This post is an extension of a letter published by The Age.

Last week, deputy director of the Australian National University’s Climate Change Institute, Frank Jotzo, made the case that carbon pricing is the “single most important tool” for decarbonising the Australian economy.

While Frank Jotzo’s carbon pricing rhetoric is reassuring, it is off the mark in terms of climate change politics and policy. The challenge of implementing carbon pricing is greater than ever. The government’s backdown on the resources super profits tax will embolden Australia’s greenhouse mafia, who will double their efforts to kill off, or substantially weaken, carbon-pricing legislation.

In a policy sense, Jotzo overstates the ability of emissions trading to de-carbonise the economy. Measures to rapidly deploy large-scale renewable energy technologies like concentrated solar thermal and other low-carbon infrastructure must be the “central plank” of credible climate policy. Carbon pricing can play a supportive role to these initiatives.

This point echoes the International Energy Agency’s Peter Taylor (Head of the Energy Technology Policy Division). “…[A] price on carbon is needed to send a strong signal to the market, but it’s unlikely this will be enough to transform our energy system,” Taylor said recently. “Other policies will be needed to support technology development and deployment.”

A nation-building approach to climate change policy can reshape the political landscape in a way that increases the prospects for effective carbon-pricing legislation in the years ahead. It is a pre-condition to implementing effective carbon-pricing measures.

I agree with Jotzo that “Amid the wrangling with business, the government failed to explain its scheme to the public, but made ever more concessions to emitters.” Without renewable energy substitutes for fossil-fueled electricity generation and transportation, carbon-pricing policies will continue to be full of loopholes.

Earlier this year, Melbourne-based public policy think tank the Grattan Institute identified compensation worth $20 billion (over a decade) for Australia’s most carbon-intensive industries in the government’s proposed Carbon Pollution Reduction Scheme. This industry assistance would defer the structural adjustment needed to decarbonise the Australia economy.

Similarly, the Australia Institute’s Dr Richard Denniss has found that offset mechanisms contained in the CPRS would allow Australia to import international offsets in lieu of reducing domestic carbon emissions until 2033.

The worst climate policy Australia can hope for is one that gives us the impression of reducing carbon emissions while maintaining business as usual.

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