Carbon pricing policy a small start to tackling climate change

On Sunday the Gillard Federal Government announced it’s carbon tax at $23 a tonne of....

On Sunday the Gillard Federal Government announced it’s carbon tax at $23 a tonne of carbon to be imposed on the 500 largest carbon polluting companies starting from July 1st, 2012. More than half the money raised will be returned to low and middle income earners, pensioners and retirees as compensation. Additional packages include $10 billion renewable energy and low emissions technology fund, substantial assistance packages to ’trade exposed’ industries, $1.9 billion to fund carbon geo-sequestration in the land sector, and a $1 billion biodiversity fund.The initial rate of $23 a tonne will be indexed at 2.5% for 3 years before an Emissions Trading Scheme is introduced in 2015 with a cap and floor price set by the Government. An independent Climate Change Authority will be established to recommend targets when the emissions trading scheme commences to take some of the politics out of the process. A target of 80% emissions reduction from 2000 levels by 2050 will be set.See also: Carbon price in a nutshell according to the Australian Youth Climate Coalition. Full Details are available on the Government compensation package and of the carbon price modelling from Treasury Department.The initial announcement was made in February 2011, with the Government being widely criticised for providing few details at the time. The negotiating process was long and tortuous with Julia Guillard’s minority Government needing to negotiate with the Independent members Tony Windsor, Rob Oakeshott and the Greens in the Multi-Party Climate Committee. The Independent MP from Tasmania, Andrew Wilkie, has now also pledged support for the package ensuring it’s passage through the House of Representatives. Although invited to participate in the MPCCC the Liberal party refused all input to this multi-party committee. Climate change is too big an issue to be used for partisan adversarial politics, and the Liberals refusal to participate in the MPCCC showed a lack of commitment to tackling the big environmental and economic issues Australia is facing. In May the head of the IPCC came out publicly to say that a carbon price was needed for climate mitigation as it was reported that Global Carbon emissions achieved a record high in 2010.Significant compromises were made by both the Government and by the Greens so that this scheme is more flexible and well rounded than the CPRS scheme the Government attempted to bring into law itself and then in negotiations with the Liberal Party headed by Malcolm Turnbull in the last parliament. Several commentators have remarked that it appears to be better rounded than the failed CPRS scheme.The carbon pricing package sets in place four key elements: a carbon price signal to change business behaviour; support for clean energy and funding clean energy innovation for the future; support for energy efficiency; and implementing the storage of carbon in the landscape through sequestration programs. But it also involves significant taxation reform for low income earners lifting the tax free threshold to over $18000pa and reducing taxation rates for low and middle income earners as part of the compensation package.Under Tony Abbott’s leadership of the Liberal Party we have seen a climate policy that has been highly critical of the introduction of a market based emissions trading scheme and instead favoured direct taxpayer funding for reducing emissions while playing on people’s fear of a new tax and the impact of the cost of living. The Liberal Party’s ’direct action’ climate policy has been heavily criticised by scientists as tinkering at the edges and by economists as ineffectual. Never mind that Europe has had an emissions trading scheme for the last 6 years, that New Zealand now has a scheme in place, that the US state of California will be introducing an ETS next year, and that even India has placed a tax on coal production. Abott even appeared to come out in favour of a carbon tax in an interview before the election last year. Abbott is stuck defending a policy that makes no scientific or economic sense even from a conservative perspective.Climate and Conservation groups have been generally welcoming of the carbon price policy, although with some caveats that it is only a start to tackling the diabolical problem of climate change and its impacts on the economy, society and environment. Indeed, with current global pledges for emissions reductions we are on target for 4 degrees of warming by 2100, well above the international commitments to restrict warming to 2 degrees C. More on this at the end of this article. The policy is an initial start. The test will be whether it can be scaled up for greater emissions reductions when the electorate realizes the huge costs and impacts extreme weather events and climate change will have on society in the coming decade. "The price on pollution package is a critical milestone in Australia’s response to climate change. In decades to come we will look back on this package as the turning point that led to a fall in Australia’s emissions." said Environment Victoria Campaigns Director Mark Wakeham in a media release."This package is not perfect, but it is absolutely essential Australia gets started. We commend the multi-party committee for establishing a $10 billion clean energy finance corporation, as proposed by ACF, to drive large-scale investment in renewables." said the Australian Conservation Director Don Henry in a media release. Watch Don Henry explain his initial impressions: