every small business should begin to look at their own longer-term interests through the prism of energy efficiency. Farmers will lobby for fuel and drought management subsidies. All businesses should look at opportunities to get into the sustainable energy businesses associated with carbon trading, emissions control and business energy efficiency upgrades.

There will be significant pressure on federal and state treasurers to reduce the purchase price of new low-emission vehicles and increase subsidies for carbon dioxide reduction operations.

Global warming and climate change threats are the main driver of debates about tax subsidies for a carbon contained environment via short-term carbon emission trading, and a longer-term switch from reliance on fossil fuels (such as clean coal technologies) to alternative fuel, electric and hybrid vehicles.

At the same time, as we see dwindling populations in rural electorates and the consolidation of small farms into big agricultural companies, there will be increased pressure for the introduction of subsidies on ethanol-blended fuels, which would direct large tax credits to ethanol production in National Party electorates, operations that cannot survive without hidden infrastructure and investment grants.

What is surprising is that the level of direct government subsidy (and hence rising taxes) is twice as high for ethanol and methane-based petrol mixes as the proposed subsidies for nuclear power stations, and produce one third the energy equivalents of electric vehicles, which are vastly better at reducing greenhouse gas emissions. At the same time as the Federal Government is taking over the water industry to protect irrigators in cotton and rice production, the Renewable Fuels Association finds that ethanol plants will be using between four and five litres of water to produce one litre of ethanol.

At an even higher level of subsidy for large investors, we will see pressures to provide massive subsidies for private sector investment in nuclear power, waste management and fossil fuel replacement industry developments.

It is not surprising that overseas studies have found that subsidies for ethanol production increase the level of ozone production at the same rate as they substitute for oil-based energy, and that the waste management costs associated with the nuclear industry are discounted against the costs of R&D subsidies to find new sources of oil and gas over the next decade.

To read more Colin Benjamin blogs, click here.