What the hell is an ETS anyway?

Andrew Pegler – 7 December 09

Wow, what a week eh? New faces, old faces, green faces, red faces. But let’s face it, who actually knows what an ETS is and how it will affect us? Read on for the plain English version.

As Dr Seuss says “let’s begin at the beginning and start from there”. The Rudd government wants an ETS to restrict the amount of pollution that businesses can belch into the environment each year i.e. Kev wants to set an emissions cap or target. (BTW FYI ETC an ETS is also called a “cap and trade” system OK?) To make sure overall emissions do actually go down, that cap/target has to be less than the amount of yucky gases businesses would burp during “business as usual”.

The idea is that each business, for example a widget factory in Wigetoria, gets a permit to emit a certain amount of gas as they go about making stuff. If they go beyond that they get smacked with a fine. Or worse, are forced to ride in an elevator with Tony Abbott wearing only budgie smugglers and a cheeky smile.

Businesses that can reduce their emissions below their allowed level can sell the bit of their permits they didn’t use to other businesses. Hence emissions TRADING scheme. See it’s not that hard.

In other words business that can’t afford the cost of changing how they do things to be less green house gas intensive can buy permits off businesses selling what they have left on their permit. See there’s that trading idea again. The underlying principle is that the market will force change towards the creation of less planet-warming gases.

So how would all this hot air affect you?

For the average household the cost energy like electricity and petrol will a definitely go up. One estimate I heard was that it will cost each household about $1100 a year, or $20 a week. In its most recent budget the government offered to compensate some households with cash handouts and tax breaks.

If you work in a heavy-polluting industry, like construction or mining, you’ll notice jobs start to shift as businesses try to reduce their emissions and energy dependency. While this raises the spectre of serious job losses, the counter argument is that a whole new raft of “green” jobs will be created.

Hopefully (and please excuse the pun) that clears the air a little.

In other news… the Dubai sandstorm in a tea cup that threatened to plunge us into a second shockwave seems to have passed. However, keep your eye on Greece, which needs to roll over and raise close to $US70 billion of loans in 2010. Many are saying fat chance, which could mean a default with dire implications for our interconnected global economy.