Thursday, 13 November 2014

Direct Action could deliver a useful outcome: carbon trading

By Alan Pears AM, RMIT University

Australia needs to put together a credible sense of carbon policies to tackle climate change. Image via iStock

There’s little point in getting too excited just yet about the details of Direct Action and its merits (or otherwise) as compared with emissions trading.

Why? Because all of the current debate about Australia’s response to climate change is focused on paths that are completely inadequate compared with the action that climate science tells us we must take. If we were really serious, we would no longer be trying to expand our fossil-fuel production.

If we were serious, we would increase the Renewable Energy Target, rather than the government proposing to cut it. We would introduce aggressive energy-efficiency measures, instead of shutting down and emasculating programs. We would protect the carbon stored in our forests. And we would be actively helping to cut emissions in developing countries.

We would still pursue Direct Action, but also put a price on carbon. As I have pointed out here before, the two aren’t mutually exclusive.

Putting together a credible set of carbon policies will mean finding ways of extracting ourselves from the political morass we are now in.

Even Direct Action, based on the Emission Reduction Fund, is opposed by many within the federal government who see climate change as a left-wing conspiracy or an otherwise trivial issue.

While Labor is now once again waving the flag for a price on carbon via an emissions trading scheme, it has shown a remarkable level of generosity to high-emitting industries and a badly misjudged approach to Direct Action, demonising the idea despite having previously encouraged direct initiatives such as the Carbon Farming Initiative.

Regardless of their ostensibly contrasting stances, both major parties are deeply committed to growing fossil fuel production for export.

Given this mess, what do we do?

Individuals, community groups, local governments, progressive businesses, and some state governments are acting in many constructive ways, despite the failures and, in many areas, active opposition of our political and business leaders.

Investment in energy efficiency and renewable energy, divestment to shift capital away from high-emission industries, growing support for public transport, lifestyle changes of many kinds, and innovative business and financing models are just some examples.

The recent decline in electricity consumption partly reflects the effectiveness of these actions.

Indeed, Australia may well achieve its 2020 target of a 5% reduction in emissions in spite of, rather than because of, the efforts of our leaders. This will doubtless be claimed as a policy success, rather than an egregious failure to do even more with the opportunity. But that’s politics, I guess.

Direct Action as a base for progress

We do need to at least begin to rebuild a national government path forward on climate. And, believe it or not, last week’s chaotic events do provide some basis for this. If we were back in 1990, when carbon pricing was first discussed, the government’s grudging pledge to conduct a review into emissions trading might even be seen as significant progress.

At the moment, the Direct Action deal does no more than offer a glimpse of hope that we can plot a pragmatic course on climate policy. It also offers scope for climate deniers and free-market advocates to establish a sham scheme that does nothing but increase subsidies to certain industries.

Nor does it avoid the cost of putting a price on carbon: the money simply comes from the taxpayer rather than requiring polluters to pay. Overall, achieving a given level of abatement is likely to cost more under Direct Action, because it is more difficult to target low-cost options and avoid subsidies.

That said, it now looks as though independent senator Nick Xenophon and economist Danny Price (who advises both Xenophon and environment minister Greg Hunt) are in the box seats to drive progress. We also have a basis to progress some moderately useful, potentially unnecessarily expensive, “direct action” measures. Maintaining the existing Carbon Farming Initiative, originally established by Labor and supported by the Coalition, is important.

Meanwhile, the Emissions Reduction Fund – while not as efficient as a wider carbon price covering more of the economy – will deliver emissions reductions within those businesses who successfully bid to receive taxpayer funding.

The fine print on Xenophon’s proposed “safeguard” mechanism to prevent emissions blowouts under the Direct Action scheme will be critical. If this is weak, as envisioned by the government, we are wasting time we no longer have. If an effective framework is introduced, it could form a basis for a “baseline and credit” emissions trading scheme, which could be run by industry if the government doesn’t want to be accused of a backflip, having promised never to return to what it views as the dark days of carbon pricing.

Perhaps the forthcoming emissions trading review, to be carried out by the Climate Change Authority, could focus on practical ways of making this approach workable and politically acceptable.

Setting these safeguards, however, sounds simple in principle but is tricky in practice. It would involve giving each participant in the scheme a “baseline” emissions level, above which they would pay carbon-related penalties. But, as we have seen with existing baseline and credit schemes, including the Clean Development Mechanism, Carbon Farming Initiative, and energy-efficiency trading schemes in New South Wales and Victoria, getting baselines right is much easier said than done.

In our present political context, baseline and credit has some important advantages over the “cap and trade” approach used by Labor. First, emitters only pay for emissions above the baseline, not all emissions, so it’s cheaper for them. Second, they can gain credits for reductions below the baseline, which they can sell to those who exceed their baselines, giving them scope for profit. A smart business can win a generous baseline, so its chances of profit far exceed its risk of costs.

A baseline and credit scheme could also include internationally sourced permits, subject to government approval of the types of permits and the extent to which they could be used. This is no different from the situation under cap and trade.

If appropriate governance mechanisms are built in, the baselines can be tightened over time, to reduce the scope for gaming and windfall profits. This might work better than Labor’s carbon price tactic of giving free permits to emissions-intensive industries, which effectively locked in subsidies. It also allows Clive Palmer to claim support for his suggested “dormant” emissions trading scheme, because any future tightening of baselines would increase the emphasis on trading.

Progressive tightening of baselines could also transition to a cap and trade scheme. By progressively tightening the baselines, a higher proportion of emissions would attract a carbon price. Meanwhile, the scheme could be gradually expanded to include a wider range of businesses and activities.
You never know, by 2020 we might actually have a useful carbon policy. And it might, in an alternative political reality, be called Australia’s emissions trading scheme.

The Conversation
Alan Pears AM provides advice to a range of sustainable energy and community groups. He and his superannuation funds own shares in the renewable energy industry. He sometimes receives funding from sustainable energy industry organisations and individual companies although, at present he is not receiving such funding.

This article was originally published on The Conversation. Read the original article.

Friday, 7 November 2014

A real victim of online piracy is Australian indie cinema

By Vincent O'Donnell, RMIT University

How does internet piracy affect independents?

Game of Thrones downloaders need not fear data retention plans, said Communications Minister Malcolm Turnbull last Friday.

Perhaps there is nothing for pirates to fear from Turnbull, but the Attorney-General George Brandis, is a dreadnought of a different disposition. Data retention will go a long way to facilitate his crusade to crack down on internet piracy.

But who is the biggest loser in this modern epidemic of online piracy?

Speaking at the Australian Digital Alliance forum on February 14 this year, Brandis said that he stood on the side of content creators in the copyright debate.

Perhaps he should have said “rights holders” because content creators are not necessarily the owners of copyright. Ask any wage slave in an animation film factory.
Brandis told the forum:
I firmly believe the fundamental principles of copyright law, the protection of rights of creators and owners did not change with the advent of the internet and they will not change with the invention of new technologies.
Last week, the commissioner of the Australian Federal Police, Andrew Colvin, confirmed “absolutely” that the legislation could be used in the war on illicit downloading of copyright content.

Knowing the data is there will aid fishing expeditions by interests such as the Dallas Buyers Club LLC, the rights owner of the Oscar-winning film Dallas Buyers Club (2013). They have been pursuing online pirates through the courts in Australia, represented by Antonelli Law.

Dallas Buyers Club LLC use the powers of preliminary discovery, hoping to force internet service providers (ISPs), such as iiNet, its subsidiaries Adam Internet and Internode, Dodo and Amnet Broadband, to reveal the identity of owners of IP addresses that have illegally downloaded copies of Dallas Buyers Club.

If the court action succeeds, identified individuals will receive letters demanding substantial cash licence fees in lieu of further court action. Dallas Buyers Club LLC has followed this practice in several overseas jurisdictions with some success, but the practice has been outlawed in the UK.

Back to the biggest loser … Certainly, the rights holders of big successes in cinema or television suffer losses.

The Australian Content Industry Group (ACIG), relying on work by public policy researchers Sphere Analysis that was published in 2011, has made some claims.

ACIG say the annual value of loss of retail sales to Australian content industries was A$900 million in 2010, and the impact of internet piracy to Commonwealth Government revenues was A$190 million. In addition, some 8,000 jobs were lost in the content industries sector as a result of Internet piracy.

However, the methodology that reached these conclusions was not revealed in detail and so, for many, this was an ambit claim from a partisan player. Nevertheless, while some will claim piracy as a victimless crime, it does have an economic impact, however hard it is to quantify.

According to a survey by US data-protection company CEG TEK, in the 30 days leading up to the opening of the American Film Market in November last year, Elysium (2013) was downloaded a massive 162,000 times a day. That amounted to more than 4.8 million times over the sample period.

How directly the downloads convert to lost ticket sales is unclear.

At a conversion rate of 50% at a ticket price of US$15, that is US$36 million lost. Elysium, with a production budget of US$115 million still grossed US$286,140,700 worldwide so the producers didn’t go broke. But after the exhibitors and distributor took their sizable cuts, the net revenue for the film would be small.

But the biggest losers, the rights holders who are really feeling it in their back pocket, are the independent producers, the rights holders to Australian films such as The Sapphires (2012) or 100 Bloody Acres (2012).
The same survey by CEG TEK, based on sampling peer-to-peer torrent services, discovered that little Aussie gem The Sapphires, at 46th out of the 100 most downloaded shows of the 2013 sample and 100 Bloody Acres at 95.

The Sapphires was the top grossing Australian film at the Australian box office in 2012, taking A$14.5 million. In October 2013, it was still attracting a lot of illegal downloads – 123,030 worldwide and 18,720 in the USA. That’s forgone revenue of just under A$1 million.

But coming in at 95, with 1,929 downloads a day or 57,870 for the month was 100 Bloody Acres. It was released on 12 screens in the US in June 2013 but took only US$6,388. In Australia, it made A$18,356 at the box office corresponding to a paying cinema audience of around 1,300 all up.

In the CEG TEK sample, about 50% more people illegally down loaded 100 Bloody Acres every single day, than saw it in the cinema. And compared to gross Australian and US revenues of A$24,744, the illegal downloads were worth perhaps A$434,000 in box office sales. Viewed in this way, the impact of piracy is devastating to small producers and genre films.

So in the Australian case at least, the ones really suffering from piracy are the small independent producers such as Cyan Films, not so much the big players like Village Roadshow.

Piracy such as that suffered by The Sapphires and 100 Bloody Acres has the potential to kill the Australian film industry. And while it is said that patriotism is the last refuge of the scoundrel, it might be the best hope for Australian film-makers.

The Conversation
Vincent O'Donnell does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.