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Uncertainties Cloud Emissions Trading
(Letter, AFR, 4 Aug 2008)

John Breusch (Emissions Trading Clarity Needed, 29/7) says power generators stress the need for greater certainty about a carbon price if new investment is to proceed. He also refers to polling suggesting majority coalition voter support for starting an emission reduction scheme in 2010.

But it is surely about time that businesses likely to be directly involved in such a scheme recognised the additional uncertainty that will occur even when a scheme has started. The start of a scheme will be the start of uncertainty because the effect on demand of the higher prices of electricity will be unkown. That demand uncertainty will be exacerbated by the exposure of Australia's export and import markets to increased competition from major emitting countries that do not have schemes. The exchange rate will be likewise exposed to greater uncertainty. Moreover, unless the carbon price is fixed, European experience suggests it will fluctuate, possibly quite widely, under trading arrangements. And at what levels will permits to emit be set, who will get free permits and how many will be issued each year, and how quickly will permit levels be reduced? What role will Parliament play in setting limits?

The business community, and the media, are way behind the ball game in failing to assess the serious problems and uncertainties that will arise when a scheme starts.

As to polling, given that almost all of the media have published only limited reports and assessments of the views of critics, and given also that media has wrongly associated higher global temperatures with the drought, it is not surprising that the general reader has supported action on emission reductions. This will change once the news spreads that there are now more scientists critical of emission reduction programs than there are supporters of them.

Des Moore Director, Institute for Private Enterprise, South Yarra Vic

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