With the carbon price starting this Sunday 1 July, we have reposted what we wrote almost 12 months ago when the policy was first announced. We hope it serves as a reminder of what the carbon price actually is, and where it falls short.
A journey of a thousand miles begins with a single step… (first posted 11 July 2011)
Let’s be clear, the carbon price policy announced today is not science-based or visionary and won’t achieve that much. However, it can genuinely be described as a small step in the right direction. If Australia is to do its bit towards achieving a safe climate future – a lot more needs to happen. Our hard work campaigning has gotten us this far, but now is not the time to be resting on our laurels.
Written below is not an exhaustive list of what the carbon price policies entail, rather a summary of the most important points as we see them.
Summary of policy package
- $23 a tonne starting price (1 July 2012) rising by 2.5% per annum before an emissions trading scheme starts on 1 July 2015.
- Compensation through the tax and welfare system means most people will be better off or fully compensated for any increases in costs.
- Emissions reduction targets of 5% by 2020 and 80% by 2050 on 2000 levels.
- Stationary energy (electricity generation and gas/oil processing), industrial processes, fugitive emissions and emissions from non-legacy (new) waste are covered by the scheme.
- Agriculture is not covered, most transport is not covered.
- $9.2 billion in industry compensation mainly for trade exposed industries, steel, coal and gas – reducing slowly over time.
- Creation of the Clean Energy Finance Corporation to invest $2 billion a year for five years in “clean” energy – with at least 50% of that money to go to renewable energy. Carbon Capture and Storage (CCS – “clean” coal) is not included as “clean” energy.
- Creation of an independent Climate Change Authority, which will advise the Government on emissions targets and report annually.
Is it better than the CPRS?
The Carbon Pollution Reduction Scheme (CPRS) put forward by Kevin Rudd after negotiations with the Malcolm Turnbull-led Coalition in 2008 was worse than nothing. There are a number of key differences with this package that make this package better:
- For the first three years of the scheme it will be impossible for polluters to buy dodgy overseas offsets rather than pay for their pollution. When the emissions trading scheme starts in 2015 it will limit overseas offsets to 50% of the carbon liability. The CPRS had no limit.
- Some of the coal “compensation” is conditional on the closure of 2000MW of coal-fired electricity by 2020. This means that it is likely that Hazelwood will be closed within this time (we need to make sure it is sooner rather than later!). The CPRS had no such conditions and only paid coal companies to stay open.
- The creation of independent bodies for controlling the investment in renewable energy (Clean Energy Finance Corporation and the Australian Renewable Energy Agency) will take the decision making out of the hands of energy ministers, many of whom, like Martin Ferguson currently, have strong links to the fossil fuel and uranium industries and are biased against renewable energy.
- The creation of independent advisory body the Climate Change Authority to advise on emissions targets and using the Productivity Commission to examine industry compensation will pressure government to improve the scheme over time.
- Putting aside a minimum of $5 billion over five years (and maximum $10 billion) for investment in renewable energy is a good way to spend the carbon price revenue. The old CPRS had money going only to household and polluter compensation.
- There are also a whole bunch of small components which improve on the old scheme. For example burning woodchips from native forests can no longer be counted as renewable energy. Also, the Australian Energy Market Operator (AEMO) is being forced to plan for a 100% renewable electricity grid, triggering a shift in thinking within the organisation.
Where does it fall short?
There is still a very long way to go. Some of the key problems are:
- The target of 5% emissions reductions by 2020 is pathetically small and well below anything even closely resembling a science-based target (which is closer to 100% by 2020). There is still no vision for a zero emissions economy and a clear pathway for how we will get there.
- The huge amounts of unjustifiable hand-outs to the big polluters remain. A lot of these handouts will go to shareholders as windfall profits at our expense.
- Most of the fossil fuel subsidies remain untouched.
- Large sections of our transport emissions are excluded from this package, meaning there is little incentive to reduce petrol usage.
- There is no mechanism to stop a transition to gas rather than renewable energy. Allowing our economy to go from being powered by coal to gas is suicidal. A carrot and stick approach to gas and renewable energy, such as banning new gas plants and providing a feed-in tariff for large and medium-scale wind and solar projects is something we need to keep fighting for.
- There is no addressing of fossil fuel exports in this package. The emissions from our coal exports are already more than our total domestic emissions. Both the Liberal and Labor parties support a massive expansion of coal and gas exports – resulting in emissions that will dwarf any emissions reduction from the carbon price. This is a profound hypocrisy that must be rectified by stopping our fossil fuel exports.
While this policy by itself won’t do much, once it has passed parliament and implemented it will represent a significant political victory over the big polluters and the climate change denier faction in the Liberal and National Parties, who have been fighting long and hard against any climate action for around 20 years. It will hopefully be a basis from which to shift the politics further towards prosperity and survival.
Word from some of the negotiators is that that without our doorknocking, emailing, rallying and phone calling, this package would have been a lot worse than it is. And of course without the hung parliament and Adam Bandt being elected in Melbourne, it wouldn’t have happened at all.