Extract from The Guardian
With the senate vote on the carbon price repeal imminent, here are five reasons the laws should be kept.
New Australian senators sworn in as the public galleries watch on. Photograph: Mike Bowers
This week, the Abbott government has attempted to cut debate on
its proposal to repeal the Clean Energy Future Act and abolish
Australia's carbon price. The new senate has a powerful cross-bench of
independent senators who hold the balance of power; the Abbott
government must negotiate either with Labor or the Palmer United Party and other independent senators.
Last month, coal-baron Clive Palmer dazzled the media and derailed Tony Abbott's climate policy agenda by announcing his party would vote for the retention of the Renewable Energy Target, the Clean Energy Finance Corporation and in-principle support for an emissions trading scheme.
Now, his party and an allied independent, Ricky Muir, who was elected under the banner of the Motoring Enthusiasts Party, have the power to keep or destroy Australia's carbon pricing scheme. (Muir has come out recently to support the Australian Renewable Energy Agency, and his spokesman has said that Muir supports renewable energy, according to a Guardian report.) However, events move quickly, and senators' votes may change.
Despite the misleading rhetoric from Abbott and his climate-denying, renewable energy opposing business advisors, the carbon price has actually done very well.
None of Abbott's histrionic doomsday prophecies have eventuated — there has been no python squeeze, Whyalla remains on the map, a leg of lamb costs less than $100 and electricity prices haven't skyrocketed. In fact, the Australian economy, despite Abbott's car industry mismanagement and industry-policy negligence, has done rather well. Unemployment remains low in most states, economic growth is good, and interests rates are stable.
On top of that, carbon pollution from regulated sectors is reducing. Renewable energy production is increasing. Clean-energy jobs are growing.
The "carbon price" policy is much more than the price, although that is the most obvious element of it. A far more important part of the Clean Energy Future Act is that it legislates an economy-wide cap on carbon emissions. It is this cap which creates scarcity, and under a trading scheme, allows the market to price carbon pollution permits. If Australia is to be a constructive global player in tackling climate change, the emissions cap is an essential policy element.
Under Abbott's proposed "direct action" policy for a 5 percent reduction in carbon emissions, there would be no cap on carbon pollution. Thus, despite paying major emitters to reduce their emissions, there would be no overall policy lever for the government to actually achieve that 5 percent target. This is one of the primary reasons that most serious economists and all climate policy commentators have criticised the "direct action" policy as being useless.
So why would you abolish the carbon price?
Here's five reasons to keep the carbon price.
The consistent lie by opponents of the carbon price is that it does not reduce carbon emissions or does not have an impact on global warming. Australia is one of the world's largest emitters of carbon pollution, and the largest per capita. Any reduction from Australia not only shows global leadership (which is at risk of the price was abolished) but has a real, measurable impact on the amount of carbon pollution in our atmosphere.
At the same time, the Australian economy grew and over 160,000 jobs were created nationally, which demonstrates the falseness of the criticism that Abbott regularly uses that the carbon price was a "hand-brake" on the economy. The price impact of the carbon price has been (as expected) minimal, and far greater influence on electricity costs and other prices are fluctuations in the Australian dollar and commodity prices.
This fails the common-sense test. Renewables decreases electricity prices, and even a moment of contemplation shows why.
Fossil fuels must pay for the cost of digging up, transporting and refining of the coal or gas, as well as massive infrastructure and maintenance of decades old facilities. Renewables have an upfront cost for installation, ongoing maintenance costs, and then gets its energy free from the wind and sun. Fossil fuels is also exposed to commodity market fluctuations, so the sector is exposed to higher natural gas prices, and coal prices.
Household renewable generators are now growing to such a scale that in some states, they are pushing electricity prices to zero, as Giles Parkinson wrote recently for Comment is Free.
The Renewable Energy Target is a big reason for the growth in renewables — the target mandates that Australia produce 20 percent of its electricity from renewables by the year 2020 — but the carbon price also assists. It does so by adding a cost to the externality of carbon pollution.
The majority of Australia's carbon pollution comes from stationary energy generation, those big coal fired power stations. Until last year, those power stations could pollute with no cost. The Climate Institute noted: "using the International Monetary Fund's approach to energy subsidies and the "social cost" of pollution, the repeal of the carbon price amounted to a subsidy of up to $15 billion to the major polluters."
Shell is not the only company calculating carbon prices into its business plans. Exxon, the world's biggest oil producer, assumes a $60 per ton price. Other major corporations, including oil giant BP, retail giant Wal-Mart and tech giant Google also include carbon prices in internal strategic planning, according to a Reuters report..
The effects of climate change will act as a dead-hand on our economy and our industries. Acting now, before the worst effects of global warming hit Australia, can ensure that jobs in industries like manufacturing, energy and mining can be transformed into low-carbon, high-tech jobs. National president of the manufacturing union, Andrew Dettmer wrote:
Without policy tools, such as a carbon price and industry policy, the risk is that Abbott's negligence will undermine Australia's economy and jobs market through the double-whammy of a downturn in commodity prices and an eroded manufacturing base.
In a letter signed by more than 50 Australian economists, the point is made that the carbon price is "a necessary and desirable structural reform of the Australian economy, designed to change relative prices in a way that provides an effective incentive to consumers and producers to shift over time to more low-carbon, energy-efficient patterns of consumption and production."
The USA for example has enacted wide-ranging national regulations covering carbon emissions, while nine different states, including California and the New England region, have local carbon trading schemes. Obama's new emissions rules would require states to reduce carbon pollution, which could include joining existing state-level cap-and-trade schemes.
China, a major trading partner, is moving to put a cap on carbon emissions, with consideration being given to including it as part of their next Five Year Plan. Within China, there are carbon pricing schemes in seven regional areas, covering 200 million people. Massive renewable energy projects are also being undertaken across China, and China has committed to reducing its carbon emissions per unit of GDP by 40-45 percent by 2020.
Whether the policy mechanism being used is a cap-and-trade, carbon tax or shadow price (i.e. regulations directly curbing carbon pollution), national and state-level governments around the world are putting a price on carbon pollution. As the ABC fact check notes, "economist Ross Garnaut says he doesn't know of anywhere in the world where carbon pricing is being rolled back."
We have had them now for two years, and polls show that most Australians like them. According to Lonergan research last year, three out of five Australians want the laws kept. More recent polling by JWS shows support for the carbon price has been increasing.
Cassandra Goldie from the Australian Council of Social Services said that ACOSS supports a price on pollution and renewable power laws, because low-income earners are most vulnerable to the impacts of climate change. "People living on low-incomes will be the first and worst hit by the effects of climate change," she said. "It is irresponsible to repeal the clean energy laws when they remain the only credible and independently assessed mechanism for Australia to adopt."
Michael Moore, CEO of the Public Health Association of Australia, said on Tuesday: "global warming is not only an environmental issue. Without dramatic action the potential for adverse impacts on health are enormous."
Dr Beth Heyde from the Anglican General Synod said: "The Synod met just last week and unanimously expressed grave concern to the Government that a market mechanism such as an emission trading scheme is not part of its strategy to address climate change." She noted, "a market mechanism such as an Emissions Trading Scheme is not a carbon tax — it is a key way by which 21st century Australia can achieve two important goals: lowering the very serious risks from global warming which have been so clearly identified by the IPCC, and moving to a thriving, sustainable economy based on renewable energy rather than fossil fuels."
If the new senators support taking action to reduce the impacts of global warming, then it should vote to keep the carbon price, and especially the carbon cap.
Last month, coal-baron Clive Palmer dazzled the media and derailed Tony Abbott's climate policy agenda by announcing his party would vote for the retention of the Renewable Energy Target, the Clean Energy Finance Corporation and in-principle support for an emissions trading scheme.
Now, his party and an allied independent, Ricky Muir, who was elected under the banner of the Motoring Enthusiasts Party, have the power to keep or destroy Australia's carbon pricing scheme. (Muir has come out recently to support the Australian Renewable Energy Agency, and his spokesman has said that Muir supports renewable energy, according to a Guardian report.) However, events move quickly, and senators' votes may change.
Despite the misleading rhetoric from Abbott and his climate-denying, renewable energy opposing business advisors, the carbon price has actually done very well.
None of Abbott's histrionic doomsday prophecies have eventuated — there has been no python squeeze, Whyalla remains on the map, a leg of lamb costs less than $100 and electricity prices haven't skyrocketed. In fact, the Australian economy, despite Abbott's car industry mismanagement and industry-policy negligence, has done rather well. Unemployment remains low in most states, economic growth is good, and interests rates are stable.
On top of that, carbon pollution from regulated sectors is reducing. Renewable energy production is increasing. Clean-energy jobs are growing.
The "carbon price" policy is much more than the price, although that is the most obvious element of it. A far more important part of the Clean Energy Future Act is that it legislates an economy-wide cap on carbon emissions. It is this cap which creates scarcity, and under a trading scheme, allows the market to price carbon pollution permits. If Australia is to be a constructive global player in tackling climate change, the emissions cap is an essential policy element.
Under Abbott's proposed "direct action" policy for a 5 percent reduction in carbon emissions, there would be no cap on carbon pollution. Thus, despite paying major emitters to reduce their emissions, there would be no overall policy lever for the government to actually achieve that 5 percent target. This is one of the primary reasons that most serious economists and all climate policy commentators have criticised the "direct action" policy as being useless.
So why would you abolish the carbon price?
Here's five reasons to keep the carbon price.
1. It's reducing carbon pollution
The main reason to have a carbon price is to reduce carbon pollution. Well, the Clean Energy Future Act is doing exactly that. After two years of operation, total carbon pollution from electricity consumption in the national energy market is "down by 5.3 million tonnes in the twelve months to May 2014", according to The Climate Institute.The latest Australian Greenhouse Gas Inventory shows that national emissions continue to drop. Emissions from all sectors excluding land use and forestry fell 0.8 per cent, or 4.3 million tonnes in the year to December 2013.
The consistent lie by opponents of the carbon price is that it does not reduce carbon emissions or does not have an impact on global warming. Australia is one of the world's largest emitters of carbon pollution, and the largest per capita. Any reduction from Australia not only shows global leadership (which is at risk of the price was abolished) but has a real, measurable impact on the amount of carbon pollution in our atmosphere.
At the same time, the Australian economy grew and over 160,000 jobs were created nationally, which demonstrates the falseness of the criticism that Abbott regularly uses that the carbon price was a "hand-brake" on the economy. The price impact of the carbon price has been (as expected) minimal, and far greater influence on electricity costs and other prices are fluctuations in the Australian dollar and commodity prices.
2. It's increasing renewable energy (and cutting energy prices)
One of the biggest lies that Abbott routinely tells is that renewable energy increases electricity prices.This fails the common-sense test. Renewables decreases electricity prices, and even a moment of contemplation shows why.
Fossil fuels must pay for the cost of digging up, transporting and refining of the coal or gas, as well as massive infrastructure and maintenance of decades old facilities. Renewables have an upfront cost for installation, ongoing maintenance costs, and then gets its energy free from the wind and sun. Fossil fuels is also exposed to commodity market fluctuations, so the sector is exposed to higher natural gas prices, and coal prices.
Household renewable generators are now growing to such a scale that in some states, they are pushing electricity prices to zero, as Giles Parkinson wrote recently for Comment is Free.
The Renewable Energy Target is a big reason for the growth in renewables — the target mandates that Australia produce 20 percent of its electricity from renewables by the year 2020 — but the carbon price also assists. It does so by adding a cost to the externality of carbon pollution.
The majority of Australia's carbon pollution comes from stationary energy generation, those big coal fired power stations. Until last year, those power stations could pollute with no cost. The Climate Institute noted: "using the International Monetary Fund's approach to energy subsidies and the "social cost" of pollution, the repeal of the carbon price amounted to a subsidy of up to $15 billion to the major polluters."
3. The fossil fuel industry is already calculating a shadow price
Major polluters, including fossil fuel producers like Shell, are already operating under a shadow carbon price to plan new projects. Bloomberg reported in May that "Europe's biggest oil company budgets for future capital investment on the assumption it will pay $40 a metric ton for carbon emissions", and that it is considering boosting this price. In its sustainability report, Shell explained its decision:Without clear measures to promote investment in more efficient and low-carbon technologies, [the world] risks setting itself on a course to potentially catastrophic climate change.
At Shell we advocate publicly and to governments that a strong and stable price on CO2 emissions will help drive the right investments in low-carbon technologies. But we are not waiting for government policy to develop. We consider the potential cost of a project's CO2 emissions, which we set at $40 a tonne, in all our major investment decisions.
Shell is not the only company calculating carbon prices into its business plans. Exxon, the world's biggest oil producer, assumes a $60 per ton price. Other major corporations, including oil giant BP, retail giant Wal-Mart and tech giant Google also include carbon prices in internal strategic planning, according to a Reuters report..
4. It's future-proofing our industries
While the current Abbott government seems intent on eradicating heavy manufacturing in Australia, most notably the car industry, putting a price on carbon will make our industries more globally competitive over the medium to long term.The effects of climate change will act as a dead-hand on our economy and our industries. Acting now, before the worst effects of global warming hit Australia, can ensure that jobs in industries like manufacturing, energy and mining can be transformed into low-carbon, high-tech jobs. National president of the manufacturing union, Andrew Dettmer wrote:
Rather than turning tradespeople into tour guides, the AMWU sought a high skill future where our skills transform manufacturing by building better transportation, better power generation through wind, solar and other means, and smarter life cycle management of manufactured products.
... foundries are one of the success stories of the carbon tax; where nearly $300M was provided to upgrade Australian foundries (most of which date from the 1950s) to newer, lower energy and hence lower emitting smelting technologies.
Without policy tools, such as a carbon price and industry policy, the risk is that Abbott's negligence will undermine Australia's economy and jobs market through the double-whammy of a downturn in commodity prices and an eroded manufacturing base.
In a letter signed by more than 50 Australian economists, the point is made that the carbon price is "a necessary and desirable structural reform of the Australian economy, designed to change relative prices in a way that provides an effective incentive to consumers and producers to shift over time to more low-carbon, energy-efficient patterns of consumption and production."
5. The rest of the world is pricing carbon
The ABC's fact-checker recently debunked Abbott's often-repeated claim that the world is moving away from pricing carbon, finding that "the reach of carbon pricing is 'steadily increasing'." Sixty-six countries that account for 88 percent of global emissions have passed laws to address global warming, according to conservative Lord Debsen, former environment minister under Thatcher.The USA for example has enacted wide-ranging national regulations covering carbon emissions, while nine different states, including California and the New England region, have local carbon trading schemes. Obama's new emissions rules would require states to reduce carbon pollution, which could include joining existing state-level cap-and-trade schemes.
China, a major trading partner, is moving to put a cap on carbon emissions, with consideration being given to including it as part of their next Five Year Plan. Within China, there are carbon pricing schemes in seven regional areas, covering 200 million people. Massive renewable energy projects are also being undertaken across China, and China has committed to reducing its carbon emissions per unit of GDP by 40-45 percent by 2020.
Whether the policy mechanism being used is a cap-and-trade, carbon tax or shadow price (i.e. regulations directly curbing carbon pollution), national and state-level governments around the world are putting a price on carbon pollution. As the ABC fact check notes, "economist Ross Garnaut says he doesn't know of anywhere in the world where carbon pricing is being rolled back."
The carbon pricing laws are working and Australians want to keep them
The simple reality is that the carbon price laws are effective, fiscally responsible, and beneficial for Australia.We have had them now for two years, and polls show that most Australians like them. According to Lonergan research last year, three out of five Australians want the laws kept. More recent polling by JWS shows support for the carbon price has been increasing.
The adults in charge. #carbonprice #auspol pic.twitter.com/ucTEdJC5bu
— Alexander White (@alexanderwhite) June 27, 2014
A large number of community leaders this week called on the new senate to keep the carbon reduction and renewable energy laws.Cassandra Goldie from the Australian Council of Social Services said that ACOSS supports a price on pollution and renewable power laws, because low-income earners are most vulnerable to the impacts of climate change. "People living on low-incomes will be the first and worst hit by the effects of climate change," she said. "It is irresponsible to repeal the clean energy laws when they remain the only credible and independently assessed mechanism for Australia to adopt."
Michael Moore, CEO of the Public Health Association of Australia, said on Tuesday: "global warming is not only an environmental issue. Without dramatic action the potential for adverse impacts on health are enormous."
Dr Beth Heyde from the Anglican General Synod said: "The Synod met just last week and unanimously expressed grave concern to the Government that a market mechanism such as an emission trading scheme is not part of its strategy to address climate change." She noted, "a market mechanism such as an Emissions Trading Scheme is not a carbon tax — it is a key way by which 21st century Australia can achieve two important goals: lowering the very serious risks from global warming which have been so clearly identified by the IPCC, and moving to a thriving, sustainable economy based on renewable energy rather than fossil fuels."
If the new senators support taking action to reduce the impacts of global warming, then it should vote to keep the carbon price, and especially the carbon cap.
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