Australia: Losing the carbon price debate may lead to an early election
- Published: 14 May 2011
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The carbon tax debate is an opportunity for Prime Minister Gillard to take real leadership on climate change issues and legislate to reduce emissions and to greatly expand renewable energy production, writes Leila Barreto.
15 May 2011
There is no doubt Australia must act urgently on climate change, because of the predicted severe impacts of climate change on rainfall patterns in Australia. As well, one only needs to visit the Upper Hunter to see the more immediate environmental impacts of coal mining.
It is hard to ignore the smell and stench emanating from one of Australia’s largest producers of CO2 - the Bayswater power station - which has approval for expansion. Coal accounts for about 56 per cent of Australia’s fossil-fuel CO2 emissions while natural gas accounts for around 15 per cent.
Australia’s dependence on coal and limited use of renewables - currently 8 per cent and down from 10 per cent in 1999 and 23 per cent in 1965 - means that carbon emissions from electricity generation in Australia continue at a much higher rate than other developed countries. What is even more alarming is that Australia’s coal exports represent an even bigger contributor to our overall emissions.
The Multi Party Climate Change Committee announced in February that it will introduce a fixed price carbon tax in July 2012, and then transition to an Emissions Trading Scheme three to five years later. The Abbott-led Coalition has gone on the attack, saying they would block any carbon tax.
Abbott’s support of an anti-carbon tax rally in Canberra on March 23, organised by the climate change skeptic group the Consumer and Taxpayers Association, has also drawn criticism from within his own ranks for associating with extremists.
While Abbott addressed the crowd of around 1,000 who appeared convinced that the end of the world was nigh if a carbon tax is introduced, inside parliament a petition signed by over 12,000 was presented by the Australian Youth Climate Coalition to the Prime Minister, urging decisive action to put a price on carbon pollution.
Cynical behaviour from Abbott to use this issue to force an early election proves he is not interested in real economic reform on climate change, or the Liberal Party’s commitment to reduce CO2 emissions by 5 per cent on year 2000 levels by 2020, but any opportunity to destabilize the government for his own prime ministerial ambitions.
Earlier, in Melbourne on March 12, an anti-climate change rally outside Prime Minister Gillard’s Werribee electoral office drew around 300 including two Victorian Liberal senators. As GetUp! became aware of this rally they were able to galvanise over 8,000 people at Treasury Place to support climate action. Meanwhile, organisers of the anti-Gillard rally were offering return bus fares to get people up to the anti-carbon tax rally in Canberra on March 23.
Incited by talkback radio, fact has given way to feeling as conservative elements unite over fears that a carbon tax presents a monumental change to business-as-usual and will devastate communities. Yet the only measures explored and proposed by the government are market-based. Abbott’s policy of ignoring the overwhelming evidence that greenhouse gas emissions, and if continued unabated, will have dire consequences for future generations and as a result will make our economy uncompetitive if Australia does not innovate now.
So far Abbott’s biggest argument against carbon pricing is that Gillard lied before the election about a carbon tax. Hammering the message “No New Big Tax” rings of the same strategy as “we will stop the boats” during the 2010 election. Further irony can be seen in his repeated message that a carbon tax is “toxic”. The sceptics believe that because carbon dioxide is “natural” and is non-toxic, so it is not “pollution”, and it should not be taxed. This playing with words is a deceit on the public, since the polluting effect of CO2 emissions is the warming effect of higher than historic levels of CO2 in the atmosphere.
As well, there are six greenhouse gases - carbon dioxide, methane, nitrous oxide, sulphur hexafluoride and the two groups of gases hydrofluorocarbons and perfluorocarbons. In the policy debate these are all converted into ‘carbon dioxide equivalents’. These gases were identified by the United Nations Framework Convention on Climate Change (UNFCCC or FCCC) as contributing to global warming. Hopefully the mainstream media’s attempt to split the broad consensus that actually supports a tax on polluters will be short lived.
The Garnaut Climate Change Review’s final report is due on May 31, 2011. Professor Garnaut has proposed a carbon tax of $20 - $30 a tonne, rising at 4 per cent a year before moving to a market-determined price in 2015 and an Emissions Trading Scheme. He argues the revenues raised from a carbon price can be used to transition to a low-emissions economy. In theory a carbon tax can be implemented by taxing the burning of fossil fuels such as coal, natural gas and oil in proportion to their carbon content.
The aim of a carbon tax is to increase the competitiveness of non-carbon technologies compared with burning fossil fuels, thus helping to reduce the impact on the environment while raising revenues.
The Gillard Government proposes to tax the 1000 most polluting companies, not households. Garnaut has proposed that half of the revenue be paid back to low and middle income households in income tax cuts and welfare payment increases, so that people are better off, despite the increased costs of energy and basic goods.
However agriculture and forestry while large carbon emitters will be exempt. The WA Farmers Federation now supports a carbon tax and has said a price on carbon will be good for agriculture in the long term in the face of global warming. Yet the agricultural exemption is not enough for the NSW Farmers Association who expects the farming sectors’ exclusion to be short lived.
On the other hand, the Australian Industries Group of manufacturers argues for the same level of compensation offered under the failed 2009 Carbon Pollution Reduction Scheme. The outrageous compensation to big polluters was one of the factors that led to the failure of that scheme.
Market-based solutions to reduce emissions have been criticised because powerful corporations demand and receive free permits, and are able to buy permits from other countries – usually poor countries with large forests. This neutralises the intention of the whole scheme. In the European Union case, the traded price of carbon emission permits collapsed, new coal-fired power stations were built, and actual emissions continued to increase.
But without a penalty on the big polluters and significant tax reform we have little hope of transitioning toward a greener economy. Is the likely carbon tax of $25 per tonne enough to reduce emissions so they do not increase more than the 8 per cent from year-1992 levels as Australia agreed under the Kyoto Protocol? Could that price get Australia even down to 5 per cent less than year-2000 levels? The price needs to be in the range of $50 - $80 per tonne to have any chance of helping to reduce emissions by more than 25 per cent on year-2000 levels, the minimum level necessary for rich countries to persuade poor countries that a global emission cap is at all possible.
Besides proposing the market-measure of a carbon price, the federal government is already implementing a Mandatory Renewable Energy Target scheme for 20 per cent of electricity to be supplied from renewable sources by 2020. The MRET scheme provides for both large-scale renewable generators and small-scale installations such as household photovoltaic panels and household solar hot water systems.
Electricity retail companies must ensure that 20 per cent of the energy they provide comes from certified renewable sources by 2020. This is a regulation-approach to the global warming challenge, with positive employment and environmental outcomes, a form of ‘direct action’ not included in the Coalition’s plan.
However, the MRET will not reduce carbon emissions until there is a legislated cap. Until then the MRET contributes to an increase in electricity supply and even allows carbon polluters to continue to expand.
The carbon tax debate is an opportunity for Prime Minister Gillard to take real leadership on climate change issues and legislate to reduce emissions and to greatly expand renewable energy production. This will be the make-or-break issue for the Gillard government and regardless of the Opposition’s scare campaign, all Abbot can do is side with the extreme right, dismiss the real issue of reducing emissions and be silent on his own party’s policy which will allow business to ultimately increase their level of emissions.
It’s an opportunity to expose the inadequacy of the Coalitions’ Direct Action on Climate Change policy to have any impact on reducing emissions. Even the mainstream economics think-tank, the Grattan Institute supports a carbon price as a relatively efficient tax and one that is needed to reduce emissions.
Finally real change requires more than active political will to stave off the conservative backlash. We need to be connecting the dots that link up the more disparate elements of the climate action movement toward a critical social movement.
While some of this was debated at the recent Climate Action Summit in Melbourne, it is clear that climate activists are generally frustrated with the lack of decisive policy vision and political will from above where the current carbon tax debate has degenerated into a media circus, and all the hot air is doing little to reduce greenhouse gas emissions.
At best if the government can win support for a tax on carbon we will at least see some economic reform towards a greener economy at worst we will have an early election – and we all know what that would mean!
Leila Barreto is an organiser at the SEARCH Foundation. A version of this article was published in the April SEARCH News.