As The Emissions Trading Scheme select committee continues to hear submissions on the review of the carbon-reduction mechaism, Australian Prime Minister Kevin Rudd has announced that the start of Australia’s emissions trading scheme is being delayed until 2011.
The Australian Government had previously planned to introduce the scheme in 2010. The Government also announced it would increase the upper limit of its carbon reduction target to 25 per cent of 2000 levels by 2020, depending on global agreements on emissions cuts being reached in Copenhagen later this year.
The AusSMC wrapped up reaction from Australian scientists:
Professor Kevin Parton is at the Institute for Land, Water and the Environment at Charles Sturt University
“The delayed start of the ETS to 1st July, 2011 is a little disappointing, but not surprising. We have already seen a dilution of the policy envisaged in the Green paper of July 2008 by expanding the number of firms eligible for free permits. Today’s announcement provides another gain to business.
“A number of comments could be made about the second component, a fixed price for an unlimited supply of permits for the first year of the scheme. First, it seems like a prudent introduction instead of moving directly to a free market. Second, however, $10/t seems a low price relative to those prices expected by some commentators, and if so, would be another gain for business. Third though, as a means of gaining acceptance for the scheme, a fixed introductory price has much to commend it. At the start it will allow firms to simply concentrate on their quantity of greenhouse gas emissions, without having to estimate a price/quantity relationship. Then the experience of one year of operation of the scheme will allow firms to be more confident of the evolving price/quantity relationships, and be more able to effectively participate in an auction market for permits from the second year onwards.
“The claim is made by the Prime Minister that this slow start will offer the opportunity to make a bigger contribution to reducing greenhouse gases later. He said, ‘We now commit to reduce carbon pollution by 25 per cent by 2000 levels by 2020 if the world agrees to an ambitious global deal to stabilise levels of CO2 equivalent in the atmosphere by at least 450 parts per million by 2050.’
“We need to remember that we need to get back to 450 parts per million (ppm) by 2050, in order to keep climate change to 2 to 3 degrees C . Also the Prime Minister’s is a conditional statement. Australia will commit only if other countries do. Nevertheless, the 25 per cent does bring Australia closer to the commitment of some other countries.
“Also we should remember that Professor Garnaut and others have said that the overall cost to the Australian economy of tackling climate change under the 450ppm scenario was a manageable 0.1-0.2 per cent of annual economic growth to 2020.
“Finally there is a component that seems to be attempting to encourage households to participate. However, the explanation about the way this will work just leaves you asking a multitude of questions. The statement said ‘Individuals and households will be able to calculate their energy use at home and pledge contributions to the $25 million plus Energy Efficiency Savings Fund to effectively offset their emissions. Individuals will be able to calculate their energy use and establish the savings they could achieve with a more energy efficient home.
“A household or individual could then make a tax deductible donation to the pledge fund, which the pledge fund would use to buy and cancel carbon pollution permits equivalent to that level of energy use.’ Perhaps the most important question here is: Does this mean that non-business organisations are excluded from the ETS except through the Energy Efficiency Savings Fund?”
John Quiggin is an Australian Research Council Federation Fellow in the school of economics at the University of Queensland:
“The good news in this shift is that the government is now prepared to offer a 25 per cent reduction in Australia’s emissions, conditional on an international agreement being reached in Copenhagen. In this context, a one-year delay in the commencement of the scheme and a temporary cap on the price of emissions is a reasonable trade-off to secure broader support for the scheme.”
Dr Mark Diesendorf is Deputy Director of the Institute of Environmental Studies at University of New South Wales:
“Since the existing ETS proposal would be unlikely to reduce Australia’s emissions, a delay doesn’t matter. Shortcomings of the ETS include:
- the tiny unconditional 5% target;
• the transfer of billions of dollars worth of free emission permits to the biggest greenhouse polluters;
• the ability of other polluters to offset all of their emissions in overseas projects of questionable effectiveness and additionality;
• the fact that emission permits would be permanent property rights instead of temporary licences;
• the cap on the carbon price, which should be replaced by a floor (minimum) carbon price.
The important actions needed from the government are to speed up the implementation of so-called ‘complementary’ policies, including:
• the expanded Renewable Energy Target, without giving accreditation to solar hot water;
• grants to solar, wind and biomass from the Renewable Energy Fund and Energy Innovation Fund;
- feed-in tariffs for large solar thermal power stations;
- a ban on new conventional coal-fired power stations.
“The first two items were election promises that have already been delayed unnecessarily for 18 months. Meanwhile the ETS should be reformed or replaced with a national carbon tax.”
Dr Ben McNeil is Senior Research Fellow at the Climate Change Research Centre, University of New South Wales:
“It is extremely important for the government to have a carefully thought out ETS scheme and meaningful carbon reduction target. Putting a 25% reduction target on the table gives the best change for a good outcome in Copenhagen and will importantly also send a signal to drive low carbon investment in Australia towards 2020. We now just have to make sure that a 25% reduction target becomes reality, since it would be in Australia’s long term economic and environmental best interests.”
Ian Lowe is Emeritus professor of science, technology and society at Griffith University, Queensland and President of the Australian Conservation Foundation.
“On balance this is a welcome change. The 25% target is a significant step forward. It puts Australia in a leadership position along with the EU in relation to developed countries targets which will be crucial for a sound Copenhagen outcome. I think a credible target to help prosecute a sound Copenhagen outcome is absolutely crucial, far more important than the ‘soft start’ to the scheme. While much stronger action by Australia and the world is needed, on balance the legislation now does more good than harm and should be passed with this stronger target. We still need improvements to the legislation and additional strong action for reducing energy efficiency and boosting renewables including solar. But I think we should see this as a useful step along the crucial path to achieve needed deep cuts in Australian and global emissions.”