Australia puts a price on carbon

The Australian government yesterday unveiled plans to impose a “carbon price” on industrial emissions in a bid to combat climate change.

Australian Prime Minister Julia Gillard said the carbon price of 23 Australian dollars (NZ $29.55) per ton of carbon emissions was designed to encourage businesses to move to cleaner energy sources.

Subsidies and tax cuts would be used to lessen the impact on consumers.

Details on the package are available via the following links:

The SMC gathered reaction from New Zealand experts. Contact the SMC if you would like to interview the scientists quoted. Feel free to use the quotes below in your reports.

Ralph Sims, Professor of Sustainable Energy at Massey University’s Centre for Energy Research comments. (Prof Sims is at the IPCC meeting in Korea and is leading the transport chapter for the IPCC’s 5th Assessment Report):

“This is an innovative and exciting approach to a complex problem – but taxing the bad and rewarding the good has been advocated for some time.

“Support for Renewable Energy has been a key part of Australian policy for a decade or so and this approach follows on from the conclusions reached in the IPCC Special Report on Renewable Energy launched in May.

“The announcement is timely for the 7th Climate Change and Business conference to be held in Wellington on 1 and 2 August where Minister Nick Smith will be justifying the New Zealand approach and this Australian Package is also to be presented by Hon Mark Dreyfus, Parliamentary Secretary for Climate Change and Energy Efficiency.

“It now makes good sense for both countries to move forward together on the climate issue. The argument by some New Zealand businesses and farmers that NZ should not be a leader in climate change mitigation is beginning to wear thin, based on the number of policies being introduced around the world, as in Australia. It is more a case of “Is NZ keeping up?”

Professor Martin Manning, Climate Change Research Institute, Victoria University comments:

“Australia has been one of many countries experiencing extreme weather conditions recently, but their government’s establishment of carbon prices to deal with climate change is clearly based on much more than that. For several years, economic analyses of carbon prices in Australian Treasury reports have been based on world class economic models, and have consistently shown that there can be advantages for introducing carbon emission charges sooner rather than later.

“This Australian move may start to raise new issues for some aspects of trans-Tasman trade and the strong economic connections with New Zealand. An initial Australian carbon price of A$23 per tonne in 2012 will be effectively twice as high as has been set in the transition phase for the New Zealand Emissions Trading Scheme (ETS), which now requires surrendering one unit for every two emitted and is equivalent to an effective carbon price of NZ$12.50 per tonne. However, the New Zealand plan is to move away from fixed prices earlier than has now been set in Australia.

“There are reasons for considering more consistency between the carbon pricing schemes in the two countries. Both have a large fraction of total emissions in the form of agricultural methane, and reducing these is very important for stabilising climate change. Also data released by BP last month shows that both countries have had decreasing CO2 emissions for the last four to five years which is part of the growing evidence that GDP growth is not dependent on greenhouse gas emissions.”

Dr Jim Salinger, climate scientist and honorary researcher, University of Tasmania comments:

“Being resident at the University of Tasmania from January to April 2011 whilst Australian Carbon Tax has been developed there are a couple of big issues facing Australia:

“Australia is on the front line for climate change and is one of the first to be experiencing the extremes of global warming. Climate models show that Australia is the drying continent in the next few decades. Some global warming aspects were apparent over the past summer: For December 2010 the Bureau of Meteorology figures show that eastern Australia (the states of Queensland, New South Wales, Victoria and Tasmania) had its wettest December on record, with an average area total of 167 mm (132% above normal).

“This was followed from 10-15 January in Victoria heavy rainfall and flash flooding, with more than 100 mm of rain across two thirds of the state. Bureau of Meteorology figures show many weather stations in Victoria have now broken their all-time January records in over 100 years of observations. It is a simple law of physics that a warmer atmosphere holds more moisture.

“With the long term heating of the oceans more moisture has been measured in the atmosphere during the last decade. The consequence is that global warming leads to an increase in the magnitude and incidence of heavy rainfall, and the resultant floods. The issue from these flooding events is that global warming is already impacting on Australian extremes.

“The second issue is will the carbon tax announcements survive the political process and lobby from big business?? With Labor and Gillard way down in the polls and opposition leader Tony Abbott pledged to oppose the package in totality the polarisation in politics will deepen dramatically. And what of the mining industry?? They have mobilized unions with the mantra that this will lead to job losses, a line that Union boss Paul Howes has swallowed. This industry sector will continue lobbying as hard as possible, with the big polluters angrily predicting dire warnings of the effects on the Australian economy. Then the Murdoch owned media is also in opposition with today’s editorial in The Australian concluding, ‘The Government has not done enough to demonstrate how this carbon-tax plan is going to save the world or, indeed, encourage other countries to step up their efforts to tackle climate change.’

“Australia, which has the highest level of carbon emissions per capita in the world, about four times of that in New Zealand needs to dramatically reduce its carbon emissions and hopefully the carbon tax announcements will endure the political process, big industry lobbying and the criticism from the Murdoch owned media. If it does not, it will be assisting the drying of the continent and future business as usual growth of carbon emissions.”

Quotes gathered by the Australian Science Media Centre:

Professor John Quiggin is an Australian Research Council Federation Fellow in the School of Economics, University of Queensland comments:

“The proposed carbon tax is a substantial improvement on the heavily compromised emissions trading scheme agreed between the Rudd government and the Opposition under Malcolm Turnbull. Although there is substantial compensation for emissions-intensive industry it is temporary and based on historic emissions level, so that the incentive to reduce emissions is not compromised.

“The design of the compensation package for households is also welcome. The government has avoided the temptation to pretend that everyone will be better off, and has taken the reasonable position that high income households do not need to be compensated for the introduction of necessary reforms. This has permitted the very welcome measure of raising the income tax threshold and thereby taking more than a million low-income workers out of the income tax system.

“While the primary focus of the package is, correctly, on the imposition of a price on carbon emissions, there are a range of supporting measures designed to encourage energy efficiency and innovation. On the whole, these seem more carefully designed than the measures introduced under previous governments.”

Professor Snow Barlow is a Convener of the Primary Industries Adaptation Research Network and is from the Melbourne School of Land and Environment at the University of Melbourne comments:

“This is a well constructed government policy addressing climate change through an immediate price on carbon, transitioning into an emissions trading scheme, thereby enabling the government to cap emissions to a level that enables us to meet our agreed five per cent cut in emissions in 2020. The budget-neutral package redistributes the estimated $10 billion pa revenue between potentially disadvantaged communities, export exposed emissions-intensive industries and innovation to enable the transition to a low-carbon economy. This innovation package is comprehensive both in magnitude and coverage.

“The specific Creating Opportunities for the Land package provides a welcome $1.9 billion over six years to support emissions reduction and carbon sequestration in the land-based sector. More than $200 million over six years is allocated for research and development to develop strategies, technologies and methodologies to achieve these emissions reductions.

“The implementation of these measures will be guided by natural resource management (NRM) plans for each of Australia’s 56 NRM regions to ensure that carbon emission reduction measures do not result in perverse outcomes for land use and Australia’s unique biodiversity. Most importantly there is a clear market for the carbon credits developed in these activities either directly into the Tax scheme or through a scheme regulator in the case of activities not currently covered by the Kyoto Protocol.”

Professor Peter Newman is Director of Curtin University’s Sustainability Policy (CUSP) Institute. Prof Newman is presently in Korea at an IPCC meeting on Transport, one of only three Australians in the next phase of IPCC work.

“I think it’s fantastic that we have a climate change package which includes a carbon price for the front end of the economy and a range of end user initiatives to assist with the transition for households and businesses. It’s been a painful process but an historic day now that we have the package.

“Well done to the Government, the Greens and the Independents! They have been real leaders for a change. I hope Australians will recognise that this is a necessary step for us, that the world needs us to be responsible and demonstrate hope like this and that the Opposition’s negativity is based on fear – which never makes good public policy.”

Professor John Cole is Director of the Australian Centre for Sustainable Business and Development at the University of Southern Queensland:

“It has more than a few rough edges and shows all the signs of the political trade-offs needed to secure a carbon price in one of the most carbon-intensive economies on the planet.

“In creating a politically defensible platform from which to lead and steer change as well as resurrect its standing with the Australian people, the Government has traded away some economic and environmental efficiency to placate the coal interest, at least in the short to intermediate term.

“That said, today’s carbon package is a welcome and significant first step by Australia on the road to decarbonising its economy as the international community slowly but surely comes to grips with the human dimensions of climate change.

“There is no shortage of targeted assistance measures to help a range of industries do what they should already be doing, namely achieving savings through energy efficiency, capturing fugitive emissions for co-generation, and planning for competition in a world which will increasingly value low-carbon products and services.

“The overall outcome is a politically practical no-frills deal which recognises that there is no silver bullet for dealing with the complexities of climate change, economic reform and decarbonisation.”

Professor Peter Cook is Chief Executive of the Cooperative Research Centre for Greenhouse Gas Technologies, Canberra comments:

“I am glad to see that clean energy technologies will be supported through the carbon tax, but concerned that carbon capture and storage (CCS) is not included in the remit of the new Clean Energy Finance Corporation. CCS is a clean energy technology that is highly relevant to decreasing emissions from biomass, gas and coal; there are also potential opportunities for combining CCS with geothermal power and algal sequestration. CCS is likely to be a key component of moving to electric cars and the hydrogen economy and the increased uptake of gas.

“All the projections of bodies such as the International Energy Agency clearly show that we will need CCS for at least 20 per cent of the global mitigation effort in the coming decades. The proposed arrangements suggest a more polarised approach to lowering our carbon footprint. Without inclusion of CCS, there is no solution to the greenhouse issue.

“The clean energy future for Australia has to be greater energy efficiency, increased use of renewable, switching to gas and carbon capture and storage. People have to be realistic about the clean energy mix and what the various technologies can achieve, and whilst they might like renewable energy to be the answer, the reality is that for decades to come it will only be part of the answer. The steps proposed as part of the carbon tax measures should reflect this reality and include CCS as an important component of future energy mix.”

Professor Ian Lowe is Emeritus Professor of Science, Technology and Society at Griffith University. He is also President of the Australian Conservation Foundation comments:

“Today’s announcement is a very important step forward. There will at last be a price on greenhouse pollution. While it does not start high enough to drive a rapid transition to a clean energy future, it is a beginning and a clear signal to the business community. I particularly welcome the establishment of a new Climate Change Authority to advise on pollution caps after 2015, improving the chance they will be based on science rather than political expediency. We need to do much better than a five-per cent reduction by 2020 to meet the urgent challenge of climate change.

“The Clean Energy Finance Corporation and the Australian Renewable Energy Agency are important mechanisms for driving the transition to low-carbon energy. The National Energy Savings Initiative needs to be rapidly implemented, as energy efficiency is by far the most cost-effective way of reducing greenhouse pollution. We should also welcome the commitment to take account of the voluntary action by millions of Australians in setting future targets. The new Biodiversity Fund is a crucial investment in our capacity to protect Australia’s unique biota from the accelerating impacts of climate change.

“There are some disappointments in the package, especially the continuing support of polluting industries like coal-fired power and LNG. While road transport fuels are excluded from the carbon price, rail is not, so the existing huge public subsidy of road freight will be increased further. An urgent priority should be the phasing out of subsidies for fossil fuel production and use.

“Ratifying the Kyoto Protocol in 2007 was the first step to joining the international effort to slow climate change. Today’s announcement is the second step. The new package deserves support.”

Professor Graham Farquhar is from Australian National University Climate Change Institute comments:

“The aim of the carbon tax is to reduce Australian emissions by five per cent. In turn the aim of that reduction is to put political or economic pressure to encourage or shame other countries to reduce their emissions by five per cent. If we are successful and all the countries of the world reduce their emissions to five per cent below what they would have been, then the anthropogenic climate that we would otherwise have seen in 2031 will be postponed until 2032.”