The PIX-JOCKEY (visual fantasist) / FoterEnvironmentalists had a global meltdown
last week after Australia scrapped its carbon tax. They
denounced the move as “retrograde” and “environmental
vandalism.”

They can fume all they want, but Australia’s action, combined
with Europe’s floundering cap-and-trade program, signals that
“mitigation” strategies—curbing greenhouse gases by putting
economies on an energy diet—are not winning or workable.

Australia leapfrogged from being an environmental laggard
(initially refusing to even sign the Kyoto Protocol) to a leader
when its Green Party-backed Labor prime minister imposed a tax two
years ago. It required Australia’s utilities and industries to pay
$23 per ton of greenhouse gas emissions.

But the tax was an instant debacle.

Australia has the highest per capita carbon dioxide emission in
the world and the main reason is that it’s even more coal-dependent
than America. Coal supplies 75 percent of its energy needs
(compared to 42 percent in America). But contrary to green
expectations, the tax didn’t prompt companies to rush toward
renewable sources, because they are far costlier.

Rather, utilities passed their costs to households—whose energy
bills soared by
20 percent in the first year. Other industries that face
hyper-competitive environment such as airlines suffered massive
losses. (Virgin Australia alone reported
$27 million in losses in just six months.) The tax also made
Australian exports globally uncompetitive, deepening the country’s
recession.

This spawned a backlash that brought down the Labor government
and catapulted into office the Liberal Party’s Tony Abbott, who
made a “blood
promise” to ditch the tax, which he did promptly once elected,
despite warnings that Aussie lowlands are more vulnerable to rising
sea levels and other dire consequences of global warming than other
countries.

Europe’s cap-and-trade program has managed to hang on, but only
by neutering itself. The program hands companies an annual emission
allowance. If they exceed it, they have to buy more on the open
market or invest in clean technologies.

But the program handed out far too many allowances for free
initially, causing their price to repeatedly crash. Worse, the
European Parliament last year refused to
scale back the allowances as planned for fear of prolonging the
recession.

 The upshot is that despite spending $287 billion, Europe
has little to show for it. (Australia’s tax at least reduced its
carbon emissions
1.5 percent in the first year). According to a study by UBS,
Switzerland’s biggest bank the program has had “almost
zero impact” on emissions—challenging the much more
rosy assessments of the European Commission.

Environmentalists blame Europe’s failure on “design flaws” like
basing its initial allowance cap on companies’ own projections of
what they need and then handing them these allowances for free.

Hence, California, which implemented its own version of cap and
trade in 2010, set its cap based on independent projections and
auctioned a portion of the allowances.

It’s too early to tell if the Golden State’s program is cutting
emissions. But its economic pain is beginning to kick in,
especially for the poor. If applied as written, it will cause
California’s gas prices, already 50 cents above the national
average, to rise another 40 cents.

This prompted
16 state senate Democrats—Democrats!—earlier this
month to ask emissions czar Mary Nichols to neuter—I mean,
“redesign”—the program.

But the “redesign” can’t change the fundamental conundrum of
mitigation strategies whether carbon taxes or cap-and-trade: In
order to work, they have to administer bitter economic medicine.
But when the do, the public revolts.