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Overview of the Australian government’s proposed carbon-pricing scheme prepared for the Breakthrough Institute

Last week, the Australian government unveiled the details of its long-anticipated carbon-pricing scheme, which include a fixed-carbon price of $23 per tonne as well as several measures to encourage the research, development, and deployment of renewable energy technologies. In contrast to the death of cap-and-trade in the United States last year, the passage of Australia’s national carbon price legislation is virtually guaranteed. Unfortunately, much of the legislation rests with the magical thinking that international offsets will drive the country’s decarbonisation, rather than full-scale efforts to drive the development and deployment of clean energy technologies.

Under the proposal, Australia will have a fixed-carbon price of $23 per tonne from July 1 2012, before moving to a cap-and-trade scheme in three years time. A Climate Change Authority will be established to advise the government on emission reduction targets and a minimum target of 5 percent below 2000 levels by 2020 has been agreed on. Starting in July of next year, the nation’s 500 largest emitters (excluding the agricultural sector) will be charged for each tonne of carbon they emit. To assuage voters, petrol is excluded from the scheme and compensation will be available for nine out ten households. Industry will receive $9.2 billion to manage the introduction of the carbon price.

Carbon pricing was not an issue the centre-left Labor government chose to champion. It is well known that as Deputy PM, Julia Gillard advised her predecessor Kevin Rudd to drop Labor’s first attempt to price carbon–the Carbon Pollution Reduction Scheme. Under Julia Gillard’s leadership, the party contested the 2010 election with an explicit pledge not to pursue a carbon tax, but after an inconclusive election result the measure was reluctantly accepted as the price of forming a minority government and hanging on to power.

Throughout the carbon price debate Labor politicians have propagated the myth that a carbon price alone will decarbonise the economy. Addressing the Committee for Economic Development of Australia earlier in the year, the Prime Minister claimed “a carbon price will drive another sweeping technological revolution like Information Technology did in the 1980s and 90s.” As I have argued previously, when it comes to clean technology innovation and deployment, carbon price is no silver bullet. Now, with The Greens holding the balance of power in the Senate, the government was forced to concede the limits of carbon pricing and adopt additional renewable energy support measures.

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Published by On Line Opinion

Carbon pricing has been a difficult policy for Australian politicians to implement and has contributed to the downfall of several senior political leaders. In 2009, Malcolm Turnbull’s own party stripped him of the leadership after supporting the Labor government’s Carbon Pollution Reduction Scheme. Last year, Prime Minister Rudd’s decision to defer the ETS sparked the loss of confidence that eventuated in his downfall. It is no understatement that the current carbon price push is a risk to the Gillard prime ministership. Though carbon pricing has contributed to ill political fortunes, it’s worth remembering that there is more to climate policy than the carbon price.

Climate advocate Joel Dignam asserts that ‘If Gillard’s attempt to put a price tag on pollution fails, climate change…will be seen as a poisoned chalice from which no sane politician could drink.’ He warns that failure to pass the measure will ‘undo years of progress.’ While I appreciate Dignam’s concern, he conflates carbon pricing with climate policy. There are a host of policies to address climate change and decarbonise the economy, the viability of which is independent to the fate of carbon pricing.

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Published by ABC’s The Drum.

In a speech to the National Press Club yesterday, Climate Minister Greg Combet announced that the government would devote half of the carbon tax revenue for compensating households.

By promising that the carbon price will be a financial boon for Australian households, Labor is attempting to counter Tony Abbott’s populist crusade against carbon pricing.

For weeks, Abbott and his Coalition allies backed by the polluting industries have mounted a fear-mongering campaign. The story the government wants to tell now is that while the Opposition leader is content to make exaggerated claims about economic ruin, Labor will make sure that you’re economically better off with a carbon price. Labor is determined to win the support of ‘hip-pocket voters’ to take the edge off Abbott’s mob.

The Gillard government is setting up another interesting dynamic. By announcing that householders will be ‘overcompensated’ for the impacts of carbon pricing, they have set a limit for calls for a low price and industry exemptions. The logic goes something like this: The higher the price on carbon, the more ‘overcompensation’ one will receive; conversely, the lower the price or narrower the coverage, the smaller the compensation.

Politics aside, the question now remains – what should they do with the remainder of the revenue? To cement its credibility on climate change the Gillard government must commit to investing the remaining share of the carbon price revenue to lay the foundations of a zero emissions economy. The government has a responsibility to protect low-income householders from carbon price impacts, but it also has a responsibility to invest in decarbonising Australia.

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“In difficult ground, keep steadily on the march; On hemmed-in ground, resort to stratagem; On desperate (death) ground, fight.” – Sun Tzu (544–496 BC)

“The ancient commanders of armies, who well knew the powerful influence of necessity, and how it inspired the soldiers with the most desperate courage, neglected nothing to subject their men to such pressure” – Niccolò Machiavelli (1469–1527)

If an election were held now the Labor party would be swept from office. Polling released yesterday confirms that the Gillard government has taken a hit since launching its push for a national carbon price. Both Nielsen and Essential polls show that the Labor’s primary vote is down, so too is PM Gillard’s approval rating—the lowest since taking the leadership. The latest polling comes just one week after Newspoll showed Labor’s primary vote at an historic low of 30 per cent.

When it comes to the carbon pricing agenda, PM Gillard and her Labor government are fighting on death ground—the terrain that the military strategist Sun Tzu described more than two thousand years ago in The Art of War. As The Australian’s Paul Kelly notes, Gillard “has no viable option but to press ahead with her carbon price policy … to retreat would repeat the mistake that ruined Kevin Rudd’s prime ministership.”

If there has been a time for Labor to unite and fight, it is now.

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Published by ABC’s The Drum.

The climate change policy debate was reignited last week with Prime Minister Julia Gillard committing to introduce a carbon price from July 1, 2012.

At the start of February, it seemed Prime Minister Gillard was gambling with her climate credibility by adopting a carbon price-only policy. Now, just a few weeks later, and Julia Gillard is gambling with no less than that, her political future, and the future of our planet.

Gillard’s strategy draws a parallel with John Howard’s GST. While shock jock Alan Jones accuses the Prime Minister of lying (remember that cringe-worthy ‘JuLIAR’ jibe?), the argument is not as potent as critics think. Surely Alan Jones would remember that in 1995 John Howard said ‘There’s no way that GST will ever be part of our policy… never, ever. It’s dead.’ As we know, it was Howard who won the 1998 election on the pledge to introduce a GST and did just that in 2000. Gillard is betting that delivering a domestic policy achievement, like Howard, will trump flip flopping in the eyes of the public.

Countering the onslaught of the Abbott-led Coalition and the greenhouse mafia is a great challenge to Labor’s agenda. To blunt these attacks Labor must look beyond the support of the large environment groups, that some argue are ‘impotent’, and the clean-tech industry that is still in its infancy. Labor must demonstrate to the public that it’s serious about the climate change challenge and invest carbon tax revenue to projects that create jobs and help build a domestic clean technology industry. Without this transparent allocation of tax revenue, Labor’s carbon price push could go the same way as Rudd’s mining super profits tax.

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Published by ABC Environment.

At her recent National Press Club address, Prime Minister Julia Gillard rationalised Labor’s decision to cut its investment in renewable energy to fund the flood levy on the basis that these policies “are no longer necessary” with a carbon price. Last week, addressing the Committee for Economic Development of Australia, Gillard argued that “a carbon price will drive another sweeping technological revolution like Information Technology did in the 1980s and 90s.”

Both cases reveal that those advising the PM grossly misunderstand climate and energy policy.

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Published by ABC’s The Drum.

As climate change advocates start yet another busy year fighting for national climate legislation, new Essential Research polling reveals that the issue is still a low priority for the electorate.

The poor polling performance not only complicates things for those who support measures that address the climate crisis, but also for Prime Minister Julia Gillard, who has staked her leadership on implementing a carbon price in the next term of government.

A meagre 10 per cent identify climate change as a top tier concern in the first public polling of 2011 to canvass voter priorities. At a time when climate change should be a high priority for Australians, concern for the issue has dropped six points in 12 months and is ranked a woeful tenth out of 13 issues.* Both the Gillard government and the climate movement will want to turn the poor polling around.

The temptation of some climate activists will be to ramp-up the apocalyptic rhetoric, however this tactic risks alienating the public further. Research published by the University of California Berkeley last December argued that “Dire messages warning of the severity of global warming and its presumed dangers can backfire, paradoxically increasing skepticism about global warming by contradicting individuals’ deeply-held beliefs that the world is fundamentally just” (PDF). In other words, it’s easier for the public to switch off than to engage with climate change when it is presented as an insurmountable problem.

So what’s the alternative? How do we avoid this trap while achieving good outcomes for climate change and renewable energy?

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Published by Climate Spectator.

This week, the Labor government’s Multi-Party Climate Change Committee (MPCCC) agreed to a set of principles to guide the development of a national carbon-pricing model. While a carbon pricing legislation is a worthy pursuit that will make fossil fuels more expensive, we must not forget that a carbon price alone is not enough to deal with the climate crisis. The mechanism has several limitations that inhibit the deployment of clean energy infrastructure.

Earlier in the year the Head of the Energy Technology Policy Division for the International Energy Agency Peter Taylor argued, “…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. Other policies will be needed to support technology development and deployment.” To ensure effective climate change mitigation and the transformation of our energy system, the Gillard government and MPCCC must be cognisant of the limitations of carbon prices and include additional policies in next year’s climate and energy agenda.

The best public policy approach is to reverse the hierarchy between carbon price and the so-called ‘complementary measures’, such as a feed in tariff, efficiency standards, public infrastructure investments and industry development. An effective carbon price will be the measure that best complements a whole-of-sector reform plan for energy generation, distribution and consumption. After all, Australia must effectively transition its whole energy system to renewable sources as soon as possible.

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Recently, the Climate Institute released a report comparing the climate and energy policies of six major economies. The joint Climate Institute/Vivid Economics report (PDF) calculates the ‘carbon price equivalents’ of non-price-based initiatives like clean energy investments, renewable energy mandates, feed-in tariffs, and other regulatory measures, for example. Whether it makes sense to shoehorn these distinct policies into the carbon price model is worthy of discussion, but for now I’d like to look at the key talking point in the communications surrounding this report.

The Climate Institute claim that carbon pricing is key for ‘driving competitiveness in the clean energy economy.’ This might be the case. But is it the same thing as driving progress towards a clean energy economy? To gain a perspective on this question, I asked leading energy policy expert Alan Pears what he thought.

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Yesterday, it was reported BHP Billiton chief executive Marius Kloppers supports a price on carbon. The news was a welcome development for climate change advocates, particularly for those who prefer carbon pricing as the key mechanism for reducing Australia’s carbon emissions.

While it’s true that Kloppers did discuss a carbon price and make recommendations for such a policy in his address to the Australian British Chamber of Commerce, the widely circulated soundbite–‘BHP Boss calls for carbon price’–does not adequately reflect Mr Kloppers’ broader comments about change policy.

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Leigh Ewbank


Climate and energy writer based in Melbourne, Australia.

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