Groping in the dark

The Western Australian government recently pledged to cut the state’s carbon emissions by 80% below 2020 levels by 2030 and reach net zero by 2050. As part of that plan it will, in its forthcoming Budget, provide funds to electrify 130 of the state’s buses at a cost of around $2 million each:

“The buses have been trialled in the Joondalup “Central Area Transit (CAT)” bus network for the past 12 months, where it is estimated to save 230 tonnes of carbon dioxide emissions in the first 12 months.

‘This is an important part of the transition to using more batteries and using more renewable energy,’ Mr McGowan said.”

Whenever these initiatives are announced, the million dollar question is always: is this an effective way of achieving those carbon targets? Or would the government have been better off helping people buy electric vehicles; subsidising renewables; planting trees; incentivising factories and farmers to reduce their carbon intensity; replacing street lights with more energy efficient light bulbs; the list is effectively endless.

No one knows what the most efficient way of reducing carbon is; because there’s no price on carbon, the economic calculation problem – the decision to allocate scarce resources among competing uses – is essentially unknown with regards to carbon.

Without prices signalling to use less of something we are left groping in the dark, leaving the government to guess where to cut emissions, likely at much greater cost than if we had just slapped a price on carbon and let economic decision makers determine where to most efficiently economise on it.

But there is one upside of reducing carbon in an ad-hoc manner, as is happening in most of Australia: politicians get to pose in front of cool new toys!

That’s one very expensive photo op.