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Emissions trading and the CPRS

The Carbon Pollution Reduction Scheme (CPRS)

CANA expresses disappointment over CPRS shelving (11/5/10): CANA has written a letter to PM Rudd to express its profound disappointment about the Government's decision to put off legislation committing Australia to reduce its greenhouse gas emissions and introduce a price on carbon, until at least 2013. Although the proposed Carbon Pollution Reduction Scheme had many flaws, it would have placed a price on carbon pollution. As many CANA members acknowledge, a price on carbon pollution is a crucial step in addressing and stemming emissions. 

Government's about-turn on pricing carbon pollution (27/4/10): On April 27, The Government's proposed CPRS was suspended until 2012.This came two days after a media article where PM Rudd re-stated his commitment to the CPRS, no matter where it is 'in season or not'. It also follows after Climate Institute polling that demonstrated placing a price on carbon pollution is still a pertinent issue for voters. This announcement released a strong response from CANA member groups in Australia, including:

  • The Australian Conservation Foundation considered that “to put comprehensive climate action in the too-hard basket until 2013 would be bad for the environment, de-stabilising for business and totally unacceptable to the millions of Australians who want government leadership on climate change.”
  • The Climate Institute said  “It is a bad day for the global community looking to Australia to be helpful in rebuilding trust and momentum in climate action. It’s a day for which all political parties and Senators hold some responsibility.”
  • The Conservation Council of Western Australia says the Prime Minister has broken his promise to take urgent action on climate change by delaying an emission tradings scheme for another two years.
  • Oxfam stated that “The Prime Minister has said that climate change is the ‘greatest moral challenge of our time’.  There is now absolutely no excuse not to provide new and additional funds in the coming Budget. It’s crucial that Australia meets its commitment under the Copenhagen Accord to provide finance to help people in poor countries cope with the devastating impacts of climate change and reduce their emissions.”
  • The Uniting Church of Australia said “It is self-evident that the health of our economy is dependent on the health of the planet. Political leaders who espouse concern for our economic future but show no desire to actually act to reduce our greenhouse gas emissions and move to a low-carbon economy are obviously not serious about our long-term prosperity. Putting serious action on climate change into the ‘too hard’ basket until 2013 sends a defeatist message to all Australians, to the international community, and particularly to our Pacific neighbours who are already feeling the devastating effects of climate change.”
  • WWF Australia has said that “the Australian Government’s decision to delay the carbon pollution reduction scheme (CPRS) is grossly irresponsible both in terms of the environment and the economy, and is a betrayal to those who voted the Rudd Government in.”
  •  The international impacts of the Government's CPRS decision has seen it already being used by politicans in New Zealand to call for their emissions trading scheme (due to start in July) to be delayed. In Japan, the new emissions trading sub-committee's discussion is likely to be negatively affected. There is also speculation about the effect that this development will have on the international negotiations – that it will set them back, depress efforts to get other Annex 1 countries to adopt domestic legislation to reduce emissions, and generally deepen the post-Copenhagen malaise.  

Restructuring the Australian economy to emit less carbon (23/4/10): The Grattan Institute, a Melbourne-based thinktank, released its report “Restructuring the Australian Economy to Emit Less Carbon” yesterday. Using a detailed analysis of Australian industries’ own data, the report concludes the assistance package for emissions intensive industries under the Government’s proposed carbon trading legislation would be a $20 billion waste of money. It finds that much of the protection proposed for the major emissions-intensive industries is unnecessary or counter-productive, and would delay the structural adjustment required to move to a lower carbon economy. Fears of carbon leakage are grossly exaggerated, as most industries will not move overseas with a carbon price, with the exception of Aluminium and oil refining (which become marginal).  These industries would be marginal in Australia at the moment anyway except for the large subsidies we give them, and it would almost certainly reduce global emissions if they moved overseas (Aluminium is very likely to move somewhere where electricity is not emissions intensive).  So we should let them move and allow that restructuring to occur. Instead, the adjustments emissions-intensive industries need to make are manageable and inevitable if we are ultimately to constrain carbon emissions. However, several industries are justified in being supported, such as cement and steel.  But this can be much more effectively achieved through the application of a border tax, rather than allocations of free permits.  This prevents market distortion and encourages appropriate restructuring, but still protects international trade in these goods.  A border tax is entirely consistent with WTO rules, and could be applied similarly to GST rebates at the border. Compared to other economic reforms, such as reduction in tariff protection over the 1980s and 1990s, a carbon price requires relatively little structural adjustment. The report recommends that industry assistance should be more targeted to prevent a few cases of truly perverse outcomes. Instead, assistance should also be provided directly to affected communities. The report is available at http://www.grattan.edu.au/pub_page/report_energy1.html.

 

Survey: Climate professionals support CPRS, higher target and less free permits (23/3/10): Green Capital's 2010 'Carbon Action Survey for Sustainability Professionals and Organisations' has just been published, with 330 participants across industry, professional services, government, research and community/NGO sectors providing insights into the thoughts and directions of sustainability practitioners and organisations throughout Australia. The survey found that a strong majority is committed to climate and sustainability action, and most are saying that ‘doing nothing is not an option’, despite feeling wounded by the failures of the Carbon Pollution Reduction Scheme (CPRS) and Copenhagen. The largest bloc of survey respondents are still in favour of either the current version of the CPRS, or a stronger emissions trading scheme (ETS) with higher carbon reduction targets and less compensation for polluters. The survey also found that momentum is growing within the business and sustainability communities for a national energy efficiency target (of 25% by 2015, and 50% by 2020). This is also supported by the widespread belief that individual organisations could achieve energy efficiency savings of 10-20% by 2015 and 20-40% by 2020. Green Capital’s 2010 Carbon Action Survey has confirmed that consumers of carbon offsets in Australia prefer to source their offsets from domestic projects. The survey report is available at: http://www.greencapital.org.au/component/docman/doc_download/172-2010carbonactionsurveyreport.html.

CPRS vote delayed - perhaps until May (4/3/10): There's been some movement on the Carbon Pollution Reduction Scheme. It was expected that the version negotiated with Turnbull in late 2009 would return to the Senate in late February. However, it seems that the Government is moving to put health as its key election policy, and will be prioritising a health insurance bill (also blocked last year in the Senate) with the potential for a double dissolution trigger on its attempt to means-test private health insurance. This means that the Senate vote on the CPRS could be delayed until May. Both sides  have blamed the other for the delay, the result of the Senate blocking a motion yesterday to fast-track the debate.

The potential delay comes as the government has been holding talks with independent senator Nick Xenophon and two dissident Liberal senators about a proposal from the Greens for a compromise climate deal and a short-term carbon tax. Climate Change Minister Penny Wong and Greens senator Christine Milne have met three times to discuss the Greens’ proposal. The Greens have proposed a two-year $23 carbon tax to start in July with compensation for heavy-polluting, trade-exposed industries (but not coal). To secure a Senate deal, the government would, together with the five Greens, need an additional two votes, such as independent Nick Xenophon and a Coalition senator crossing the floor. Senator Troeth has said she would consider supporting such a proposal  once it had been finalised and was before the Senate, but Xenophon sounds like he's got cold feet.

Supprt abounds for the Greens' proposal. Ross Garnaut has urged the government to consider an interim carbon price as a first step towards an ETS. James Hansen of NASA, in Australia for a speaking tour, said the emissions-trading model backed by the government was ''a non-solution'', but supported the Greens' plan - in line with his support of industries having to pay a carbon price without access to offsets through a carbon market. And as Philip Sutton of Climate Emergency Network (a CANA member) writes to urge support for the Greens' proposal, 'adopting this measure will send a political message to Australian businesses and to the community at large that things are moving with climate action.  It will begin to nudge the economy in the right direction.  And it then gives us all a chance to move on to arguing, in a more favourable political climate, for the strong structural change polices that are needed to make the really big changes to the economy over the next few years'.

Climate paralysis- and potential for Greens to break the deadlock: The Age's editorial (22/2/10) has backed the Greens plan to break the Senate deadlock. The article, "Go to plan B to limit costs of climate paralysis", outlines that of a rethink on emissions trading may emerge. Climate Change Minister Penny Wong and Greens climate spokeswoman Christine Milne are believed to have made progress on a compromise that involves a tax of $23 a tonne of greenhouse gas for two years, giving Australia time to frame a carbon market as global negotiations proceed. An interim deal with the Greens would need the votes of two other senators, most likely the two Liberals who crossed the floor on emissions trading legislation or independent Nick Xenophon.

Update on the CPRS' journey (11/2/10):  The Greens are still offering to negotiate with the Government, and today over 30 local community climate groups across Australia supported a fixed carbon price, issuing a statement that rejects the government and coalition policies and called on the Parliament to back the Greens' plan. The plan, also supported by Ross Garnaut, seeks to break the Senate deadlock on climate change by setting a interim $20 a tonne carbon price for the next two years. The Greens are calling on people to support their proposal in the media to assist to 'deliver something that will be a start but will not lock in failure. We believe our proposal will do that'. Meanwhile, the Government's Carbon Pollution Reduction Scheme has now reappeared in Parliament, and yesterday Penny Wong entered a debate with Greg Hunt at the National Press Club to promote the CPRS and kill Abbott's 'plan'. Despite the deadlock, the Government is reportedly pressing ahead with plans to set up the auction systems under its carbon pollution reduction scheme. It is likely that the CPRS Bill will be introduced into the Senate in the week of February 22. It is the Coalition parties' intention to vote it down. The speculation is that the Government would consider reintroducing three months later for another double dissolution trigger, although this depends on their negotiations with the Greens, the state of the polls, the mood of the Senate and the opposition.

Research debunks myths on ETS causing food prices to rise: The Climate Institute has analysed key research on the impact of an emissions trading scheme on food  prices. Their research debunks the (more hysterical) claims made about food  price rises under an ETS. Key findings include: all credible modelling shows modest price rises of around 1%, under an ETS; extreme weather events linked to climate change are significant drivers of food prices and volatility of both prices and supply/production; and putting a price on carbon, as part of a global effort to reduce emissions, is prudent risk management to address threats to agricultural sector.

Opposition release their climate proposal (1/2/10): Tony Abbott released the Opposition's climate policy on February 1. It proposes a 5 per cent cut in emissions by 2020 (on 2000 levels), $3.2bn spending in total, and no CPRS. Many CANA groups rejected the policy outright. Their comments include:

  • Australian Conservation Foundation: “Without an overall cap on greenhouse pollution there is no certainty that the five per cent cut would be achieved, let alone the 25 per cent cut both parties have committed to as part of global efforts. The package relies heavily on reducing emissions through soil carbon (60% of the claimed reduction), which is not recognised in international carbon accounting rules”.

  • The Climate Institute: “While there are some positives, it’s a high-risk strategy with no long-term plans beyond 2020. There is no absolute cap, or limit, on emissions and no guarantee that big polluters will clean up their act as there is no disincentive to pollute, which makes it fundamentally flawed. The fact is that Australia has one of the most energy inefficient, polluting economies and in a world turning to clean energy, our competitors among China, India and Europe are leaving us behind in clean energy investments, jobs and industries”.

  •  Climate Change Australia (CCA): Local CCA president Harry Creamer said it is not an emission reduction scheme, but a half-hearted response from an opposition shadow cabinet who do not believe that climate change is a problem.

  • Friends of the Earth Australia: “The Coalition's climate fund is too small and their target, like the governments, is too low to make a meaningful impact on the climate crisis. As it stands under Mr Abbott's policy coal fired power stations would be eligible for funding if they burned coal more efficiently.”

  • Greenpeace Australia Pacific: “We can continue propping up aging and dirty coal-fired infrastructure, or kick-start the shift to clean technology. Doing so would create jobs, cut energy prices and reduce carbon pollution. Even for a politician unconvinced by climate change, such a policy would be common sense. Tony Abbott has missed a huge opportunity.”

CPRS gone (2/12/09): On December 2, the Carbon Pollution Reduction Scheme was rejected by the Australian Senate for the second time (41 to 33, with the Greens voting with the Opposition against the Bill, and two Liberal MPs crossing the floor to vote with the Government). This has raised the option for the Government to use this as a trigger for a dissolution of both houses of Parliament and call a snap election. However, Climate Change Minister Penny Wong has indicated the CPRS version amended with the Opposition will instead be reintroduced to Parliament in February 2010. CANA's members released statements following this development, including WWF and ACF.

Will the CPRS breach international laws? (September 24 '09): CANA member, ClientEarth, has completed an evaluation* of the proposed CPRS and advises that the proposed target range leaves Australia open to allegations of breach of its international legal obligations under articles the World Heritage Convention, the UNFCCC and the Convention on Biological Diversity 1992 (*If you are unable to download this document, request a copy from the author, David Holyoake at dholyoake@clientearth.org)

Senate rejects CPRS: CANA members' views (August 13 '09): The Rudd Government's proposed Carbon Pollution Reduction Scheme (CPRS) has been rejected by the Australian Senate. Some CANA member organisations are disappointed at this outcome, some welcome it, and others have taken the opportunity to focus on what policy Australia requires. Read a range of CANA members' views here.

New report shows gap between Carbon complaints and shareholder disclosure (June 15 '09): The Australian Climate Justice Program, based at CANA, has released a report with ACF that compares the claims of financial impact of the CPRS against what these leading resource companies have disclosed to shareholders- and highlights a significant gap. Read the complaint they have lodged with the ACCC and the full report here.

CANA member groups launch Plan B to rival CPRS (June 11 '09): State conservation councils, Greenpeace, the Wilderness Society and Friends of the Earth joined to state their opposition to the proposed Carbon Pollution Reduction Scheme, urged the government to swiftly reduce emissions, and placed 'Plan B' on the table. The Plan includes recommendations for energy saving, fast-tracking the switch to a renewable energy economy, and growing the green jobs economy. Plan B can be viewed here.

CANA submission to Senate on changes to CPRS (May 28 '09): Following the increase to the CPRS target, the Senate is conducting an Inquiry. Read the CANA submission here.

Rudd Government's Changes to CPRS: NGO responses (May 5 '09): The increased ceiling target of 25% in the proposed Carbon Pollution Reduction Scheme may look good, but significant design flaws still remain. Read the views of CANA member organisations here.

Submission on the draft exposure legislation of the Carbon Pollution Reduction Scheme (April 14 '09): CANA considers that the legislation and design of the proposed Carbon Pollution Reduction Scheme has significant and fundamental problems. Read CANA's to the Federal Government here.

CANA workshop presentations on the CPRS (August 2008)

Earlier CANA statements on the CPRS

 

Emissions trading positions and reports

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