Industry still wants to trade carbon

Advertisement
b0006

The Australian Industry Group is on crusade this morning to render “Direct Action” moot. From the AFR:

The Abbott government’s direct action climate change policy is unlikely to reduce carbon emissions sufficiently, and the money set aside for it would be better spent on paying for pollution reduction in developing counties, the Australian Industry Groups says.

In a dramatic intervention into the debate, AiGroup chief executive Innes Willox said Labor’s price on carbon would be “a dead duck’’ once the new Senate sat next year, meaning what mattered for business was what came next. He said it was optimistic to believe Mr Abbott’s direct action policy – in which domestic carbon emitters would be directly subsidised from the budget to cut emissions – would meet the target of reducing emissions by 5 per cent below 2000 levels by 2020, as the ­government claims.

“There is a risk of the scheme underperforming,’’ he writes in Friday’s The Australian Financial Review.

“Abatement may simply not be offered at the high volumes or low prices that the government expects.’’

This is not news. Treasury and various private bodies have been warning that the cost of making Direct Action meet Australia’s carbon reduction targets (that is, buy enough shut downs of emitters) is somewhere between an additional $4 billion and $15 billion to that budgeted.

Advertisement

But the Government has already said that this policy is budget dependent and if it misses its targets then it just won’t happen.

The AIG proposal is quite sensible as an alternative. It could work as an additional way to insure that the target is met. Or, indeed, if the target is deepened. The UN allows countries to fulfill up to 50% of their carbon liabilities via abatement permits.

But guess what? It is also a form of carbon trading, even if structured differently and run through the Budget instead of privately. Thus it is a non-starter!

Advertisement
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.