Token Environmental Policy Continues in Australia: Australians Elected the Rudd Government in the Hope It Would Protect the Environment and Take Action on Global Warming, DR SHARON BEDER Notes, but Instead It Is Promoting an Emissions Trading Scheme, despite Evidence This Will Achieve Little Apart from Higher Prices for Consumers
Beder, Sharon, Pacific Ecologist
When Australians went to the polls in November 2007 they voted for the party willing to acknowledge the threat of global warming and promising to do something about it. Yet the Rudd government seems to be interested in little more than symbolic gestures to appease the electorate. The first of these was to ratify the Kyoto Protocol, in which Australia was committed to keeping its greenhouse emissions to within an 8 percent increase on 1992 levels.
The centre piece of the Rudd's government efforts to reduce greenhouse gases is its emissions trading scheme, entitled a "Carbon Pollution Reduction Scheme." Emissions trading is a system aiming to keep costs to Australian industries to a minimum rather than achieving the rapid, significant changes necessary to prevent further global warming. From the beginning the government has discussed this scheme in terms of how much it would hurt and how necessary it is. Yet the no-pain no-gain message is really just window-dressing for a scheme that will cost very little and achieve even less.
The federal and state governments commissioned neoliberal economist, Ross Garnaut to review the likely impacts of climate change and recommend policy responses. Garnaut is a professor at ANU as well as chair of mining company Lihir Gold Co and a director of Ok Tedi Mining Limited, both of which operate in PNG with considerable adverse environmental impacts. Earlier in his career Garnaut was an influential economic advisor to the Hawke government (in the 1980s) promoting a raft of neoliberal policies including free trade, financial deregulation and floating of the dollar. Later he became an advisor to Exxon. (He is also a member of the Trilateral Commission.)
The choice of Garnaut to head the climate change review was clearly aimed at ensuring business interests were given prime consideration, as well as ensuring his policy recommendations were going to be market-based. Given his background, it was not surprising Garnaut recommended an emissions trading scheme to reduce greenhouse gases in Australia, despite its lack of success in Europe.
When the EU emissions trading system was introduced in 2005, analysts believed many governments had been too generous in allocating permits to local firms as they feared their local industries would be at a competitive disadvantage if they had to buy extra permits. A study by Ilex Energy Consulting for WWF examining six EU countries found none of them had set caps that went beyond business as usual and so they wouldn't meet their agreed Kyoto obligations. 1 Because allowances were not in great demand, the market opened at 8 euros per tonne and settled around 23 euros a few months later, far less than necessary to provide an incentive to reduce emissions. (2) Yet Garnaut recommended permits be sold in Australia in 2010 for only A$20 per tonne rising each year by only 4 percent. (3)
It has been argued that one of the reasons emissions trading was unsuccessful in Europe was that initial allocations of permits were free, so Garnaut recommended against giving free permits. But after heavy industry lobbying 45 percent of permits in the Australian scheme will be given free to energy-intensive "trade exposed" companies.
Industry lobbying has also ensured the cap on emissions will be so small as to be laughable. The government originally decided on a 5 percent cap on 2000 levels by 2020 if no international agreement is reached and 15 percent if one is negotiated in Copenhagen later this year. As a result of more industry pressure it has delayed the start of the scheme till 2011, kept the 5 percent cap and increased the 15 percent to 25 percent as a supposed compensation for the late start. More compromises include a low fixed price for carbon permits of $10 per ton to begin with as well as the handout of more free permits.
An editorial in The Economist magazine in 2009 referring to the US proposed emissions trading scheme, applies equally well to Australia's scheme: "The weakening of this bill illustrates one of the central problems with cap-and-trade systems. …