Expensive Fisher price comes down to virtue signalling

The cost of cutting Australia’s carbon dioxide emissions will relate directly to the amount of virtue being signalled.

A go-it-alone big target that forgoes savings already in the bag will come with a trillion-dollar price tag.

There simply is no free lunch, with the Fisher modelling projecting a “shadow” abatement cost under this scenario of up to $969 a tonne.

This is the extreme based on Labor’s planned 45 per cent emissions abatement goal compared with $263 a tonne for the Coalition’s more modest Paris target of 27 per cent.

The figures are well beyond anything previously considered as a reasonable economy-wide carbon price to encourage action.

But the Fisher estimates bring to account the full economic impact that flows from decarbonisation of the economy.

The shadow carbon price cost can be reduced dramatically by accepting the global reality of what is a global problem. There are two key mechanisms and a big opportunity.

One way to significantly reduce the cost is to book Australia’s Kyoto target over-achievement onto its Paris pledge. The Coalition will do so and Labor would be well advised to quickly follow suit.

Allowing the purchase of international carbon abatement permits also needs deep consideration.

There must be a bipartisan agreement to get the best result at least cost.