Carbon Taxes and Direct Action - Essay Example

Carbon taxes and direct action Student name Student number Assessors Name Date In Australia, 5.6% of the gross domestic product comes from mining; this makes Australia the largest exporter of coal in the international trade. Despite the level of exports, only 1.3% of the Australian labor force is employed in the mining sector. The mining firms are technologically advanced and use computer software in running the projects. In a case where the mines are in remote areas, the workers operate in a fly in and out basis and take short periods leave after a given period. Mining in Australia has affected the environment substantially, for instance, deforestation, erosion and pollution. The Australian government in 2012 had come up with an approach to reduce greenhouse emissions, the controversial carbon tax involved the government creating a certain cost with regards to the carbon produced by a firm or a company. This resulted to market forces that determine the reduction of the emissions. In carbon tax, firms like Cougar limited will have certainty in the prices of carbon emissions. There would be variation in the results of greenhouse gases emissions. Through carbon tax the government can create revenue that can be used for compensation purposes, the revenue can also be used to improve productivity and engagements that can help to reduce greenhouse emissions. It is an important point to note that carbon tax has negative effects on income growth and increase in productivity (Oleynik 2005). The direct action plan involves the intervention of the government to cougar energy limited among other mining firms in the mining industry to reduce the greenhouse gases emissions. Some of the measures the government may apply in the direct action include termination of contracts and licenses to high-emitting firms, provision of subsidies to firms that lower their levels of emissions and restricting entry to sectors that contribute to high greenhouse gas emissions. Direct action plan does not increase revenue to the government and can have undesirable effects to the nation's growth and income generation. The federal government favored the direct action plan mostly since firms would be more willing to reduce the levels of greenhouse emissions. Predicted climate change impacts There are some predicted climate change impacts in the mining industry; the impacts can either affect the sector directly or indirectly. Major impacts will include public pressure on the mining sector that will see the reduction of greenhouse emissions in the process of mining or generation of electricity. Some mining projects will be affected due to restricted access to water, note that mining does not necessarily use clean river or rainfall water, though some mining firms are using water of high quality by desalination of river or rainwater. Some mining operations will be affected by changes in the intensity and frequency of storms. In mining, some physical structures like dams and controls of erosion are affected by increased storm intensity. Greenhouse gases cause increased temperatures in summer; this will create a demand for electricity as households will turn to air conditioners to try to lower their room temperatures (Oleynik2005). Since people are more aware of how they play a part in emissions of greenhouse gases, there is a likely possibility that the demand for electricity energy from mines that use fossil fuels or coal may reduce or slow down. Many firms are giving priority to other sources of energy that are renewable and reducing their levels of electricity consumption. Due to the widespread mining operations geographically, precipitation and temperature changes are more frequent leading to extreme weather conditions. This will have major effects on the mining sector, the cost of water will rise, and accessibility to the site will be difficult and affect the supply of energy to the sites. As the temperatures rise, the water will become scarcer that may cause conflicts with local communities and slowing down mining operations (Oleynik 2005). Cougar mining limited among other mining firms operate in more socially and politically challenging parts of the world since mining is the major economic driver in those nations. There will be a threat to the mining sector viability and profitability through changes in climate, and this will lead to significant outcomes and consequences for the development of the host countries. When a mining firm gets to the extent of causing drastic changes in a host country, it will lose its reputation that can lead to denial of social license of operation and closing of project financing. Rationale and the theoretical underpinnings of a carbon tax compared with the Direct Action Plan Both carbon tax and direct action plan give an indication to the emitters that they need to reduce the levels of emission. There is a rise in prices if no action is taken regarding high emissions and will decline if proper measures are taken. From this, the mining firms like Cougar Energy among others will have a profitable trade, and all this will make the emitters more innovative in trying to cut down the levels of emissions. The revenues that are collected by the government will be used to try and bring down the emission levels and will compensate the parties affected by price increments. Since a price creates revenue, the government does not have to acquire funds from its other sources or activities (Oleynik 2005). The direct action plan is more effective and a perfect incentive; note that carbon price can be affected by imperfections in the market and barriers that are non-financial. Weak carbon tax measures imply weak prices of carbon that do not show in the long-term climatic change costs. Mining firms and other households will have more value to the money at hand than the ones they will have in the future. This means that the carbon costs of the future will not have a strong influence when compared with the other factors. In the mining industry, when the sales increase profits go up. The carbon tax will give priority to the method that lower emissions per unit of power generated and sold, like renewable energy but not a plan that will lower sales. Mining companies won't approve energy efficient options, the methods that are cost effective since this will lower their profits. A carbon tax does not raise the cost consumers pay for energy sourced from coal, but there is a small increase of one to five in a percentage of cost many households and mining industries incur. Direct action can greatly help in improving energy efficiency leading to reduced greenhouse emissions; this is by coming up with alternative power generation methods like solar power. Voluntary abatement is undermined by the local government, state, firms and households. Unless strict measures are put in place, some individuals, and well-grown entities will emit greenhouse gases more. On the alternative, direct action can be very costly for the government since the government pays the polluter rather that the emitter paying for pollution. If the government does not implement and design an efficient pricing mechanism, this will lead to negative results. But if the government decides to incorporate both mechanisms being well-designed there will be great efficiency and positive results (Cromwell 2007). Risks and opportunities for the mining sector in a carbon constrained world Changes in climate is a major issue affecting the whole world; a carbon constrained the world will pose some risks and challenges to the mining industry. Greenhouse gases emissions are one of the greatest issues highlighted by the government and facing the mining industry. Climate change risks involve compliance with the local government that regulate the emission of the carbon and increased costs of suppliers. The products and technology risks also pose a major threat to the mining industry due to the fast changing standards in technology. The mining firms are also faced with risks of losing reputation lacking sustainability and extreme weather conditions causing physical risks to the firm (Cromwell 2007). Contrary to the risks facing the mining firms and the industry, there are some opportunities that can be pinpointed mainly experienced by companies that operate globally. The big firms operating globally are in a better position to burgeoning in the carbon market internationally; this has come up from the carbon projects and in the developments in the voluntary sector and the national systems. Adaptation strategies Cougar energy among other mining companies can pursue a wide range of adaptation strategies to deal with the current issues related to climate changes. Some measures will be intended for value protection of the potential and existing assets. Other measures will create value through the innovation o technology, emerging markets and the people affected by changes in climate. In value protection, the mining company will upgrade its internal structures in management that will uphold adaptive, proactive and sound management of changes in climate impacts. The mining firm must apply scientific modeling regionally to establish the physical risks at the local level together with opportunities (Cromwell 2007). The firm can adopt identification of risk processes so as to create better measures to help mitigate these risks and incorporate climatic change effects. Through the period of the project, the mining firm can integrate measures to curb climate-related perils into business and a sound decision-making procedure. To cut down the effects of climate change, the firm should adhere to standards of construction and engage robust engineers to cope with severe weather conditions in new sites or expansions. The mining firm can plan for contingencies like fire, floods, and pandemics in various scenarios of climate. In water management issues, the mining company should improve the water use efficiency; this is by having access to water resources that are new, recycling and reusing this water. In Value creation, climate change effects can be mitigated by creating solutions and opportunities that provide new sources of revenue together with other stakeholders to ensure that community and corporate demands are met. The mining firm can diversify their production so that they can respond in time to the rapidly changing market. The mining firms should be technically innovative and come up with various solutions that would assist the communities and the stakeholders to deal with the climatic changes. Use of alternative fuels, investing in new sources of renewable energy and acquiring new revenue streams can greatly help the mining firm to manage their power and energy supply, financial risks and costs arising from regulations. Programs that help to recycle waste water will help the mining sector to cater for shortfalls in the water supply to their mines (Cromwell 2007). In climate adaptation, the mining firms mainly focus on the physical risks that occur due to climate change but it is recommended that the adaptation strategies must have various components. The mining company should work with the local communities to create sound climate adaptation strategy that will lead to economic growth and work in planning practices that are an emergency in nature. The operations of the project should invest in projects that use natural resources that are scarce, improve peace and community peace and create emergency plans for a response. The mining firm needs to establish local resilience can be improved by investing in the ecosystem. This can be done by enhancing the water supplies locally and ensuring that the water sources are protected to ensure clean water provision to the community and the company (Oleynik 2005). Working together with related stakeholders on the emerging issues and concerns can greatly help the mining firms in adaptation. Stakeholders have various expectations when there is minerals exploration; this is regarding changes in climate, biodiversity and adaptation. Strategies of collaborating with other industries in the region by sharing information and costs in modeling climate and adaptation of strategies in large scale will have positive impacts on the company. Strategies of adaptation can vary significantly; this is due to the geographical diversity and the produced commodities by the industry. Despite their location, these mining companies can adapt faster to the changes in climate, not only in their areas of operations but even to the local communities and the business regionally. References OLEYNIK, I. S. (2005). Australia: mineral & mining sector investment. Washington, DC, International Business Publications. CROMWELL, D., & LEVENE, M. (2007). Surviving climate change: the struggle to change global catastrophe. London, Pluto Press. Read More