Two low-cost emissions trading schemes and a big boost for renewable energy are at the centre of Labor’s climate change policy, which aims to reduce Australia’s greenhouse gas emissions to a net zero by 2050.
The policy would cut emissions by 45 per cent on 2005 levels by 2030, which is well above the Turnbull government’s target of a 26 per cent to 28 per cent reduction by the same year.
In a bold but politically risky policy to be unveiled on Wednesday, Labor leader Bill Shorten and opposition environment spokesman Mark Butler will promise that if elected, Labor will reintroduce restrictions on land clearing, expand the mandate of the Clean Energy Finance Corporation, introduce new vehicle emissions standards and scrap the government’s direct action scheme, which pays polluters out of the budget to reduce emissions.
Under the plan, approved by the shadow cabinet on Tuesday, Labor would introduce a domestic emissions trading scheme that would run from July 2018, until June 2020. This “first phase” is designed to ensure Australia meets its stated commitment to reduce emissions by 5 per cent by 2020. Unlike Labor’s previous scheme, there will be no carbon price on any emissions under a set pollution cap.
If the limit is breached, an emitter can buy low-cost international permits to offset its excess. These permits are currently cheaper than $1 per tonne. During phase one, agriculture, road transport and refrigerant gases will be exempt.
…Then, from 2020, there will be phase two of the scheme which Labor says it will design during its first term in office in consultation with stakeholders. It will be designed to strive towards net zero emissions by 2050.
…To better manage “a just transition out of coal-fired power” over several decades, Labor will implement a separate electricity emissions trading scheme.
This is good politics. The more considered, consistent and forward looking policy that Labor announces, the more the Government gets shoved into the zero-policy doom loop that is engulfing its leader who is only popular for his centrist and policy-focused history. Especially so given Turnbull can’t object without exposing his own record of support for carbon pricing and his party’s shocking record on carbon.
Whether it is good policy is another question and one we can’t yet answer:
- having no carbon price below a cap and allowing international permit trading means the effective carbon price is very low (quite intentionally no doubt) and therefore not effective to 2020;
- that means no impact o the Budget, either, though potentially this is a large contributor to a long term Budget fix as it restores permit auction revenue (for tax cuts we’ve already got) assuming the government does not give them away;
- it also removes the cost of Direct Action which is an enormous un-Budgeted burden.
This is basically restoring carbon pricing architecture more than it is installing a new carbon price. It is positive in the sense in that as the emissions cap is lowered over time, and in concert with the globe, then the local price of permits will rise and accelerate change.
It’s economically sound but not environmentally bold.
