Say a big block of the world’s markets shifts to an ETS. The...

Say a big block of the world’s markets shifts to an ETS. The electorate are told that the ETS trades in permits to produce carbon emissions. That is company X buys from governments a series of permits that allows them to pollute. Company A has billions of dollars in cash in the kitty buys permits without great concern. Company A recovers the costs of the permits in the sale price of the goods from the consumer of the product.

Market forces intend company A will pollute less to be able to compete on price with company B.

Company C wants to enter the consumer market with a new product to compete against company A and B. Company C must also buy permits to pollute to make its product. Company C is a start-up. Its product is moderately superior to company A’s in its function but requires the same manufacturing process which requires the same carbon emission. Company C cannot raise the funds to buy the permits. Company C profits by selling the idea to Company A. Company A sells the improved product and makes more cash and beats down company B which becomes unviable. Company A then dominates the market. The consumer is denied advances in technology and pays a higher cost for goods because there is no competition in the market.

Outside of the ETS block of countries, (ie Asia and the sub-continent) Company A realises its products can be manufactured on behalf of Company A and B and others with the impost of the ETS because no permit is required in that nation. It stops manufacturing in the ETS block of countries.

The consumers in the ETS block of countries buy the products from the non-ETS block because it is less expensive that the products coming out of the ETS block of countries. Manufacturing in the ETS countries becomes unaffordable, unprofitable and extinct. The consumers choice of goods in the ETS countries is further diminished as there is no competition for products produced by Company A and B.

The governments in the ETS countries collect revenue which is in part used to initially subsidise manufacturing (read subsidise wages) and eventually applied to welfare while there is a transition to a non-manufacturing economy – tourism? Education?

The non ETS governments collect taxes from company A and B and eventually subsidise a nationalised company N to compete against A and B.

The bottom line is that the rich companies will wipe out the cash strapped companies at the expense of the consumer in the ETS countries and innovation.

The Aus electorate must ask – how does the collective tax payer directly or indirectly benefit from the ETS? What does the future hold for our standard of living? Will be become hostages to the whims of wealthy foreign companies?