A Permit to Pollute


Professor Ross Garnaut has finally handed down his draft report, and it leaves much to be desired. While I agree with his overall sentiment that Australia needs a massive wake-up call and must act quickly and strongly to reduce greenhouse pollution, the devil in the Emissions Trading Scheme (ETS) is all in the detail.

My quick checklist for an effective emissions trading scheme is one that includes:

– A strong emissions cap aiming to halve Australia’s greenhouse pollution over 1990 levels by 2020.
– Coverage of all sectors emitting greenhouse pollution, including transport (especially aviation).
– Auctioning of emissions permits – no free ‘permits to pollute’ for carbon-intensive industries.
– No compensation to industry, but assistance to low-income households to reduce energy.
– Revenue from the trading scheme to go to energy efficiency, renewable energy and public transport.

Let’s see what Professor Garnaut had to say on some of these issues.

The draft Review does not address the issue of an emissions cap.

Garnaut supports including the transport sector in emissions trading, stating that "the more sectors included in the emissions trading scheme, the more efficiently costs will be shared across the economy". True.

Consistent with previous statements, the Review supports 100 per cent auctioning of permits – but not until after 2012. From 2010 to 2012 Garnaut says that "permits to be released according to demand, rather than in line with the emissions reduction trajectory". This is problematic. Furthermore, Garnaut’s plan for the money raised in the auction is not the best use of the money from a climate perspective.

This leads directly to the next checkpoint: compensation to industry. The Report proposes that half the proceeds from the sale of all permits go straight back to households, that around 30 per cent goes into structural adjustment needs, and the other 20 per cent is allocated to research and development and the commercialisation of new technologies.

Only 20 per cent to deploying and commercialising the technologies we need to solve climate change? That is simply not enough. We’re talking about a fundamental economic transformation of the economy. Of course some industries will need to be phased out – in a way that is fair to workers and communities, not profit margins of industries that have refused to deal with the reality of climate change for years. But every dollar given to polluting industries is a dollar less to energy efficiency or insulation programs for low-income households, or a dollar less for a new wind farm.

So how is the Government likely to respond?

There is, of course, a cacophony of voices responding to the report already. Even the Garnaut Review acknowledges, in a very understated manner on page 14, that "some elements of the Australian resources sector have been especially vocal about the perceived threat that a price on carbon poses to their competitiveness and to Australian prosperity".

Despite this, Kevin Rudd must keep his promise to act on the concerns of the Australian community rather than the polluter lobby.

We all know that the Government’s promise to reduce Australia’s greenhouse pollution was one of the main reasons for its victory in last year’s Federal election. In December last year, Rudd called climate change "the defining challenge of our generation" and promised the world that Australia was ready to assume its responsibility to reduce emissions.

Now, the Opposition and polluting industry lobby – electricity generators, coal mining companies, and energy-intensive industries like aluminium and cement – are running a scare campaign against the ETS.

Industry lobbyists are urging the Government to break or delay its promise to implement an emissions trading scheme by 2010, and are pushing for free ‘permits to pollute’ for carbon-intensive industries. In the past few months, they have spent enormous amounts of time and money lobbying cabinet ministers and trying to influence the media debate around the ETS.

The way that the Garnaut Review is being reported about now and the way the debate turns is being influenced by their press releases, their comments, and their PR agencies.

The scare tactics over job losses are designed to obscure the fact that taking action on climate change will create hundreds of thousands of new jobs in green industries. Last week’s CSIRO report Growing the Green Collar Economy found that if Australia takes significant action to cut greenhouse gas emissions national employment will still increase by between 2.6 million and 3.3 million over the next two decades.

Similarly, the outcry over increased prices for business ignores the reality of how much our economy will suffer if we don’t reduce our emissions. When compared to these costs, taking action today is much cheaper.

The Garnaut Review points out that, "when assessments of the reasonableness of arrangements for trade-exposed industries are made, we should be mindful of the wider context. The highest possible obligations under an emissions trading scheme, at the top end of the range of possibilities for permit prices for the foreseeable future, would represent a small fraction of the resource sector’s increased revenue from higher export prices in recent years".

The Australian community pushed long and hard to place climate change at the top of last year’s election agenda. For two years in a row, hundreds of thousands of Australians turned out to the streets for the Walk Against Warming rallies. And we still care. Last weekend’s Newspoll found that 61 per cent of Australians support an ETS.

For Kevin Rudd to delay – or decrease the effectiveness of – the ETS because of pressure from the polluting industries is a slap in the face for the millions of ordinary Australians who elected him on a promise of effective climate action. Australians know that reducing greenhouse pollution will change our economy; but they’re ready for those changes and they want leadership, not short-term populism.

The polluter lobby must not set the terms of the debate around climate solutions. Climate change is too important and the costs of inaction will affect every aspect of our economy and our lives.

As Garnaut says on page 2 of his epic 600-page report: "While an effective response to the challenge would play out over many decades, it must take shape and be put in place over the next few years. Without such action, if the mainstream science is broadly right, the Review’s assessment of likely growth in global greenhouse gas emissions in the absence of effective mitigation tells us that the risks of dangerous climate change, already significant, will soon have risen to dangerously high levels".

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.