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Softly, softly goes the carbon pitch

By Graham Lloyd, The Australian

1338 days ago   Article ID# 891196
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World Wildlife Fund

SYDNEY, AUSTRALIA (The Australian) - THE federal government's framework to cut carbon emissions conforms to a now-familiar pattern playing out in climate change negotiations around the world.

The twin ideals of individual action and incremental change took centre stage at climate talks in Cancun, Mexico, in December where the post-Copenhagen reality was that any agreement to keep talking was progress.

Australia's Climate Change Minister, Greg Combet, took an active role in the Cancun negotiations and has obviously applied the lessons learned from global discussions at home.

Flanked by Greens and independents yesterday, Prime Minister Julia Gillard announced the government would introduce an as-yet-unspecified fixed carbon price from July 1, 2012.

The fixed-price scheme will morph into a trading scheme in which carbon permits can be traded in an international marketplace after a period of three to five years.

Yesterday's announcement had been widely anticipated and was one of three options under consideration by the government's climate change committee, which includes Greens and independents, since late last year.

The government has opted for what appears to be a slow start, market-based approach that gives business a price incentive to act on reducing carbon emissions and ultimately the security it needs to make long-term investments.

It is designed to send a message to the community that it is serious about acting on climate change and to industry that the cost of business-as-usual with carbon emissions will get progressively more expensive.

Unlike the Rudd government's proposed Carbon Pollution Reduction Scheme and the Howard government's emission trading scheme before that, carbon emissions will not be immediately capped and emissions permits will not be traded on a global market for at least several years.

The decision to start with a fixed price and integrate the system within a global framework reflects the difficulty encountered in establishing an international marketplace for carbon permits.

It is a scheme first raised in Australia by the Greens and backed by the government's climate change adviser Ross Garnaut.

And it reflects a growing trend for countries to push ahead with their own arrangement, which can be linked up at a later date in the absence of a clear international agreement.

But the framework announced by Gillard yesterday is far from conclusive and faces a number of significant political and practical difficulties. As at Cancun, the good intentions of Australian negotiators face some hefty hurdles.

Opposition Leader Tony Abbott pledged yesterday that the

Coalition would fight the government's efforts "every second of every minute of every hour of every day". He predicts a people's revolt over a plan he says will increase electricity bills by $300 a year and petrol by 6.5c a litre.

Abbott says the government had broken its pre-election promise not to introduce a carbon tax that would put Australia at a disadvantage to its international trading competitors.

In its defence, Labor says its changed position reflects the reality of a federal election result that delivered it minority government. But the divisions run deeper than between the two main parties.

There is no uniform view within the climate change committee assembled by the government, which includes the Greens senators Bob Brown and Christine Milne and two independent MPs who were central in delivering government to Labor, Rob Oakeshott and Tony Windsor.

Labor may have effectively adopted the Greens model for a fixed-price start up out of three potential models outlined by Combet in a landmark speech in December.

But discussions have not even begun on the issues that really matter: the starting price for carbon, the coverage of the scheme and household and industry compensation.

"This is a broad framework document but we have a lot of work to do," Combet says.

"It will ultimately be a lot of detailed work and detailed legislation that will be required.

"The starting price has not been discussed, household compensation has not been discussed, the treatment of trade exposed industries has not been discussed and the treatment of the energy sector has not been discussed."

Without those details it is impossible to know whether the plan is capable of achieving anything at all, either good or bad.

Selling the carbon tax yesterday, Gillard warned of the dangers for Australia's future prosperity if it falls behind in a world undergoing rapid transformation. "History tells you you have to be on the wave of change, you can't afford to be left behind,"she says.

" We are doing this because we want to see future prosperity and the jobs that come with that.

"I expect we will have a fast and furious public debate."

The Greens' target, for carbon emissions to be cut by 25 per cent, is five times greater than the government's target of 5 per cent by 2020.

The Greens do not support the compensation arrangements for trade exposed industries agreed to by Labor under the failed CPRS.

Senator Brown said yesterday that overseas experience had shown the impact on energy intensive industries from a carbon tax had not been as great as "the alarmist predictions of the past".

The committee must also agree on whether, and if so when, to include transport fuels, and how compensation payment should be distributed in the community.

There is also a danger that money collected will be squandered promoting renewable energy technologies that may be sentimentally attractive but do not offer value for money.

The call has already been made for a set portion of the carbon tax received to be spent on renewable energies such as wave and geothermal.

The fact is there are no obvious pain-free options to achieve the changes in consumer and corporate behaviour needed to reduce carbon emissions.

Senator Brown definitely secured a victory in yesterday's announcement and is ready to negotiate for more.

"These are important matters that are going to engage our intention in coming months," he says.

"But we are here today because we are on the move."

Independent Tony Windsor is still to be convinced.

"Don't construe from my presence [at yesterday's press conference] I will be supporting any scheme," he says.

"This is very much the start of the process, in my view."

Windsor says his decision will be informed by reviews being undertaken by Ross Garnaut and the Productivity Commission into what action was being taken internationally.

The government must also continue negotiations with two round table groups that have been established to negotiate a climate change response.

One is focused on the business community, which has supported the introduction of a carbon price to deliver investment certainty, but now faces the prospect of having to renegotiate the transitional arrangements secured under the Rudd government's CPRS. The other round table includes a range of non-government organisations, including environment groups, unions and representatives of the social services sector.

The World Wildlife Fund was among the first to comment on the government's plans for a hybrid system yesterday.

The fund welcomes the decision but says the starting price will be critical to make the scheme effective.

"If the price is too low, there is no incentive to invest in big,

long-term clean energy like solar thermal, geothermal and wave," says chief executive Dermot O'Gorman.

The WWF wants negotiators to ensure at least 20 per cent of revenue from the scheme is re-invested in clean energy, provide flexibility for deeper cuts in response to new science and international agreements and to only provide assistance to energy-intensive, trade-exposed business where there is a demonstrated need.

Australian Conservation Foundation executive director Don Henry says while a fixed price on pollution is an important step that will help business adapt, it does not on its own ensure that greenhouse pollution levels will fall.

"We need to move from a fixed price to a cap on pollution sooner rather than later," he says.

Henry says the government should also support the retention of carbon in the landscape through carbon farming and protection of natural landscapes.

Garnaut is due to release an updated report on transforming Australia's land use next week

Carbon emissions from agriculture have been specifically excluded from the carbon tax proposal announced yesterday.

But the government is working on introducing a separate carbon trading scheme that will reward land holders for activities that fix carbon from the atmosphere.

Copyright 2014 The Australian   (Copyright Terms)
Updated 1338 days ago   Article ID# 891196

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