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Is Emissions Trading on the Agenda Again in Australia?

June 25, 2010

With the new Prime Minister, Julia Gillard, comes new promise to put climate change back on the agenda. 

The Emissions Trading Scheme (ETS), or Carbon Pollution Reduction Scheme (CPRS) as it was called in Australia in its last incarnation, is a potential key plank of any such policy. 

An emissions trading scheme sets emissions limits to the economy, or sectors, and lets the market identify the cheapest abatement options.  In that respect, it is the most efficient way of securing emissions reductions, rather than through ‘command and control’ cherry-picked measures.

Kevin Rudd effectively shelved the CPRS once the measure had been blocked in Parliament twice by the Liberal opposition and cross-benchers.  On the other side, the Liberal party have seen the dangers posed by making ETS a focus the policy agenda – first unseating John Howard, then Malcolm Turnbull.

Should Australian companies  be brushing the dust off strategies to deal with carbon pricing?

No.

Gillard stated on the 7.30 Report last night:

“…..if we are to have a price on carbon and do all the things necessary for our economy and our society to adjust we need a deep and lasting community consensus about that. We don’t have it now.

“That’s why I said today if elected as Prime Minister at the forthcoming election then I will take the time to reprosecute the case with the Australian community to develop that deep and lasting consensus”.

Instead of making supportive comments for an ETS, on several occasions now the new Prime Minister has reiterated a focus on wind and solar.  There is already a Mandatory Renewable Energy Target, with the key amendments separating large-scale projects from – projects (principally solar PV) only now passed by parliament.

The only wriggle room to do more to support wind and solar technologies would be for further capital or innovation grants, and/or an option to signal the introduction of a solar feed-in-tarriff.

Polls show again and again across the world that voters are overwhelmingly positive towards solar Photovoltaic (PV), and strongly associate solar PV with tackling climate change.  With retail electricity prices in the next few years likely to increase in parts of Australia, and PV module prices rapidly declining, PV is fast reaching grid-parity. 

As such, a minor price support mechanism could go a long way to supporting PV implementation, would meet very little resistance, and would tick the boxes for the Unions that supported her coup.

Emissions trading is a bridge too far for Ms Gillard when confronted with such easy alternatives, and a need to avoid providing fodder to the opposition in the run-up to the election.

Industry can rest assured that it will be some time yet before the polluter pays in Australia.

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