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Australia Legislates an Emissions Trading Scheme

Posted on 10 November 2011 by alan_marshall

A Moment to Savor!

Julia GillardOn Tuesday, November 8, 2011, the Senate, or upper house, of the Australian Parliament voted by 36 to 32 to pass the Clean Energy Future legislation to put a price on carbon. This follows its passage through the lower house on October 12, 2011 by 74 votes to 72. The package of 18 bills is now law, with the bills that price carbon coming into effect on July 1, 2012, and the bill which compensates households taking effect in May 2012. The prime minister, Julia Gillard (photo at left), is right to describe this as historic legislation. At her press conference (click here for full transcript) she said:

Today Australia has a price on carbon as the law of our land. This comes after a quarter of a century of scientific warnings, 37 parliamentary inquiries and years of bitter debate and division.

Al Gore was equally exuberant:

With this vote, the world has turned a pivotal corner in the collective effort to solve the climate crisis. 

Australia had been dragging its feet since 1997 on real action to combat climate change, so this law is long overdue. For John Cook and myself, who have been playing our part to try to ensure our politicians understand the science, it is a moment to savor!

The scheme requires around 500 of the nation’s largest emitters to purchase fixed-price permits for their CO2eq emissions at a starting price of $A23 per tonne (metric ton). Initially, some industries will receive a percentage of their permits free depending on their degree of trade exposure. Agriculture and private transport are excluded from the scheme. The latter was excluded in order to secure passage through the lower house. SkS believes that the scheme would be improved by its inclusion.

As stated in Appendix 1 of the Copenhagen Accord, Australia is committed unconditionally to reduce emissions by 5% below 2000 levels by 2020. This equates to 160 million tonnes of CO2eq in that year. Many would see this as inadequate, and indeed it is, though I should point out that with Australia’s growing population, it represents a reduction of 23% on a per-capita basis.

In 2015, this carbon pricing scheme becomes a fully fledged emissions trading scheme (ETS), with the price of permits set by the market, and an overall cap that will achieve the required 5% reduction. The scheme has the flexibility to tighten the cap in the context of significant global efforts to reduce emissions. Under the Copenhagen Accord, Australia has committed to "reduce its greenhouse gas emissions by 25% on 2000 levels by 2020 if the world agrees to an ambitious global deal capable of stabilising levels of greenhouse gases in the atmosphere at 450 ppm CO2eq or lower, and by up to 15% by 2020 if there is a global agreement which falls short of securing atmospheric stabilisation at 450 ppm CO2eq and under which major developing economies commit to substantially restrain emissions and advanced economies take on commitments comparable to Australia's". Commendably, this review of the cap will be conducted by an independent body, as it is the UK.

A Long Hard Battle for Science

In the aftermath of Al Gore’s influential film “An Inconvenient Truth”, and the report by UK economist Sir Nicholas Stern, a majority of the Australian public came to understand that climate change was real and potentially dangerous. In this political climate, both major political parties went to the November 2007 election with an ETS as part of their platform. That election was won by the Labor Party under Kevin Rudd. He succeeded in getting his Carbon Pollution Reduction Scheme, a forerunner of the Clean Energy Future bills, through the lower house, only to have it defeated in the Senate. In hindsight, he should have negotiated with the Greens, rather than the centre-right Liberals, who were by then split on the science.

As Gore’s film started to fade from public memory, a number of misinformers, for what seemed to be primarily ideological reasons, began to contest what is the overwhelming consensus of climate scientists. In the United States and Australia, but notably not in Europe or elsewhere, these misinformers received undue attention from conservative media and politicians.

In Australia, the Leader of the Opposition, Tony Abbott, has acknowledged how much he has been influenced by Ian Plimer, who is a notorious misinformer. At SkS, we have previously examined Abbott's climate myths. With the public becoming confused about the science, Abbott saw a political opportunity. In the lead up the August 2010 election, he ran an effective scare campaign over what he claimed would be an onerous tax. (Treasury modeling actually shows the impact on prices to be a once-off rise of 0.7%, for which 2 in 3 households would receive at least equal compensation through tax cuts and adjustments to welfare payments). So effective was Tony Abbott's campaign that the result of the election was a hung parliament, with his Liberal-national Coalition and the Labor Party under Julia Gillard each commanding 72 votes. For three nervous weeks, a mechanism to price carbon hung in the balance, as the nation waited to see who the 5 independents and one Green MP would support. To the credit of the majority of these men, they understood climate science well. They aligned themselves 4 to 2 for Gillard, and a government was formed. Gillard worked productively with independents and the Green MP in a multi-party committee to fashion the legislation that has now passed into law.

While questioning the science, Tony Abbott did put forward an alternative policy for mitigating emissions. I have published a critical examination of that policy on this web site.

The passage of the legislation is a defeat not just for Tony Abbott and the climate change "skeptics", but also for Rupert Murdoch, owner of Fox News. His newspapers have worked tirelessly to oppose both the Labor government and its climate change policies.

SkS Continues to be Non-Partisan

Lest there be any accusations of political bias, we affirm that SkS' interest in politics is solely a desire that decision-makers and voters understand the consensus science. We are not in the business of promoting one philosophy or ideology over another. In fact, while taking the current conservative parties in Australia to task for their lack of commitment to tackling climate change, we commend the former Liberal leader, Malcolm Turnbull, for his respect for the science. We applaud the conservative Government of the UK under David Cameron for their commitment to halve 1990 emissions by 2025. We approve of the conservative government of New Zealand under John Key for introducing their ETS for energy and transport in 2010. We also commend Arnold Schwarzenegger, former Republican governor of California, for the coming introduction of an ETS (cap and trade scheme) in that state on January 1, 2013.

More Still Needs to be Done

While the Clean Energy Future legislation, and the actions by other nations listed above, are all commendable, international efforts will need to be ramped up if we are to have a chance of avoiding dangerous climate change. At Copenhagen, scientists were seeking a 25% to 40% reduction in emissions from the developed nations, and commitments to date fall well short of that target. In the upcoming COP 17 conference in Durban and beyond, the science needs to set the agenda.

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Comments 51 to 59 out of 59:

  1. Suggested reading: “Countries Most Vulnerable To Climate Change Meet In Dhaka, Bangladesh” PlanetSave, Nov 12, 2011 To access this timely article, click here.
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  2. Unlike the USA, China is not burdened by a major political party in denial. Haha. Or a 2nd political party.
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  3. I can't help but look at this through the lens of US policy (but very fun to get the insider view on Australian politics). At this point, I base my hopes on the fact that US politics often change on a dime. If we get a hot summer in 2012 (even in a La Nina this could happen) leading up to the elections, and these effective policies in Australia, Europe, Scotland, BC are highlighted - we could end up with a rational policy in the US. As much as Obama has given lip service to climate change, the facts remain that he made health care his primary issue, and completely botched the effort in the US Congress to get cap and trade passed. It could be true that a Romney election is the path to an effective US response, just as only Nixon could go to China. For all the noise in the US - there are only 20% firmly against, and another 20% doubtful. The rest of us have a pretty firm grasp of reality (perhaps only on this issue...).
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  4. Romney abandoned his acknowledgment of climate change when it became clear that he wouldn't win the primaries otherwise
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  5. I am surprised to learn we have a second political party here in the USA :) IMO there is little doubt that someone who acknowledges climate change will be elected President in 2012. However the House will not acknowledge it unless the people do (may take a while) and the Senate will not propose effective legislation due to disproportionate farm state representation (it would basically be a big farm bill with some windmills and solar). I would support tax and rebate to gain popular support and remove some of the offset fluff.
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  6. For a site that pleads a policy of "Poitical comments.... will be deleted," there are an awful lot of political comments posted!
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  7. … someone who acknowledges climate change will be elected President in 2012 I sure hope so, Eric. I must admit that I have shed no tears for Perry and Cain as they have faltered in their campaigns. Both seem to have a predisposition to deny global warming, whereas Romney does not. While he shifted his position for the Republican primaries, I don’t think he has closed his mind to the science. Still, if you can judge by his books, Obama is passionate about doing something about climate change, with or without the help of congress. He would still get my vote, except that mine doesn’t count! In any event, whoever wins the next presidential election is likely to be faced with undeniable evidence of AGW within their first term if the trend for Arctic ice loss continues. I have used graphs like this one with Australian politicians and believe them to be effective. I think it surprises politicians to learn that the current loss of 286 billion tonnes per year from Greenland alone is more than enough to fill Sydney’s massive harbour 500 times over!
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  8. Patrick Kelly @ 56 In a post that discusses how nations are acting to mitigate climate change, making reference to the views of decision-makers would seem to be unavoidable. The SkS comments policy does not prohibit discussion of politics per se, but rather "political rants". I committed myself to a nonpartisan presentation, commending both sides of politics when they acknowledge the consensus science. If you are offended by my little aside about a party in denial, I hope that my above acknowledgement @ 57 of real differences on climate change between the Republican candidates, which we have previously examined on SkS, is helpful.
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  9. Suggested reading: “Carbon Trading May Be Ready for Its Next Act,” New York Times, Nov 14, 2011 To access this timely article, click here.
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