The ETS That Couldn't


Yesterday, Climate Change Minister Penny Wong released the Rudd Government’s draft legislation for this country’s response to the challenge of global warming.

Called the Carbon Pollution Reduction Scheme, the draft legislation contains no fewer than six bills and commentaries and, if you were to be so environmentally unfriendly as to print it out, would be roughly the size of a couple of old telephone books.

It contains few surprises. The Rudd Government’s absurdly inadequate 5 to 15 per cent cap stays. The free permits to polluting companies stay. The unnecessary complexities and Byzantine paperwork requirements have, if anything, expanded.

"Laws are like sausages," runs the famous quote erroneously attributed to Bismarck, "It is better not to see how they are made". And as Liz Jackson reported on ABC TV’s 4 Corners on Monday night, the making of the CPRS has been a particularly ugly process.

Recall that Ross Garnaut’s original draft report strongly stressed that no free permits should be handed out. The reason is simple enough: the more free permits that get handed to polluters, the more costs have to be borne by the rest of the economy. That means you and I, through our utility bills and taxes, subsidise the major polluters.

Recall also that Professor Garnaut — hardly a heart-on-his-sleeve environmentalist — recommended that Australia aim for a 25 per cent reduction in emissions by 2020, with an eventual 2050 target of 90 per cent reductions. The Government’s response to this was to commit to 5 per cent, with a promise to go to 15 per cent if there was an international agreement in Copenhagen. And so it is in the draft legislation.

Finally, let’s also reiterate that the science of climate change is more alarming every day. Garnaut’s 25 per cent target, when scaled up to a global effort on carbon reduction, roughly equates to a carbon dioxide level in the atmosphere of around 450 parts per million (ppm). Of course, this is way too high. The last five years of climate research has found that the world is far more sensitive to changes in atmospheric CO2 concentrations than anyone first realised — with the terrifying implication that we may already have passed the tipping point to a radically hotter, drier, more unstable future. In this context, Labor’s target of 5 per cent is tragically inadequate: rather like sighting the iceberg from the bridge of the Titanic and ordering the ship to slow down by 5 per cent.

Then and now, Kevin Rudd and Climate Change Minister Penny Wong have made great show of positioning the Government in what they call the "reforming centre" of the climate change debate. Rudd loves to repeat the line that Labor will be "attacked from the left" by the Greens and "attacked from the right" by the Coalition on emissions trading, in an attempt to paint Labor as the sensible chaps trying to seek a middle ground.

You’d think Labor was leading the charge of the Light Brigade — a cannon to the right of them, a cannon to the left of them. Unfortunately the result of Labor’s charge towards an emissions trading scheme may be all too similar: hit with criticism from both sides, Rudd and Wong may in the end be forced to retreat with heavy casualties, leaving the Government’s response to climate change in tatters on the Senate floor.

This has already been demonstrated by the response of the Greens and the Coalition to the draft legislation, which was to set up a joint select committee in the Senate to examine and review the draft bills. And not even the chief lobbyists from the energy and mining sector, such as Heather Ridout and Mitchell Hooke, are happy — they’ve lined up to kick the Government for not handing out more free permits and not delaying the scheme’s start until 2012.

I don’t know about you, but I’m getting rather impatient with the level of influence that key industry spokespeople like Ridout and Hooke seem to be able to exert on the Rudd Government. Can you or I get a face-to-face meeting with Wong or Resources and Energy Minister Martin Ferguson to argue that we shouldn’t have to pay for the pollution of big corporations? No, I didn’t think so. But if you’re Don Voelte of Woodside Petroleum, Ferguson will hop in a plane and come to you, no doubt to discuss how the Government will adjust the CPRS to make sure your multi-billion dollar LNG projects will magically qualify as "emissions-intensive trade-exposed industries".

At her press conference yesterday, Wong said of the Government’s CPRS scheme: "Some people want it to be a Ferrari, but if you can’t have a Ferrari, would you really have no vehicle at all?". This has already led some to point out that the CPRS as it stands is more like a lemon (perhaps it’s a Leyland P-76) than a Ferrari. Others observe that perhaps a zero-emissions bicycle might be a more appropriate metaphor.

Of course, this is just another variation of the "something is better than nothing" argument — which at this stage is pretty much the only argument the current legislation has going for it. As Greens Senator Christine Milne has argued, the problem with this argument is that it assumes that the "something" will do any good — a point very much up for debate with the current legislation.

The big polluters are right when they say that the current scheme will have big costs for little environmental return. Indeed, you can even turn the "Australia only emits a small amount of global carbon so we don’t really matter" argument on its head. What if Australia’s emissions reduction target is so low that it doesn’t cut any ice in the Copenhagen negotiations? When it comes to obtaining global action on carbon reduction, locking Australia in to a meaninglessly low carbon cap will make it very difficult for us to convince other countries to their bit.

Despite this, many in the commentariat still cling to that belief that Labor’s scheme is a masterstroke of triangulation. Crikey‘s Possum Comitatus, for instance, thinks that Labor’s 5 per cent target is carefully calibrated to have the maximum chance of passing the Senate — which may well be true. That still doesn’t make it good public policy.

As I have argued previously, it’s not necessarily good politics either. If Labor had chosen a target with scientific credibility, it would automatically have ensured Greens support, which means Labor would have needed only two extra votes in the Senate to pass the legislation. The stage would have been set for some intense negotiations with Senators Nick Xenophon and Steve Fielding, but I believe Labor could have got its legislation through in much the same manner as it passed the stimulus package. It seems that the Prime Minister and his strategists were aiming to wedge the Coalition on the issue, and in the process score a few easy points off those "extreme" Greens.

But the legislative battlefield hasn’t shaped up like that. The current target is manifestly inadequate for the Greens and I imagine they will only support the CPRS with significant amendments. The Coalition won’t vote for it at all — and indeed probably never would have. The result will most likely be that the CPRS goes down — a major defeat for Labor and one that will leave Australia’s response to climate change back at square one.

Of course, much could change once the horse-trading in the Senate begins. But it does appear as though sentiment is hardening against the current system. That’s not surprising. The CPRS as currently designed is a dog.

Ben Eltham is New Matilda's National Affairs Correspondent.