Blatant money-grabs by governments, even if through taxes, are an action that can do long-term damage to economies. The damage is done either through making industries unprofitable, or by frightening off current and potential future investors. This tax does not have many issues on the former point, as it focuses on corporations with large windfall profits. It does little, however, to mitigate the issue of investor confidence.

Investor confidence can be fickle, and if the Australian Government cannot provide a sense of continuity for the legal, regulatory, and taxation frameworks under which companies operate, we may see a long-term reduction in foreign investment. The obvious extreme example of such a case is when governments can no longer convince corporations that property rights exist on a solid footing. This has historically been the case in many African (and some South American) nations that have repeatedly seized lucrative private assets. Australia isn’t anywhere close to that situation yet, but this policy could be perceived to be a step in that direction. No doubt some will portray it that way.

The resource & minerals industry is slightly different from other economic sectors however, in that it does not always bring prosperity to countries owning the resources (African nations are also a case in point). If the resources companies are internationally owned and the domestically employed workforce is small, economic benefits of a resources sector can be minimal. The Australian economy still gains significant benefits from its resources sector, but less than was once the case. From this perspective, a well-planned policy to ensure the domestic economy gets full value from windfall profits in the resource sector would be beneficial. This is particularly the case in the current environment, where the boom is not driven by exceptional management or technological improvements, but by external circumstances: the economic boom in China.

A well-planned resource taxation policy would consist of a small royalty imposed on mineral exports for individual minerals when their sale price is much higher than that of market fluctuations, with the royalty ramping upwards as price increased further from the average. Such a policy could be in place over the long-term, reducing investor uncertainty, would ensure a larger share of windfall mining profits remains in the domestic economy, and could help provide a braking mechanism for the boom-bust cycles in Australia’s resources sector.

Even such a mechanism would have some detrimental effects on the resources sector in the long-term, but they could be outweighed by the overall benefits. The tax as currently proposed, however, is using a cleaver when a scalpel is needed.

The importance of risk aversion is noted in this MIT debate on the release of emails, code, etc from the Climate Research Unit at the University of East Anglia. The debate is the most interesting commentary I have seen of that event, as it contains varied viewpoints on the implications for science and climate change policy. It is noted in the debate that individuals’ opinions on climate change policy are already largely informed by their aversion to environmental risk. This implies that the acceptability of different levels of environmental risk to the general public should be a central component of how nations approach the challenges of climate change. This requires discussing openly the unknown factors in predictions of the future, and not relying on ‘most likely’ outcomes.

This is not to deride predictive models as worthless. They are vital to give an indication of where the world is headed. However the extremities of probability are notoriously hard to predict, and may not be predictable within a time-frame that the prediction is useful. Neither does this mean that discussion of climate change policy should simply be spun to emphasise extreme events and catastrophic destruction. A better approach may be to accept that science tells us the general direction the world is headed, but there is great uncertainty as to where specifically within a spectrum of possibilities. The fact that science is uncertain of the exact outcome may in fact make the general public more inclined to mitigating climate change. Firstly, it is honest. Addressing the uncertainties involved in the scientific predictions may be more convincing compared to the typical approach of more radical environmentalists – hysterical alarmism. Secondly, aversion to small risks with significant consequences has often been a powerful driver for human action. It is risk aversion that makes insurance companies successful, and encourages people to follow safety regulations.

The stimulus is unnecessary at this stage because Australia can still actively change monetary policy. Our central bank interest rates are as of writing at 3.25%, leaving a lot of room to adjust them downward without hitting the 0% boundary. Because we still have access to this simple and effective tool for economic adjustment, we don’t need to rely on a fiscal policy of government stimulus.

This is unlike the situation in the United States and Europe. There, a fiscal stimulus is justified as an economic measure, due to the lack of ability to strongly affect monetary policy. Currently both the US and the EU have central bank rates so close to zero as to effectively allow no possibility of stimulus by a downward adjustment of interest rates.

Lack of control over interest rates is why the US has tried unconventional expansionary monetary policies, such as the direct purchase of corporate debt by the Fed. Unfortunately, this has had less effect than Ben Bernanke might have hoped, leaving little ability to increase the supply of money. For these reasons, a large stimulus bill can legitimately be justified in the US (and EU countries) as the only way to significantly boost demand.

Within Australia, as noted, we don’t have the same constraints on our policy. The Australian Reserve Bank prudently adjusted rates upwards during the boom years. This has allowed sufficient room for adjustment for the current crisis, preventing the need for unconventional stimulus methods.

The error of implementing a stimulus now is emphasised by the nature of the decline in the Australian economy. We haven’t yet had a significant collapse in our domestic demand. Instead, the majority of decline has been due to the collapse of the international commodity markets, affecting our mining and resources sector. This has lead to loss of jobs in mining and associated consulting work, but we haven’t seen a decline in employment of the order experienced overseas. While this may yet feed back into the rest of our economy, causing more job losses, it isn’t yet justification for unconventional policies.

The sole advantage provided by the current government’s stimulus bill is the effect internationally. When other countries implement stimulus policies, we implicitly benefit from their spending, due to a boost in demand for our exports. Because the current financial crisis truly is global in scope, and is likely to be offset by stimulus in many countries, we can work with our international partners towards a global stimulus. While this may not be necessary on a domestic level, the political benefits may justify this.

However, the approach to stimulating the economy through direct hand-outs is an ineffective one (and a shamelessly populist move), as some will always be spent paying off debt instead of boosting demand and supplying jobs. If and when stimulus is really necessary, a better method than cash hand-outs would be well-planned government projects in infrastructure, health, and education. These options would do better at providing jobs and boosting long-term economic growth.

This is even more important if the global downturn is sustained for a number of years, as appears to be predicted by many prominent economists. Then, the money wasted on the current stimulus would have been better aimed at providing meaningful employment for those who lost their jobs in the resources, construction, and finance sectors.

The government hasn’t properly explored the options available. For example, an increase in funding for technical retraining and professional education would have fed back equally into the economy, but would have sped up the rate at which those who have lost their jobs to retrain in skills that are in demand.

The current stimulus bill has too many risks currently to be justified. It risks being unnecessary spending for the Australian economy when we have other economic policies available. It may prove to be an ineffective way to boost demand due to the nature of the stimulus. And as with all large increases in deficit spending, there is increased reliance on the good perception of our economy by international investors, a particular concern in times of such volatility. Finally the rush to pass a stimulus now runs the risk that when this poorly-planned piece of legislation proves ineffective, it removes this policy tool from our options in the future, when it could be truly necessary.

High density living has been looked on for a long time as a cause of emissions, as cities are an immediately obvious example of humans having a major effect on their surroundings. This opinion is wrong, and changing – recent studies show that there are environmental benefits from living in highly urbanised areas. A report from the Harvard Kennedy School indicates that urban areas produce lower emissions than their suburban counterparts (for many cities in the US). A similar study from the International Institute for Environment and Development said that cities are unfairly blamed for a disproportionate amount of the world’s greenhouse gas emissions, and that cities instead should be part of the solution to the problem of climate change.

Developing higher density cities is particularly important for Australia, Canada, and the United States, which have the highest per capita emissions in the subset of highly developed countries. Their high emissions are partly due to their particularly low population density, which results in energy wasted from transportation of goods and supply of services over long distances. This wastage could be offset in part through encouragement of increased urbanisation, and aiming for high density urban areas instead of large tracts of suburban housing.

Low density living near the inner-city has been a carryover from times of lower population. When cities were smaller, and the inner-city was smaller, it was reasonable to have suburban houses close to the centre. The demand to replace these areas with higher density apartment complexes is present and growing; when areas are re-zoned, they are re-developed quickly. However, partly because of the political incentives against re-zoning (most residents don’t like apartment blocks being built next to their houses), and partly because of considerations of preserving houses built in a ‘traditional’ style, re-zoning proceeds much slower than is desirable.

Urban planners in cities characterised by large suburban sprawls would be wise to pursue long-term plans to increase inner-city density. The demand for inner-city accommodation will increase over time, due to increase in population and a rising cost of fuel – when the price of crude oil was high in 2008, there was a trend of paying a premium for accommodation with lower travel distance. As the cost of electricity increases from implementation of emissions trading schemes, there will also be a drive towards housing that requires less electricity. One example would be apartments, which generally use less electricity for heating/cooling and lighting.

Increasing the population of inner-city areas would reduce problems with the transportation system. Australian cities already have major traffic problems, which will be magnified if cities grow in area. These troubles would be eased by encouraging migration from the suburbs to the city, and discouraging additional outward growth. Higher-density living would also simplify planning for public transport networks. Part of the difficulty in encouraging the use of public transport is ensuring accessibility and timeliness of transport services, which is complicated when a city’s population is spread over a huge area of land.

Encouraging high-density living would take some time to have an effect, and it may not be politically favourable to immediately re-zone large areas. The benefits would be compelling, however, so effective plans for Australia’s cities should increase inner city density, and they should aim to do so sooner rather than later.

The word “green” is overused now to the extent that it now only indicates to the reader that the discussion somehow relates to the environment. “Sustainable” as an adjective has a flexible connotation. It is variously used to describe anything from socially responsible projects that consider future impacts through to a “truly sustainable society” where everything is powered by renewables, and there is no overall waste, only re-use and recycling. The more troubling aspect of these words is not their lack of clear definition to a general audience, but their role in subverting discussion of the importance challenges facing us. They’re more powerful emotionally than intellectually, to the point where they are used to inspire public support or approval even where it might be misplaced. Declaring a technology to be “green” renders it socially favourable, even where it might not cause significant benefits.

Discussion of mitigating climate change is often diverted to an argument for a “truly sustainable” society. It is a fashionable viewpoint to respond to cost-ineffective renewable energy and recycling technologies with the argument that “even if they’re not effective in negating climate change, they’re still an important step in a progression towards a sustainable society”. This type of thinking is dangerous in that it can lead to damaging our ability to achieve vital short-term goals in favour of distant ones. Automatic support of anything that promotes sustainability risks sub-optimal results in the near-term (particularly when partnered with opposition to anything that’s not sustainable indefinitely). It’s a mistake to bypass cost-effective mechanisms for combating climate change because they’re not sustainable in the long term (proponents of nuclear power in particular face this problem).

An example of misplaced concern that zeal for sustainability has caused is concern for the sustainability of metals and minerals (in the long-term sense). Clearly mining is not an indefinitely sustainable industry – in the distant future it needs to transition towards recycling and re-use of the materials we have extracted from the ground. But concern regarding the topic of peak oil production has spilled over into anxiety about the immediate sustainability of metal use and the exhaustion of metal ores. For example, there are concerns that if current growth in consumption continues, we would exhaust iron ore reserves in 64 years (page 109 of this reference). These concerns have neglected to consider the important aspects that differ between liquid fossil fuels and metals: recycling, accessible alternatives, and how they’re used. Unlike fossil fuels, metals aren’t “used up” by most of their uses, and their products also have a limit of application (unlike energy use, which will continue indefinitely). We mine more metals partly to enlarge our accessible pool or material available, and partly because it’s cheaper than recycling. For example this New York Times article from 2008 mentions that last year’s soaring metal prices were leading to theft of publically accessible fixtures for sale to recycling companies:

“For most of the cities, the increase started in the spring of last year as the price of steel and iron surged because of a growing demand for recycled metals in China and India. Thieves have been pulling up anything metal — screen door frames, plumbing fixtures, copper wiring — they can get their hands on.”

When demand inevitably does outstrip our supply from easily-mined reserves, the cost of metals will rise, leading to increased overall recycling. Equally so, if the costs of individual metals are too expensive, there are generally different materials which can be used instead without large cost increases (which is not yet the case for liquid fossil fuels). The worry about resource exhaustion is misplaced, and too much concern for the importance of sustainability may lead to poor use of limited resources.

All of this is not to say that an ideal of a sustainable society is not admirable; it is. Neither is it to say that discussion of sustainability and a progression towards it are irrelevant. However it is a separate, long-term issue for our society. It is important that we consider our actions in the short-term in the context of the goal of long-term sustainability, but we shouldn’t destroy our ability to solve our immediate problems because of it. Mitigating climate change, and developing a reliable source of liquid fuel will be incredibly important challenges for the world in coming decades. Solving them requires strategic thinking; this necessitates accurate and deliberate weighing of the options, not prematurely making decisions that may be far from optimal. The solutions should aim for the best overall benefit to the people of the world in terms of quality of life (in general they should be the most cost-effective options, but should also aim to avoid abrupt changes), but that’s a discussion for another day. It would be a shame to waste our resources now on ineffective solutions merely because they are superficially socially or politically attractive.

Subsidies make emerging technologies much more economical for the end consumer, encouraging uptake of the technology by the general public. This is a great way to help make specific products or services more affordable for everyone. For more general goals, it is more useful to adopt generally supportive measures instead of specific subsidies. Moreover, subsidies become problematic as emerging technologies begin to take over in marketshare, and a situation develops where the dominant technology that is used is uneconomical and needs to be supported with government subsidisation. Subsidies then tend to remain, because of the political fallout from revoking them.

This problem is neatly illustrated in subsidies for fossil fuel electricity generation. While it might seem convenient now to take the point of view that some subsidies are good (ones that support saving the earth for example), and others are bad, one should pause and consider that at most points when subsidies have been enacted as part of government spending, they’ve seemed like a good idea. And once the government money starts being paid out, it’s hard to stop.

So if subsidies are something that should be avoided, how can we progress towards emissions-free energy generation? If renewable energy is to be broadly implemented as an electricity source sooner rather than later, some government encouragement is needed. Even the most effective renewable electricity costs on the order of twice that of fossil-fuel based power. The difference between the two needs to be made up somehow for there to be an economic incentive for the implementation of renewables.

The option that causes the least uneven market distortion, and the lowest costs to the government is adding costs to the technologies that are unfavourable (in this case energy generating lots of emissions). This causes consumers to start using cleaner technologies because they’re comparatively less expensive. This is what most countries are looking at doing variously through carbon taxes, emissions trading schemes, etc. But what about when you want the clean technologies to be adopted as quickly as possible, and you don’t want to put such high costs on fossil fuel power as to cause lots of job losses from power plant closures? Here are some ideas:

• Government-backed, low-interest loans for renewable energy technologies
  One of the biggest difficulties experienced by renewable energy technology companies is high project capital costs coupled with difficulty getting loans from banks for not-yet-proven commercial concepts. The government could assist here by providing some loans instead of direct subsidisation. Where banks would normally charge high-interest on the loans to offset the risk, the government could charge lower interest (with a view for the long-term benefits than for short-term profits).
• Increased research spending
  A lot of renewable energy technology companies can benefit from broad government support. This type of research would be aimed at providing information that helps all companies in a specific field; clear examples of this include compilations such as geothermal heat and solar flux maps, as well as research into energy storage technologies. The latter would benefit many different renewable energy technologies, as well as electric and hybrid vehicles (from battery-type storage).
• Funding pilot-scale projects
  For pilot-scale projects of unproven technologies, even low-interest loans might not be sufficient to get things underway (particularly if the pilot-scale project is unlikely to have commercial value in its own right). In these cases, where there is reasonable potential for the concept, the government could provide direct funding. If the project is successful, the funding could be converted into a government loan; if unsuccessful, the government could get ownership of all equipment and IP, using them to further renewable energy development.
• Temporary tax-exemption status
  While giving tax exemptions is similar to giving subsidies, it doesn’t work in quite the same manner. Where subsidies spend money from the budget towards a technology (that may or may not bring result in equivalent value to the country), tax exemptions don’t cost money directly. Instead, if the technology is of commercial value, there is a decrease compared to potential income for a period of time; if unsuccessful, there is no significant loss to the government. Critical to this idea is that an unmodifiable deadline is defined, so the benefits can be factored in to the companies’ finances.
• Direct investment matched to market capitalisation
  The government could also periodically invest in emerging renewable technologies directly; this would help provide some of the capital to get them started, with an expected payback in the long-term. This would need to be done in a manner that doesn’t rely on bureaucrats picking companies or technologies for investment. Ideally government funds would go to a pool to be paid out in response to bids from companies arbitrated by an independent panel.

Each of these possibilities have their own advantages and disadvantages. In particular, government support in ways where an expected financial gain might be expected in the long term are risky in that they encourage government intervention. They offer some interesting alternatives to subsidies, however.

Two separate incidents since July 2008 highlight this issue within the Australian general aviation industry; one near Sydney’s Bankstown GAAP Zone (Dec 08) and one at Melbourne’s Moorabbin GAAP Zone (Aug 08). A young flight instructor and two student pilots have lost their lives due to the crashes.

There have been comments that the prescribed general aviation airspace procedures are dangerous and are to blame for these deaths. It is true that significant reform has been seen over the last decade which decreases traffic interaction with air traffic control (ATC). Much more responsibility has been handed to the pilot in command to manage and follow their own flights unaided. If an aircraft is navigating visually outside of controlled airspace, it is essentially left to its own devices.

With respect to the Bankstown collision, concern has been expressed over the need for aircraft to report their inbound intentions at a certain fixed point outside the GAAP aerodrome (a VFR Approach Point). This simplifies and expedites the movement of traffic through the control zone itself. Concerns such as these are understandable as all aircraft wishing to enter the GAAP zone must fly to one of only 2-4 fixed points (depending on the aerodrome), are required to be at the same altitude and due to the fact that the airspace is uncontrolled the only means of separation is by sight. It is only once they reach one of these approach positions that ATC provides any kind of immediate traffic advice to the pilots. However, there are a number of reasons why this procedure should remain in force.

Due to the fact that GAAP zones are invariably placed in capital cities and thus near traffic-dense commercial/military airports, there is a need to control the flow of GA activity around these centres. One must also bear in mind the fact that a grand proportion of movement associated with GA facilities is of a flight training nature. Allowing traffic to approach a training aerodrome from any direction is confusing for a student pilot whose mind is occupied by an overwhelming number of new tasks. The insertion of aircraft though approach points provides GAAP ATC with the ability to allow circuit insertion in a generally consistent, predictable and therefore safe manner. It is the provision of information to pilots regarding separation at these approach points that requires attention.

With a sharp increase in the reliability of contemporary computer technology, civil aviation has been rapidly dragged into the 21st century. New aircraft are fitted with glass cockpits, terrain warning systems, digitalised engine monitoring, sophisticated flight management software and even airframe parachutes. In an industry where safety must be the paramount priority, it is no longer acceptable to simply specify a VHF radio and a transponder as the only communicative equipment required to legally enter controlled airspace.

Cockpit mounted Traffic Collision Avoidance Systems (TCAS) which would have averted both the Bankstown and Moorabbin incidents are now readily available. More importantly, despite common misconceptions about this type of instrumentation, they are incredibly affordable. These systems sense the transponder signals of aircraft in their vicinity and operate completely independent of ground based stations. Lower end systems simply provide a distance and relative altitude to nearby aircraft. Most importantly however, is that an auditory warning signal is fed to the pilot if a collision threat exists. Enough time is provided to allow for a change in flight level, and also to establish communication with ATC or the other aircraft so that the situation can be resolved in an informed and thus effective manner. While there are packages incorporating larger radar-style displays (costing USD$10,000-30,000), that level of detail is not needed for GA operations.

The following style of equipment is cost effective, simple and necessary to avoid further mid incidents (For information on higher end systems, see manufacturers such as Garmin, Avidyne & Honeywell):

• Monroy ATD-300 (US$795)
• Zaon PCASMRX (US$549)
• Surecheck Trafficscope VRX (US$795)

After numerous large scale commercial mid air accidents, it took the deaths of 82 people in 1986 to spur the US and the rest of the world to mandate the carriage of TCAS in larger commercial aircraft. The same philosophy must now be applied to all aircraft wishing to operate in or around any form of controlled airspace. Indeed it would be simpler to apply a blanket regulation to any aeronautical craft operating in Australian airspace.

In the last 6 months, three people have been killed by these avoidable collisions in Australia alone. How many more need to occur before something is done? Next time, there will be no excuse.

Solar PV policies are an example of policymakers moving quickly (and laudably) in support of sustainability, renewable energy and the environment, but unfortunately neglecting to appropriately weigh up the competing options. Even in countries such as Australia, which both are particularly sunny, and have low population density, solar PV is overshadowed by other power generation technologies such as wind power, or even concentrated solar thermal power. For countries with lower solar flux, such as Germany, the comparison is far starker.

As a quick illustration of the ineffectiveness of this particular policy, the Australian Government’s solar homes and communities plan is a good example. This program is aimed at using 150 million AUD to subsidise small-scale distributed solar implementation through a rebate of 8000 AUD for the first kilowatt of installed capacity. This would support a total of 18.75 MW of installed capacity over the lifetime of the plan. Generally wind power costs on the order of 2000 AUD per kilowatt of capacity. It’s pretty clear from this cost discrepancy that if renewable energy generation is the goal, government funding would be much better spent directly on other sources. This is even excluding the cost to the citizens deploying the solar PV panels on their homes – even with the government rebate scheme, and generous feed-in tariffs for electricity fed to the grid (which are an almost equally misdirected piece of policy), solar PV tech in Australia can take longer to pay itself off than the lifetime of the equipment.

All of this is not to say that solar PV is completely useless – it is a great technology for locales that are sunny, remote, and geographically (or otherwise) isolated. There are many opportunities for effective use of solar PV in remote towns powered by diesel generators, and regions where the delivery of electricity from the grid is insecure. Examples of the latter scenario are the usage of solar PV in US military bases, and for power in Baghdad. Photovoltaics are also an appropriate technology for mobile electricity sources. Consider though, that for these implementations, solar PV is either more cost effective or convenient than both fossil-fuel-based power and other renewables, so subsidies are not necessary. The problematic policy is subsidisation of solar PV in large urban areas, where the cost is much higher than other renewable energy, without any other significant advantages.

There are two common reasons that are often presented as the benefits of solar PV subsidies: their ability to spark a market for the technology; and their encouragement of innovation and development. Creating a market for the technology is credited with causing an economy-of-scale effect, where the cost rapidly decreases as more people buy solar panels and the cost of manufacturing them in large factories goes down. Unfortunately current commercial solar PV panels rely on polycrystalline silicon as a raw material, the supply of which is reasonably inelastic. Because of this, subsidies for solar panels around the world have caused a demand spike in silicon, leading to a rise in the cost of solar panels, instead of a decrease. The other argument, that demand caused by subsidies will encourage innovation and development of the technology is partially true. It is, however, a misleading selling point for government subsidisation of the technology. If additional development of the technology is the goal, government spending would be much more effectively targeted at supporting research and development efforts, instead of subsidising the technology itself.

Solar PV will have an important place in any future energy mix (particularly as it becomes more cost-effective over time), but current government subsidies of commercial and residential implementations are a dangerous trap. The government resources would be better allocated to other, more cost-effective renewable technologies (the obvious contender is concentrated solar thermal power), or on increased research and development spending on solar PV to make the technology more broadly economically competitive in the future. As a more general consideration, government policy should not just pursue admirable goals, but needs to do so in a manner that maximises the benefits.

If these characteristics are inherent in the scheme, emissions targets can be modified in an ongoing manner in response to public opinion, economic effects, and environmental concerns. It is clear that the scheme has some incorporated flexibility, with targets changing depending on international cooperation. However additional thought might be given to add accountability with regards to emissions permits for ‘emissions-intensive trade-exposed’ and ‘strongly-exposed’ industries. It would be foolish to make the same mistake as made in the first round of emissions trading in the European Union, where too many permits were given to highly-polluting industries, resulting in the trading system being ineffectual.

Discussion should focus, for the time being, less on exactly how much emissions should be reduced by, and more on creating a long-term system allowing for effective control of Australia’s emissions in a changing future. The proposed scheme is mostly a step in the right direction. It may need to aim higher, as argued by the environmentalists, but more importantly, it needs to be ensured that the system is robust and not open to subversion by special interests.

There has been a troubling trend recently in the promotion of environmentalism without discussion of the costs involved. Greenhouse gas emissions reduction schemes and government spending towards renewable energy are likely in the best interest of the general public. However, they should be discussed with a full disclosure of the both the benefits and the costs. The tendency among both environmentalists and politicians of treating a green revolution as a panacea to both economic and environmental woes is false and should stop. Here’s why: an overreaching scheme sold to the public without full discussion of the economic consequences is at far greater risk of catastrophic failure.

It is self-evident that emissions reduction schemes designed to directly protect the environment aren’t going to benefit the economy in the near future. Any company that can improve their profitability by ‘going green’ will invariably already be doing so. Setting a price on emissions will have negative economic impacts in any energy-intensive sectors, particularly mining, minerals processing, and manufacturing. Due to the recent high commodity prices, many resource processing operations use low grade ores – now that the bottom has fallen out of the commodity market, these companies will likely struggle to stay afloat. Increases in electricity costs from emissions reduction schemes will hit these companies (and any others operating on very small margins) hard. This will have direct negative consequences for the economy in the short term.

Whether or not this is a bad thing is not necessarily clear cut. The loss is in short term economic prosperity. The benefits are in the longer-term shift towards a cleaner future, with the possibility for lost jobs being replaced by newer, greener options (specifically through changes in the market, not government spending). The point here is not whether this is a worthwhile tradeoff; it is that proposed environmental policy needs to be discussed from this perspective. Any new policies will have immediate effects as well as long-term ones, and they should be discussed in the public sphere. Marketing a policy to the public without acknowledgment of the short term effects risks a backlash.

It can be hard to predict exact effects of the policies, particularly in unstable and volatile market conditions. any governments are looking at policies with a multi-decade time span. Because of this, any emissions reduction scheme needs to be designed to be both robust and adjustable in the long term. An effective system should therefore aim to incorporate three fundamental characteristics:

• Transparency: to ensure that the public knows how effectively the system is progressing, and where weak points are, the scheme should involve full public disclosure. This should cover both operation, and the expected impacts before implementation.
• Accountability – to prevent misuse and bias of the system, any scheme should both prevent political intervention on the basis of individual cases or companies, and should have capability to hold those running the system accountable.
• Adaptability – in the event of the system not meeting emissions reduction targets, or having far different economic impact than expected, it needs to have the capacity for adjustment. One could imagine a system similar to central bank interest rates, but instead involving a change in the cost of government permits or emissions caps.

Good government policy on emissions reduction will incorporate these characteristics. As climate change and environmental impacts become increasingly important topics, transparency and public accountability only grow more vital.