I wrote a report in 2001 highlighting that zero excise duty on LPG transport fuel appeared to make no environmental sense because LPG cars emit more, and incur less fuel excise, than many similar but more efficient cars. It took until 2011 to do something about it; as described in the following link:
The above link calculates 2.392 kg of carbon dioxide per litre of petrol and 1.665 kg per litre of LPG.
The above link compares two similar cars burning 14.5 litres/100km of LPG versus 11 litres per 100km of petrol.
This is where the logic starts:
(1.665/2.392) x (14.5/11) = 92% emissions from a large LPG powered car relative to a similar large petrol driven car.
Let's look at three categories of cars and the fuel excise they pay per 100km:
- Smaller, or just more efficient, sedan using 7.5 litres of petrol per 100km. 38.6 cents x 7.5 = $2.9 per 100km
- Large sedan using 11.0 litres of petrol per 100km. 38.6 cents x 11.0 = $4.25 per 100km
- Large sedan using 14.5 litres of LPG per 100km. 12.5 cents (in 2015) x 14.5 = $1.81 per 100km
Now consider the emissions. The smaller, or more efficient, petrol car produces 68% of the large car's emissions and the large LPG car produces 92% of the large petrol car's emissions.
So the Smaller Petrol / Large LPG / Large Petrol emissions ratios are 68% / 92% / 100%
The fuel excise ratios are $2.9 / $1.81 / $4.25 per 100km.
If equitable emissions management logic had been used for determination of the LPG excise, the $1.81 figure for LPG vehicles would be increased to reflect the emissions produced, which are 92% of those for a comparable petrol vehicle.
Now there may be other political and commercial reasons for this concession to LPG users, but in the context of over 6 years of Carbon Tax Debate that never included the transport fuels that contribute 30% to 40% of Australia's total emissions; we have to challenge the logic of Government in addressing this issue.
In 2011, the laws were modified to provide scaled introduction of an LPG excise of 12.5 cents per litre by 2015. In the same year an equally incoherent scheme called the Carbon Tax was introduced. It incorporated a plan to "buy" 100 million tonnes per year of something called "Carbon Credits" from unknown overseas sources for an unknown cost. If you thought Gough Whitlam's plan to borrow $4 billion off a bloke called Khemlani was dodgy, how dodgy is a "Carbon Credit"?
Gough was going to buy back foreign owned assets in Australia with the money. Good on him and may he rest in peace. The Carbon Tax plan was to buy the right to produce 100 tonnes of carbon emissions per annum from a carbon broker. And since every country is producing too much carbon; which country can afford to sell credits? Well, one possibility is that a hypothetical country called Flaregeria stops flaring gas from its oil production wells by turning the wells off. They are awarded the credit. They concurrently build an LNG (Liquefied Natural Gas) production facility that converts the gas into LNG and exports it to foreign markets using LNG tankers. They could have done that anyway without the bogus carbon credits, because project economics would have justified the cost and the borrowings. So they win twice. Why they haven't built the LNG plants already is another story. This is the tip of the dodgy carbon trading iceberg when it comes to verification of "credit" authenticity.
By paying Flaregeria money Australia keeps burning coal. The Flaregerians may or may not do something socially equitable with the money. The Australian generators would just charge consumers more for the coal-fired power, which makes alternatives look more attractive. But PV solar is already looking more attractive as its cost drops more steeply than a carbon tax would increase the cost of coal fired power. So the trend is already in the right direction.
The Victorian Government sold all its coal fired power stations in a Thatcheresque deal that includes unlimited free access to the coal. So the Carbon Tax was going to make power more expensive for the consumer, but the generator is getting a permanent "coal subsidy" to provide no incentive for burning less coal more efficiently.
The privatised transmission and distribution networks along with the power generators were sold by Jeff Kennett to pay off a state debt equivalent to $1100 per person in 1997. These privatised assets have a Government guaranteed internal rate of return.
So how muddled up is this? As people switch to PV Solar combined with battery power storage and disconnect from the grid, the Government has to allow the distribution, transmission and generation companies to keep making the same rate of return. The less people who use the grid the more it will cost the remaining users. This should create momentum for escalating prices for commercial electricity users and the remaining private users (and help cripple what remains of Australian manufacturing), while more and more private users disconnect from the grid.
So why would you need a Carbon Tax to make this happen quicker if the cost of PV Solar is dropping further than the Carbon Tax would ever have increased the cost of coal fired power, while declining market share will also escalate coal fired power distribution prices? And what about the billions of dollars sent overseas? Who would benefit from that? The starving people? But I digress.............
Why did it take 10 years to come up with a seemingly irrational excise duty on LPG? Why does the excise appear to bear no relation to the emissions from LPG ? Ask the Greens, the environmental NGOs and the ABC who all appear not to be concerned about this.
Are the numerical flaws at the heart of Australia's Carbon Tax and Population Growth debacles a common theme here? Isn't "The Science" about basic numeracy skills?
Coal is one of our biggest emissions problems. It has to be replaced; but not using schemes that don't add up.
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