Thursday, March 27, 2008
Now I'm sure you're thinking that's one of the most stupid ideas you've heard lately. And it probably is, but it's not quite as stupid as it sounds.
The potential audience for any particular show is people who would otherwise watch another free or pay TV channel and people who otherwise wouldn't watch TV at that time at all.
Consider a deal where two networks ran three ads for a show on the other network. If successful, they'd take viewers from each other - but they should roughly cancel each other out - and, importantly, they'd also take viewers from other networks not in on the deal as well as people who would otherwise wouldn't have watched TV at all on that timeslot.
They should both win from such a deal. It should grow both their markets.
So why do you think we don't we ever see it?
Wednesday, March 26, 2008
The big issue appears to be whether to auction permits or hand them out to exsiting emitters. More on this from me later, but it seems the debate has finally moved beyond the myth coming from the electricity industry that they need to be issued with free permits or else electricity prices will rise, disproportionately hurting the poor who spend a greater proportion of their income on energy. Electricity prices will inevitably rise under an emissions trading scheme: to a large extent, that's the point. Giving handouts to existing generators in the hope that they pass some savings on to households and not just their shareholders is naive - particularly when their competitors (new entrants to the market) will have to buy permits on the open market. And it's not necessary: the best way to compensate poor households, surely, is to use the revenue gained from auctioning permits to target tax cuts at lower incomes.
On that point, I notice that petrol producers have run the same line in recent days: petrol should be exempt from an emissions trading scheme because families are struggling enough with petrol prices already. Aside from the fact that these kind of suggestions wholly undermine the aim of a trading scheme, there's better ways to help out struggling families than subsidising their energy use. How about reducing their overall tax burden? They can spend their savings on petrol if they so desire but how about we leave it up to them what they spend it on, rather than what petrol or electricity companies think they should spend it all on (oddly enough, petrol and electricity)?
Tuesday, March 18, 2008
And that comparison doesn't count the costs of allowing emissions to grow unabated.
It seems to me that the US is in a unique position when it comes to fighting climate change: it's the only country where taking unilateral strong action would pay off for it. That's because its emissions are such a big chunk of the global total (more than a quarter) that it can have a real impact on its own - and it faces some big costs from climate change. So if any one country should be leading on this issue, it's the US. And yet, it's the country that up to now has done the most to delay a global solution to the problem.
The EPA's analysis follows other analyses (eg, the Stern Review in the UK and recent McKinsey reports on the cost of abatement in Australia, the US, the UK and Germany) that show that strong action on climate change is compatible with strong economic growth and can be achieved at a more modest cost than is widely anticipated.
Monday, March 17, 2008
Davis points out that these announced tax 'cuts' (and the Howard government's cuts of the past few years) are not necessarily cuts at all: the stated amount of the cut is the predicted reduction in the amount of tax collected because of the change to tax rates, compared to what would have been collected if the change hadn't been made (not compared to what was collected last year). The upshot? A government can collect more income tax than the year before and still call it a tax cut - and everyone seems to buy it.
So what about the proposition that the latest batch of tax cuts due this July and said to be "worth" $7.1 billion will fuel inflationary pressures?
Taking Treasury's most recent forecasts, and using some back-of-the-envelope figuring, suggests that Canberra could collect about $4 billion more in personal tax next financial year compared to this year.
And as a share of the economy that would see the tax take from individuals decline
by a little under 0.2 per cent of GDP.
So while the Government has been defending the tax cuts with convoluted arguments such as their effect on boosting labour supply and on dampening wage demands, the simpler reality is they will not fuel demand excessively because they are not nearly as generous as the politicians would have you believe.
Speaking of inflation and things macro, one thing that I don't think has received enough attention is the emissions trading scheme due to kick off in 2010. It will come too late to influence our current bout of inflation but, depending on its design, it could have significant macroeconomic consequences down the track.
Friday, March 07, 2008
The study compared total life-cycle emissions from biofuels from various sources with diesel. Fuel from canola has 49% lower emissions over its life cycle than diesel and, for a waste product such as used cooking oil, emissions can be 87% lower than diesel.
However, total life-cycle emissions from biofuels derived from palm oil plantations established by clearing rainforest or swamp forest are up to 21 times higher than diesel.
The problem is that some biofuels do indeed come from these sources.
The CSIRO report points to other studies that have estimated that a substantial proportion of international palm oil production is established by clearing - and often burning - these forests in Indonesia and Malaysia, which together supply 83% of the world's palm oil:
- It has been estimated that in Malaysia nearly half of all new oil palm plantations involve deforestation, with 87% of deforestation between 1985 and 2000 due to oil palm expansion.
- From 1982 to 1999, about 16,000 square miles of Indonesian tropical rainforest was converted to plantation. Oil palm plantations were responsible for at least 44 percent of that rainforest loss.
And although palm oil hasn't so far been a major source of biofuels, that may slowly change:
with growing demand for biodiesel, especially in Europe, with increasingly large suggested as well as mandatory targets, it has been observed that it is unlikely production will be able to meet future demand without the use of palm oil as a feedstock.
It seems that biofuels do have the capacity to lower greenhouse emissions from transport. But whether their contribution will be good, bad or ugly depends critically on where they come from.It's true: oils ain't oils.
I love this quote from a Paul Krugman paper on the topic:
It should be noted that, while the subject of this paper is silly, the analysis actually does make sense. This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.
Wednesday, March 05, 2008
That means - whatever happens in November - we will see a significant shift in US climate change policy in January 2009. Today is an important day for global progress on climate change.