01-October-2008
Articles, Emissions Trading Scheme
The Garnaut report confirms the imprudence and great risk of the Rudd government's haste in pursuing a 2010 start date for any emissions trading scheme.
The report is saying Australia, by itself, can make no impact on global climate change; that climate change is a global problem requiring a global solution. A global agreement is an imperative.
In just 20 months the Rudd government is demanding the introduction of one of the biggest structural changes in our history, yet people still have no idea what it will cost, how it will work and the impact it will have on jobs and investment.
To rush the finalisation of the scheme without knowing the outcome of next year's Copenhagen summit, without knowing what the new US president will do and without knowing the impact of the global financial meltdown on real economies is reckless in the extreme.
The government's 2010 deadline and handling of the design of an emissions trading scheme (ETS) is a shemozzle. Treasury modelling is months overdue. Business is in the dark about the cost of the Rudd scheme. The opportunity to respond to the government's green paper has come and gone without this Treasury modelling.
Garnaut has concluded that unless our ETS is carefully designed and introduced in a co-ordinated way with our main export competitors, there is a real risk of serious economic damage to Australia, without real and sustainable environmental benefits.
He is saying that 2020 targets for emissions reductions should be 5, 10 or 25 per cent, depending on the level of commitment of the large emitting countries.
This wide range of potential targets will do nothing to address the growing uncertainty and highly justified fears of Australian business about the "rushed" approach being taken by the Rudd government.
Australia must have an ETS that will achieve carbon reductions without compromising future economic sustainability.
Last year's Shergold report warned that "excessive haste carries great risk". The government's indecent haste is already causing serious design flaws, producing perverse effects, with some of our leading climate change innovators being comprehensively penalised.
Clean burning liquefied natural gas industries are facing major doubts about the viability of future projects worth over $40 billion a year to Australia. Visy is looking at shelving over $1 billion worth of emissions-reducing technology because it will get zero compensation, yet has to sell its products on world markets.
At Rockdale Beef, an 180,000-head a year abattoir and 53,000-head feedlot, ETS price rises for 2010 to 2015, without any assistance, mean large-scale investment in a planned biomass facility will be shelved, and the opportunity for generating offsets lost.
Many trade-exposed emission intensive industries have already been told they are `but in the cold".
Yet Climate Change Minister Penny Wong said in February "there is no point in imposing a carbon price domestically which results in emissions and production transferring internationally for no environmental gain". This haste, confusion and -lack of detail is starting to erode confidence and affect business decisions.
The government's haste to create an ETS by July 1, 2010, runs the risk of doing enormous economic damage in Australia, without any environmental benefit. The issue is not the Garnaut report. The government has relegated Garnaut to the status of "just another contributor" to the debate. The real issue is the question of what is the Rudd government going to do. After nearly 12 months of government we know very little of its plans, except that a start date is just over 20 months away.
Australia has much at risk in the transition to a low-emissions future. Our capacity to respond to climate change is founded in the strength of our economy. Designing a scheme that achieves carbon reductions without compromising Australia's future economic sustainability requires a considered, balanced, shrewd approach - with a particular eye on international events. This leadership is not occurring.
The coalition has a vision for Australia where economic growth goes hand-in-hand with a clean environment. This vision must not be compromised by mismanagement.