Climate Change and Government Carbon Pollution Reduction Schemes

The debate about climate change and the development of new non-carbon based energy industries is too often centred around short term costs, and the need for private industry to be the primary mover. The argument is made that private enterprise would develop clean energy industries if there were money to be made, and if the benefits outweighed the costs. These proponents argue that there is no need for governments to intervene to mandate emissions trading schemes, and other incentives to encourage the private sector to develop clean energy industries.

Unfortunately the market is not perfect. The market often fails to develop industries that may be of significant benefit to local, national or global communities. Markets often also impose significant costs on the world community during economic downturns, such as the financial and economic crisis recently generated in the United States, and there is no private sector mechanism to respond to terrorist attacks such as 911 in the United States. Without government support, the market fails to address many important issues such as climate change, air pollution, water pollution, health, national defence and poverty.

Market failures however, can be corrected by government support measures such as regulation, taxation, incentives, and on occassion, such as the recent financial meltdown in the United States, to partner with private industry to correct market failures. Climate change and the development of clean energy industries is one issue where government can regulate, tax, provide incentives, and work in partnership with the private sector.

Governments are often ridiculed by ideological extremists who argue for individual freedom and private initiative, claiming all governments are incompetent, should not be involved in economic decision making, and should leave everything to the private sector. These extremists are too often caught up in meaningless ideologies, and not focused on "what works". Unfortunately, when elected, extremists driven by this type of ideology often do nothing, and prove by their own inactions that governments are indeed incompetent.

Strong, ethical and effective governance at the political level is as critical as it is in the corporate boardroom. Incompetent, corrupt and unethical governance in both, which has been too prevalent in the US for example, in the last decade, is a recipe for disaster, as evidenced by the financial meltdown.

Government regulations and tax incentives related to climate change and "clean energy" are intended to encourage and help the private sector to invest in new forms of energy. That's what governments are elected to do, regulate, tax and support private industry, and the people who elected them, to achieve individual and development objectives. China, with strong support from government for a highly competitive private sector is already a huge player in wind, nuclear, hydroelectric power, and solar panels, and with a stimlus package of almost $700 billion will be investing heavily in new energy systems. It is the world's largest producer of solar panels, 90% of which are exported worldwide. Within two years it could become the world's largest consumer of clean energy.

The Obama administration in the United States is also likely to partner with private industry to address climate change, and develop non-carbon based clean energy industries. It could potentially provide significant benefits to private industry, as did the government inititiated space program NASA in the early 1960's, which spun off an immeasurable amount of private sector activity. Without it we would today not be corresponding by email, blogging, or navigating our roads by satellite navigation systems. There would have been no IT boom. This collaborative government and private sector program to explore space yielded enormous benefits not only to private industry, but to the world community in many ways.

In Australia, the Minerals Council has estimated that the Government's Carbon Pollution Reduction Scheme will result in the loss of more than 66,000 jobs over the next twenty years. Others, such as the National Australia Bank estimate that it will generate annual investment of more than $6 billion over the next 50 years. Both are likely crude estimates.

Judging by the spinoffs from the NASA space program in the United States, the benefits are likely to be immeasurable, and the costs marginal. And, we will breathe clean air, which will make an incalculable contribution to the most significant asset we all have, our health.