I realise that the carbon tax or more correctly the emissions...

I realise that the carbon tax or more correctly the emissions trading scheme is not popular and will cost this government power, but I find the ranting and raving about how bad a policy is quite misleading. Please give me the opportunity to explain why.

If you trust the climate scientists then you need to impose a cap on carbon. How big a cap well we need to cut emissions about 80% from where we are now. I think it is silly that they still measure reductions in 1990 and 2000 levels as this just hides the huge task that is at hand.

The catch from cutting emissions overnight by 80% is that it would literally destroy the economy overnight - so you need to make sure the policy you choose imposes the least interruption to the economy in the long run.

That is what an emissions trading scheme does, it enables market forces to compete for the little carbon production that is allowed, so it is used where it is most valued. Over time the economy can afford to further lower the cap until innovation means that carbon production is no longer needed for most industrial production (might take couple of hundred years).

Other alternatives such as energy efficiency only get us a tiny fraction of the way to cutting emissions 80%. Solar panels are a joke because they cost so much. Offsets such as sequestration can also get us part of the way, but only buy us time until these sources run out. The only sustainable thing that can save us is a cap on carbon through an emission trading scheme.

The political debate in Australia should not have been whether or not to have emissions trading but when to introduce it. My preference would have been to wait until big economies like US and China are onboard, because if you take unilateral action you risk shifting businesses overseas for reduction in emissions. I do not buy Garnaut’s line that China is doing anything at the moment. Go there yourself and you will see the whole country is now covered under polluted smog, even regional areas I am not kidding you. The whole world could like this soon if nothing is done.

Ultimately the emission trading scheme should be part of worldwide scheme to ensure least cost on the global economy. But we are a long way from there, so perhaps Australia by taking an early lead will make it easier for other countries to do something that is the hope anyhow.

I will finish with saying even if you do not believe the carbon scientists, then obviously emissions trading is a bad policy. However, you should like it over other carbon reduction policies as it will cost the economy less in the long run. So while you can debate the science the merits of an emission trading scheme to sustainably reduce carbon in the cheapest way is very strong.