Australia Legislates an Emissions Trading Scheme

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.

Posted by alan_marshall on Thursday, 10 November, 2011

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