Australia’s carbon price delayed

2009-05-04

in Economics, Law, Politics, The environment

When Australian Prime Minister Kevin Rudd came to power, it was hailed as a victory against climate change, given the inaction of his predecessor and the contents of the Rudd platform. Disappointingly, a key element of that has how been put on hold for a year, supposedly because of the ongoing economic crisis. Australia’s emissions trading scheme (ETS) will now launch in 2011, rather than July 2010, as originally planned.

Personally, I think it is foolish to delay carbon pricing on account of the credit crunch. We want to be rebuilding national economies in a manner complimentary to climatic stability. Also, the less time we give ourselves to increase carbon prices to the necessary levels, the more painful the eventual adjustment will be. Given that prices were to be set at $7 per tonne for the first year, the policy would not have been an excessive burden on industry, even if the funds weren’t recycled back via tax cuts elsewhere or investments in low-carbon infrastructure. A moderate carbon price now thus serves the dual purpose of alignment economic redevelopment more with environmental goals, while stretching out the total timeline across which adjustments will be made.

Like Canada, Australia has some of the highest per-capita emissions in the world. That means they bear special historical responsibility for the climate change problem. It also means they should have more opportunities for low-cost reductions in emissions. Both ethical and economic logic suggest that this delay is a mistake.

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{ 7 comments… read them below or add one }

. June 22, 2009 at 10:29 am

Australia releases draft carbon trading regulations
Posted by Adeline Dontenville on June 21, 2009 at 20:39
Australia, Countries

The Rudd government has just released (19/06/09) draft regulations for the Australian Carbon Pollution Reduction Scheme (CPRS), outlining how carbon emissions will be measured and industry compensation calculated. The draft regulations specify the framework for the Emission Intensive-Trade Exposed assistance program, application procedures and reporting requirements for eligible entities under the program.

The regulations just published are the first of several disclosures on how the country’s emissions trading scheme will take shape, Australia’s Climate Change Minister Penny Wong said. The rules outline some of the highly emissions-intensive sectors that will receive up to 94.5 per cent of their expected needed amount of emission permits for free under the CPRS.
Production of carbon black, methanol, silicon, bulk flat glass, newsprint, and zinc will all be counted in this category. Moderately emission-intensive sectors will get up to 66 per cent of their allowances free of charge.

. June 22, 2009 at 10:35 am

Australian Senate poised to defeat carbon laws
Mon Jun 22, 2009 6:12am EDT

CANBERRA (Reuters) – The Australian parliament’s upper-house Senate began debating plans for the government’s carbon trading scheme on Monday with little sign the package of 11 bills will pass.

The emissions trading system (ETS) is a key element of the government’s plan to curb greenhouse gas emissions, blamed for global warming, and was a major promise in the election that swept Labor Prime Minister Kevin Rudd into office in late 2007.

But the government needs an extra seven votes to pass the ETS laws through the Senate, where the opposition, minor parties and two independents all plan to vote against the current plan.

“I don’t know how any parliamentarian could vote for this legislation,” independent Senator Steve Fielding told local radio, adding Australia should first wait to see what other major countries do to curb emissions.

. May 10, 2010 at 9:53 am

Australia’s floods
The drought ends, the shouting starts
Should Australia save its rivers or its farmers?

Apr 22nd 2010 | BOURKE, NEW SOUTH WALES | From The Economist print edition

AT FIRST, the sight from the helicopter soaring above the Cuttaburra Channels, in outback New South Wales (NSW), seems hard to believe. After a decade of drought, said to be Australia’s worst in a century, the plains that were brown and parched just weeks ago are now smiling green. Waves of water from two magically timed floods, in northern NSW and southern Queensland, are slowly making their way south towards the Murray and Darling rivers, bringing the desert back to life with birds, frogs and plants that many outback folk had given up hope of ever seeing again. Australia’s biggest river system is shared by four states and feeds two-thirds of the country’s irrigated farmland. But with both rivers depleted from drought, climate change and the plundering of their waters, the floods are also watering a political dispute over how their bonanza should be managed: to save farmers’ livelihoods or the rivers themselves.

. May 10, 2010 at 10:15 am

Australia and carbon emissions
A change in the climate
Make us greener, oh lord. But not yet

Apr 29th 2010 | SYDNEY | From The Economist print edition

ONLY a few months ago Kevin Rudd, Australia’s prime minister, was painting a dark picture about looming storm surges, rising sea-levels, a fall of over 90% in irrigated farming and a drop of nearly 2.5% in GNP over this century unless Australia took action against climate change. “Action now,” he declared. “Not action delayed.” But this week Mr Rudd climbed down from what seemed a defining pledge of his leadership. Instead of using this year to get parliament to adopt an emissions-trading scheme that would put a price on carbon pollution, action will now be delayed until 2013 at least. Some wonder if it will ever happen at all.

Few leaders have staked more than Mr Rudd on tackling climate change. The issue helped him lead the Labor Party to power in late 2007, after the former conservative coalition government had largely ignored it. Relying on coal for most of its electricity, Australia is one of the world’s highest carbon-emitters per person. Mr Rudd hoped that forcing it to change how it uses energy would give the country clout in forging a global consensus.

. November 2, 2010 at 10:20 am

Australia’s climate-change policy
Greening Oz
The government considers a carbon tax

Oct 21st 2010 | sydney

EVER since she was elected prime minister six weeks ago, Julia Gillard has been under pressure to restore the ruling Labor Party’s credibility on climate change. Relying on coal to generate about 80% of its electricity makes Australia one of the biggest greenhouse-gas emitters per head. Labor’s decision to abandon an earlier pledge for a European-style emissions-trading scheme (ETS) cost it seats at an election in August. Ironically it also left Ms Gillard relying on support from the Australian Greens to form a minority government.

Ms Gillard has now ditched a much-lampooned election promise to establish a “citizens’ assembly” to discuss climate change. Instead, she has appointed a multiparty parliamentary committee to decide how Australia should make its worst carbon polluters pay. A report this week by the Climate Institute, a Sydney-based think-tank, suggests how hard that will be: comparing Australia with five of its main trading partners, only South Korea has done less to factor the cost of carbon emissions into its electricity prices.

The Greens are claiming credit for Ms Gillard’s new climate concern. Some also detected their influence when she announced on October 18th a more moderate approach to another divisive election issue: the increasing numbers of asylum-seekers arriving in Australia by boat. Those with children will no longer be incarcerated, but allowed to live freely while their claims are assessed. The Greens have long called for such a change; Ms Gillard claimed it as her party’s idea.

. August 5, 2011 at 4:01 pm

Pushing for a carbon tax in Australia
An expensive gamble
The prime minister stakes her future on a divisive scheme

A RARE moment of triumph settled on Julia Gillard, Australia’s prime minister, on July 10th when she unveiled a plan for a carbon tax to fight climate change. Few issues have divided Australians more bitterly. Earlier plans to curb carbon emissions had toppled at least two political leaders, including Kevin Rudd, Ms Gillard’s Labor predecessor. She justly boasted that she had knocked down the brick walls others had hit. But then political reality kicked in. An opinion poll two days later (conducted before the carbon plan’s details were disclosed) gave the Labor government record low support of 27%. With the next election due in two years, Ms Gillard faces the task of rescuing her government by selling her bold carbon plan to a sceptical public (see chart).

. August 24, 2012 at 2:54 pm

No one likes taxes. Economists dislike them not because they relieve people of their money, but because they distort people’s behaviour. Income taxes discourage work; corporate taxes inhibit enterprise; even consumption taxes obstruct some mutually beneficial exchanges. These lost purchases deprive customers of a deal and shops of a sale, without raising any money for the government. The best taxes impinge little on the decisions people make, or fall on things worth inhibiting. Carbon taxes are an example of the second, forcing people to bear more of the cost of the carbon they burn, including its unpriced contribution to global warming. Australia, which emits more carbon dioxide per head than any other member of the G20, now charges 300 firms A$23 ($24) per tonne for the privilege, a higher price than prevails under the European Union’s emissions-trading scheme.

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