Australia's #1 industrial directory for equipment & suppliers

Carbon scheme in danger of going up in smoke

25 June, 2012

Political squabbling runs the risk of turning the world’s best carbon pricing scheme into the world's shortest-lived.

Australia’s carbon-pricing scheme is a world-leader and shows the way forward for other countries seeking to mitigate carbon emissions, according to an expert from The Australian National University. However, political squabbling runs the risk of turning the world’s best carbon pricing scheme into the world’s shortest-lived.

Writing in a recent edition of Nature Climate Change, Dr Frank Jotzo, director of the Centre for Climate Economics and Policy in the ANU Crawford School of Public Policy, said Australia’s carbon pricing scheme is notable for its broad coverage of emissions, managed pricing and recycling of permit revenue through income tax cuts.

"The centrepiece of the scheme is a carbon price covering 60 per cent of Australia’s greenhouse gas emissions, including carbon emissions from both industry and households. This broad coverage underpins Australia’s national commitment of a 5 per cent reduction in emissions by 2020 when compared to 2000," Dr Jotzo wrote.

"The government-determined price of A$23 per tonne of carbon dioxide is also a notable feature. Importantly, the fixed price model helped break some of the political deadlock impeding the adopting of the scheme. It also makes fiscal revenues and impacts on price levels more predictable, and allows more time to prepare for market-based trading.

"This model could be particularly attractive for emerging permit schemes in China, South Korea and Mexico, because business and governments in these countries are likely to prefer price predictability in particular in the early phases of their schemes.

"Recycling revenue has also been an important and novel feature of Australia’s carbon pricing scheme. The income tax cuts have been the government’s trump card in its bid to rally public support for the policy, though this has fallen victim of poor public communication.

"Targeting household assistance at lower-income groups directly tackles the most widespread concern about the scheme – namely increases in the cost of electricity.

"And finally, as colleagues at the University of Melbourne also writing in today’s edition argue, Australia’s policy approach to tackling greenhouse gas emissions gives hope that the country can make an effective contribution to international objectives."

However, Dr Jotzo warned that the innovative scheme could soon be derailed by partisan politics.

"The legislation of ambitious climate change policy is a remarkable development for Australia, which is the world’s second-largest coal exporter and among the highest per capita emitters.  A decisive factor was the growing awareness that Australia faces severe risks from climate change impacts," Dr Jotzo wrote.

"The government adopted this position, but public support has since fallen, amid a widespread misperception that few other countries are acting to cut emissions and following the end of a long period of drought in Australia.

"However, there is no bipartisan support for carbon pricing, resulting in continued policy uncertainty. The opposition parties now reject carbon pricing, and their leader has pledged to repeal the legislation if and when in power. The issue of carbon pricing has been turned into such a political touchstone that substantial change or repeal is a distinct possibility after the next election, which is due by late 2013.

"If so, Australia’s carbon pricing mechanism might enter history as one of the best-designed yet shortest-lived policies for climate change mitigation."

View comments (20)

Have your say...

We welcome thoughtful comments from readers
Reload characters
Type the characters you see in this box. This helps us prevent automated programs from sending spam.
Kermit | Friday, June 29, 2012, 11:25 AM
The Global Warming monolith was built on a LIE...politicians and scare mongers have managed to disrupt the world financial system and that's exactly what it was designed for....the Global Warming scam is shadowed by the the real facts - Global Cooling. Have you taken the time to see where Al Gore has his business interests...it worked a treat for his wealth scheme. The propaganda is designed as a fear tactic to control the masses of the world by lowering the standard of living of the middle class. When people start realising this they will note this is a plan by the "big money" to introduce "the new world order", nothing short of Global Terrorism! The smart money is on the Global Warming scam only lasting a short while!....The more research we see the more the worm turns and lets discard the Al Gore lies before we throw the baby out with the bath water. Wake up people there is too much proof to show the "Hockey Stick" graph is a farce. The statistics were manipulated to suit the cause. The peer review process by world scientists was directed to those who could be politically and financially swayed...this is not based on good science at all...we all know how fragile the research dollars are so of course the scientists will comment favourably. When the GST was fixed at 10% the political system (what a joke, Julia) was tasked with finding a "new" tax...and now they have it! ......Carbon Tax...GOTCHA!
Rio | Friday, June 29, 2012, 1:00 PM
Here ! Here ! Could not agree more
Ken Goldsmith | Tuesday, July 3, 2012, 1:13 PM
"Australia’s carbon-pricing scheme is a world-leader and shows the way forward for other countries seeking to mitigate carbon emissions," : Yes, the way foward is to lie your way into power, then seditiously legislate a policy, knowing that the electorate is aware the policy is based on false, fabricated "science", and do not want it. We need some way to hold these traitors responsible.
Alfred A Arnold M/Director ACI pty ltd | Tuesday, July 3, 2012, 2:59 PM
I can only believe this artificially presented tripe was written by a paid Labor adviser, what tripe, as for his comments on China,The China government owns 80 % of all industry,They are not going to be setting a carbon tax in place ever, but what they do is offer tax deductions and incentives to those outside the Community's owned companies and this includes One Steel/Bhp and many German and US companies to reduce their carbon emissions and research is sponsored by the government. But can some one answer me as to whom gave them permission to railroad their ideas over and above the people they are responsible to, the Australian public.
Danno | Tuesday, July 3, 2012, 4:23 PM
Yeah Go Kermit & Rio!! Lets dig it up and burn baby burn, 'cause like inhaling exhaust fumes and gases doesn't harm you at all, and we can always find new stuff to burn, and anyway who cares about being more efficient, leave to some other fruitcake to solve. You guys are what makes Asustralia such a cutting edge economy, keep at it guys.
Alfred A Arnold M/Director ACI pty ltd | Tuesday, July 3, 2012, 4:42 PM
Judging from the comment Danno you must have excelled at maths at school what is 5% taken away from from 5% if we produce that much, go overseas to Shanghai Beijing Pune in India, man you don't have any idea what fumes are, in this country we can see a blue sky , over there it`s a blue haze.
Kermit | Tuesday, July 3, 2012, 4:56 PM
Danno, back under your rock mate! Take some time to check out the evidence before you vent...Climate Change (the earth is getting cooler) is a natural phenomena that all the tax in the world cannot stop....there are scientists on UTUBE, white papers, PhD thesis' just waiting to explain to you why and like two thirds of mankind; you have been duped!. As Alfred comments....providing incentives and providing research money to our CSIRO would achieve more than imposing a Tax on everyone...BAD! Reducing energy consumption is definitely a good move...it will make our oil last longer...taxing us and adding money to the bottom, will this sequestrate the Carbon (locking it up in the Reserve Bank)? It is time for all mankind to put action before a tax...tax money is wasted money...investment in humans instead of another tax creates a wealthy country, tax only gives us more unemployed peasants.....so HI! HO HI! HO its off to work we go...scrap the Carbon Tax...and Carbon Dioxide...get used to it, the mix in the air is so minuscule mankind doesn't make a difference.....Jul-liar just wants your dollars! and the Climate Change hype provides the ideal catalyst to extract them from you.......
Danno | Wednesday, July 4, 2012, 9:21 AM
Ahh Alfred & Kermit, I'm sure your knowledge of science is far superior to that of 97% of peer reviewed scientists, and your grasp of economics far superior to most economists. If you tax organisations on pollution, and they produce less pollution they pay less tax, this scheme is an incentive to produce less pollution so those organisations pay less tax. The air is cleaner in Australia due to government intervention in removing lead from petrol and introducing emissions standards for automobiles. A process that met with almost universal condemnation from auto companies around the globe. Yet they are still making cars and we are still buying, the cars just happen to be more efficient and safer. I'm sure that the presence of heavy metals in Sydney harbour is miniscule as well, but it makes seafood in Sydney harbour dangerous to eat, and I know a tiny amount of arsenic won't kill you, but just a tiny bit more will. No use preaching to the converted however, Elvis is still alive, the CIA crashed the planes on 9/11, and Harold Holt lives a comfortable life in China.
Kermit | Wednesday, July 4, 2012, 9:58 AM
Interesting comments, Danno! It is amazing how the "sheep of the world" take heed of the propaganda...you are the people following blindly, proving conclusively that propaganda is still the best form of control over the masses. The information revolution has failed to reach the majority. Only 30% of the population actually do the research to make an informed decision. I understand your frustration and the need for something to be done to kerb pollution and bad habits BUT no problem is solved by adding a TAX... Taxation only steals money from the people (you and me), it never finishes up where it is needed or stops the powerful (energy companies) from continuing their methods, they will find a reason why the goals cannot be achieved. Tax lodges itself firmly in the hands of government, the banks and the idle rich...get used to it! I will leave you to continue your own research......
Ken Goldsmith | Wednesday, July 4, 2012, 11:28 AM
Danno: CO2 is not pollution, and contributes a miniscule amount to global warming. The tax is not about pollution, it is about social engineering, as the seditious Labor/Greens government's grant of over $250M of borrowed money, to the REAL pollution belching Yallourn power station, to keep it going, proves.
Alan Swales | Thursday, July 5, 2012, 9:23 AM
Carbon Dioxide is the source of the oxygen we breathe. Loss of Trees/Forests are the real problem. We need the CO2! Taxing it is TAXING BREATHING.
Bill Koutalianos | Sunday, July 8, 2012, 5:34 PM
Given the discredited allegations of the ANU death threats, one might have hoped the ANU would give politics a break and try to present itself as an academic body for a change. Dr Jotzo is jumping the gun on Coalition policy by interpreting "No carbon tax" as a rejection of carbon pricing. The Coalition introduced the National Greenhouse Gas and Energy Reporting Act of 2007 and "Direct action" will obviously rely on some such auditing mechanisms, which suggests some form of carbon accounting and perhaps even pricing. Giving the Coalition more credit than is their due at this stage, is likely to result in further confusing and misleading the Australian public.
Ken Goldsmith | Monday, July 9, 2012, 10:25 AM
Good point, Bill Koutalianos. I worry that Tony Abbott believes in man-made climate change, and thinks his "direct action" plan can reduce CO2 emissions without doing as much damage to the Aus. economy as the tax and Emissions Trading Scheme would do. We don't need ANY damage, especially for no purpose. Abbott needs to get educated on the subject, and drop all thought of limiting CO2 emissions. He should also bar M. Turnbull from standing as a Liberal candidate. Malcolm would be happier in the Labor party, anyway, and they are desperately in need of a leader. Let him campaign for an impoverished republic from there.
Kermit | Monday, July 9, 2012, 10:58 AM
There seems to be a consensus that the Climate Change fiasco is generally accepted as propaganda machine aimed at creating alternative wealth to "Oil Money". Aimed to shift control of money from the Middle East back to "the new world order". From the scientific community there are as many believers as non-believers and both camps admit there is nothing man can do to alter what has been done. However, this does not prevent us from working cooperatively to develop more efficient energy systems and a cleaner environment reducing CO2 emissions. We must fight our way through the smoke screen of deceptive propaganda and face the problem intelligently - get rid of the Carbon Tax. For the better of humanity, stop the foolish efforts for world dominance by one "power" and concentrate on the real issues, spend the money to solve overpopulation issues...feeding and educating humanity. On a local level we seek a "statesman" to lead us out of this wilderness....Tony Abbot is a good fox terrier nipping at the heals of Jul-Liar, but we need a statesman to take us forward as a nation....someone who can lead with respect...We need a mix of Frazer, Whitlam, Keating, Costello and Howard!
alf arnold | Monday, July 9, 2012, 12:35 PM
Kermit and Ken, It might sound corny but I agree with you both, We most defiantly need a good Liberal Leader and I think we should ask John Howard to sit at least one more term and train a successor, As for Malcolm Turnbull you hit it on the head, for years I have said he is in the wrong party, for a man that has earned his own wealth, and with his education he could make a great right hand man to Jul,lair and when he learns to train his mouth he could take her place, alternatively he could replace BOB BROWN as he thinks like them as well.or start the Green Labor Party, it used to be RED once, or is it still, the way they treat industrial companies now is no different than what it was after the war,higher taxes, higher costs less production and demands for more money by the Unions, and industries dying all around us.
Bill Koutalianos | Monday, July 9, 2012, 12:56 PM
Hi Ken Goldsmith, I believe we're on the same page. As the outcome of the next Federal election has become clearer to all, I was recently struck by the fact that in the last Federal election most (say 85%) of Australians thought they were voting for "no carbon tax" and in the next Federal election almost all (say 95%) will be voting for some sort of carbon taxing, pricing or carbon control regime. The public will have been successfully duped and everyone from SBS news readers to Jotzo seem to be inadvertently, further promoting this process.
Kermit | Monday, July 9, 2012, 1:26 PM
Good point Alf, Malcolm Turnbull has a brilliant mind but he hasn't got what it takes to lead the nation...he is a brilliant man (but confused), he lacks the statesman credentials! Yes! we need the "terrible twins" back, but we give Johnny instructions to finish his training program. Unfortunately, we are falling short in our search for another statesmen from within! We definitely do not want one with Pinoccio's nose! I fear a landslide win to the Liberals without good leadership (Abbot)...we need a statesman to lead the politicians and our wonderful country out of the wilderness and our ever increasing DEBIT! ....we need HELLLPPP!
Ken Goldsmith | Monday, July 9, 2012, 1:41 PM
Kermit, I think China controls at least as much of the world's wealth as there is "Oil Money", but neither seem to me to be under attack. After all, they are all developing countries, and the plan, as set out in Agenda 21, is to reduce the "developed" west to the same levels as undeveloped cou8ntries. I don't see much effort directed at raising the levels of those less/un-developed countries, so long as "we" pay, it does not matter that all the "aid" is wasted on corruption and incompetence. Frazer, Whitlam were both as useless as JuLiar, Keating was detestable and unelectable, Costello has said he no longer wants to play politics, same Howard, who also, in the end, supported an ETS. Don't forget, also, that in 2007 he lost to KRUDD, IMHO because of the number of lies his government told. (Children overboard, "core" and "non-core" election promises, etc. So I don't agree with your proposed "mix", but am at a loss to nominate an alternative. Also, again, CO2 is not pollution, it is plant food, it is the bubbles in your fizzy drinks, the holes/space in your bread and cake, it plays a miniscule role in Global Warming, but it does detract attention from REAL pollution, and as such is counter productive. Bill, I don't think it is "inadvertant". Despite our current problem with "Independent" politicians, I think the two-party system is the root cause of our problems. We need a system whereby electorates can recall and replace their representative, and the legislative bias against new parties and independents needs to be fixed.
Bill Koutalianos | Monday, July 9, 2012, 3:21 PM
Good point or rather point taken Ken. In support of your point, I noticed SBS World News almost went into meltdown a few nights ago, when Tony Abbott began saying "Axe...". I believe the rest of the sentence was "Axe the tax", which has been the slogan of the Galileo Movement. They're attempting to educate the public by exposing the climate lies which we've been fed. They have also tried educating Greg Hunt, to no avail. Are you going to any of the Donna Laframboise talks?
Ken Goldsmith | Tuesday, July 10, 2012, 10:46 AM
Bill, unfortunately, I can not attend any of the Donna Laframboise talks. Anyway, there is too much "preaching to the converted", hopefully the seat I would have occupied as a "convert", will go to someone who believes in man made global warming, or at least someone who is already starting to see the reality of the scam.