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DEFER LAW ON CLEAN ENERGY
article published in The Australian, 10 October 2011

Major emitters havenít adopted the pledges of Cancun

by Des moore


Parliament is scheduled to vote this week on the Clean Energy legislation introduced by Prime Minister Gillard on 13 September and providing for a carbon tax starting at $23 per tonne for three years from next July.

Gillard’s justification is that most Australians agree “the climate is changing; this is caused by carbon pollution; this has harmful effects on our environment and on the economy; and the Government should act”. The action is described as reflecting “Australia’s bipartisan commitment to reduce our greenhouse gas pollution by 5 per cent below 2000 levels in 2020”. However, while it proposes direct action to this end, the opposition will vote against achieving it through a carbon tax.

The question that arises is whether any member of the government or independent might move an amendment that would allow the introduction of the tax to be deferred. Such an amendment could provide for no carbon pricing until the main emitting countries have agreed on a binding program of reductions and a Productivity Commission review of the competitive implications of any action by Australia.

While the chances of such action might seem fairly remote at this stage, there is ample justification for it in the polling. This shows Labor’s primary vote at only 26 per cent, reflecting to an important extent the reversal by Gillard of her promise not to impose a carbon tax.

An obvious challenger is former leader Kevin Rudd whose current bout of self-promotion signals immediate readiness and who, if he could get the numbers, would have no compunction in challenging Gillard on the basis of her broken promise. A successful challenge by Rudd would undoubtedly produce a significant lift in Labor’s polling, as would one by former leader Simon Crean. As leaders go, the latter is still a youngster at 62 and has the experience to avoid the immediate policy change solutions to which Rudd has been prone. Other younger possible challengers are relatively unknown but could scarcely do worse than Gillard and would have time to develop before the 2013 election.

The basis for a policy deferral is clear. First, for Australia to go ahead now would, as the May Productivity Commission report on Carbon Emission Policies in Key Economies showed, put us at or near the head of the pack of industrial countries in terms of emission reduction policies. The assistance to certain industries would not prevent a loss of international competitiveness and, contrary to claims by Gillard and Climate Change Minister Combet, would not result in any other major country following our lead. Policies of industrial countries such as the US and Japan will continue to be determined by their domestic situations.

Second, Australia has to compete with China, India and Indonesia and other developing countries which have not even adopted the pledges to set emission reduction targets made at Cancun last year and show no sign of doing so at the forthcoming conference at Durban in November. A report last month by the Netherlands Environmental Assessment Agency, with the European Commission, showed that emissions by developing countries in 2010 constituted over 60 per cent of the world total and that a continuation of the trend since 1900 would increase that to about 75 per cent by 2020.

In short, Australia and other industrial countries now face a game-changed situation. If there is to be any chance of meeting the aim of keeping temperatures increases to no more than 2 per cent developing countries (or at least the major ones) have to be included in the group of emissions reducers. Clearly there is a strong case to defer substantive action by Australia until that has happened.

Des Moore is a former deputy secretary of the Treasury

(NOTE: The reference to “1900” in the penultimate paragraph above should be to “2000”)

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