By ABC's Annabel Crabb

Updated July 14, 2011 08:50:32

Photo: As a tax measure, putting a price on carbon is designed to be - in the long term - a self-eliminating sort of an impost. (Giulio Saggin: ABC News)

A normal-sized Drum entry is nowhere near enough words to cover every reason why this carbon pricing plan of the Government's is so diabolically difficult to sell.

Forget about the political events that brought us here, which are alone sufficient to make the average householder about as suspicious of a government bearing a carbon tax as they might be of one of those crackly-line folk who ring at dinner-time trying to sell you a phone package. ("Sorry? You're from what? I beg your pardon? I'm sorry, sir. Could you speak up?" Just by way of aside, has anyone ever bought phone services from these people who appear to be ignoring their own fabled high-tech wares and are instead canvassing using two tin cans and a piece of string?)

And it's not just that the scheme itself is complicated.

It's that even once you manage a rough understanding of it, the whole thing is full of hedges and internal contradictions.

As a tax measure, putting a price on carbon is designed to be - in the long term - a self-eliminating sort of an impost. Given that it's pitched as a disincentive, one would reasonably assume that over the very long term - once we've all seen the error of our ways, I mean, and are zapping from A to B in algae-powered teleportation modules instead of four-wheel drives - over the VERY long term, the proceeds of a carbon price should shrink, as we learn to emit less and less of the stuff.

Like cigarette taxes, this is a levy whose end-game is its own redundancy.

And even in the shorter term, you would sort of expect that the central driving theme - to eliminate the major culprits for carbon dioxide emissions - might govern the construction of the scheme itself, and the accompanying rhetoric from its proponents.

Instead, we are assured daily by the PM that things for the Australian coal industry - whose product, when burned, causes hundreds of millions of tonnes of CO2 - never looked so good. Given that we're going to pay coal-fired power stations in Australia to close, we have to assume that the bright future for coal involves continuing to flog it off in astounding amounts to people who will burn it in other countries.

The continued economic strength of the coal industry, in other words, is premised at least in part on the noble failure of our own scheme. It's as though Nicola Roxon were buying shares in Benson & Hedges.

Here's another thing. You'd assume, wouldn't you, that Australia's carbon pricing scheme would become cheaper and easier as other countries around the world shouldered their own responsibilities and entered into a gloriously gassy global trading place, where cow-farts, landfill-burps and the eructations of power plants the world over would be swapped for permits by Brylcreemed Wall Street types?

Well - no, actually.

According to the Treasury modelling document accompanying the carbon tax – a document I have now attempted to read several times, although I found in the end it worked better with gin (sorry, Nanny Roxon) - the cost of the scheme to Australian businesses will actually be lower if no-one else in the world lifts a finger.

Keep in mind that from 2015, Australian companies will be allowed to account for half of their emissions reductions by simply buying permits from overseas, which will send a substantial proportion of the scheme's revenue (How much? No-one knows) offshore.

"In a world where other countries pursue more ambitious abatement targets, the carbon price will be higher, and this increases the cost in terms of domestic production and income foregone," the Treasury document confides.

"If the extent of global action is less than assumed, then Australian mitigation costs will be lower, not higher, than reported for two main reasons. First, less stringent world action would strengthen export demand and output for our energy exports. Second, if global action is less than assumed, world carbon prices will be lower, making it less expensive to source abatement overseas."

Reading this made me want to do two things.

First: Have another gin. (Sorry, Nanny Roxon)

Second: Buy up a large slab of rainforest in Borneo and not log it for about 30 years, while selling the resultant credits at inflated prices to Loy Yang Power.

Put simply, it means that if the world gets its ducks in a row, carbon-trading-wise, we can look forward to more abatement dollars going offshore, which is fine because we're a global village, but not so fine when you remember that the Australian Government is promising to spend that money on compensating people with healthcare cards, or 3.1 kids, or whichever is the most lucrative amount of children according to the Treasury spreadsheets.

A Government can't spend money it doesn't get, no matter how noble its intentions.

That's if things go well, world-carbon-scheme-wise.

If things go pear-shaped, the outlook is oddly cheerier. If other countries don't do anything, they'll at least still be buying ludicrous amounts of Aussie coal, which will keep us in the pink even though we will feel constrained from burning it ourselves. Plus, in a spottily-attended world carbon market, the prices will be lower, meaning that when we pour our carbon abatement dollars overseas we will do so in smaller amounts.

The Treasury boffins - conscientious to the last - do mention that the downside of this dirt-cheap global failure option is that we still boil to death in our swimming pools (not that they put it that way, bless them).

When Ross Garnaut used the word "diabolical" to describe the problem global warming presents to governments, he was not wrong.

Annabel Crabb is ABC Online's chief political writer

Australia's diabolical carbon pricing scheme - The Drum (Australian Broadcasting Corporation)