15-December-2008
Articles, Emissions Trading Scheme
If you wish to make a contribution to the environment at a personal level by putting a solar panel on your roof or by installing a water tank, most of us would need to have a job and some money in the bank.
It is no different at a national level.To effectively meet the huge cost of tackling greenhouse emissions requires people in jobs, businesses performing strongly and a cashed-up government.
If the design of an emissions trading scheme is flawed it could seriously set back our economy and result in jobs, industries and emissions being exported. In turn, community support for a program to reduce emissions could collapse.
As a country producing only 1.4 per cent of the world's emissions, everyone, including the Government, agrees that there is no Australian solution to climate change; there is only a global solution. There must be a global deal to tackle the problem.
It is why the Rudd Government has to get the design of a scheme right.
Artificial political deadlines must not dictate the Government's thinking. Too much is at stake.
In just 18 months' time, the Rudd Government is demanding the introduction of one of the biggest structural changes in our history, yet most people still have no idea what it will cost, how it will work or the impact it will have on jobs and investment. Or whether the rest of the world will be joining us.
To rush the introduction of the scheme without knowing the outcome of the December 2009 global environmental summit in Copenhagen, without knowing what US president-elect Barack Obama will do and without knowing the impact of the global financial meltdown on the real economy is reckless in the extreme.
The Kyoto agreement doesn't conclude until 2012, and Australia will be one of only five countries to meet their Kyoto emissions target.
So far, the Government's 2010 deadline and handling of the design of an emissions trading scheme has been a shemozzle.
The Treasury modelling was months overdue, and when it was released it did not factor in the global financial crisis and it also assumed the entire world would sign up to be part of any scheme. No alternative scenarios were permitted. The exercise has been self-serving and misleading.
The Rudd Government's green paper on an emissions trading scheme, released in July, has been found to be badly flawed. Many industries discovered that they would be made seriously uncompetitive.
Some businesses that had already taken major steps to reduce emissions (such as Visy) found that they would receive no assistance and in fact would be penalised, while other companies that had no energy-saving alternative found that basically they would have to pay a new tax.
Then there were the companies that were already operating at the most efficient level in the world, such as zinc producers, yet they would be forced overseas under such a scheme.
Australian zinc smelters emit 2.6 tonnes of CO7 for every tonne of zinc produced. This compares with 6.8 tonnes of CO7 for each tonne of zinc produced in China. Forcing Australian zinc smelters to close and relocate to China would see world levels of CO, increase and thousands of Australian jobs lost. That is a very dumb outcome.
And only recently we have seen cases of companies that are undertaking environmentally responsible practices, such as the waste coalmine gas power stations run by Envirogen, whose abatement benefits are being removed and replaced with a tax that guts the profitability of the business.
As well, in many cases the bestplaced companies to develop and fund the transfer to cleaner energy sources, including major renewables, are the big emitting companies. Financially crippling these companies kills this opportunity.
There are many differences between the positions of the Government and the Opposition other than our request to be more measured and careful about the start date.
The Coalition believes an effective emissions trading scheme must be designed to protect Australia's export and import competing industries until the country's competitors have signed up to a course of action.
We must not get too tar ahead of the rest of the world. To design the scheme otherwise will see Australian jobs, industries and emissions move offshore for no good purpose.
Kevin Rudd's scheme involves the churn of billions of dollars, with the Government picking winners as to who gets compensation and who doesn't.
The Government has made no attempt to assess what impact the global financial meltdown will mean for industries coping with the transition to its scheme. The Government's philosophy is to move from benefiting the abater to taxing the emitter.
In many cases, such as in agriculture and Australia's huge building sector, the Government scheme involves a tax that hits the bottom line, with no incentive to abate.
Once the Government releases its white paper today, the Coalition will make a considered evaluation of the proposed emissions trading scheme and the related targets.
We will not be rushed into endorsing or opposing this proposal.
The Coalition and business found with the Government's green paper on emissions trading that the devil was in the detail. We expect that to again be the case.
As well, the failure of Treasury modelling to consider the economic implications for Australia if the world fails to strike a climate deal creates huge uncertainty.
As a consequence, very little is known or understood about the transition costs of the Government's emissions trading scheme over the next 10 to 15 years.
Reducing greenhouse gas emissions poses huge challenges. But the poor design of an emissions trading scheme could have devastating consequences.
Serious inroads into emissions will best be achieved from a position of economic strength, with people in jobs and business profitable.