Media coverage of Rudd’s announced changes in the ETS scheme has focused on the one-year delay in the starting date. But the big news is that the government will now offer emissions reduction target to up to 25 per cent of 2000 levels by 2020, if an international agreement is made later this year in Denmark to keep global emissions under 450 parts per million.
This is significant good news. It’s obviously necessary to look at the fine print, but a 25 per cent reduction would be consistent with a global contract and converge agreement which could achieve climate stabilization. In the context of such a commitment, a delay in the start date for the scheme (inevitable in any case given the situation in the Senate) is a small price to pay, as is the temporary cap on permit prices.
Also, the government seems to have responded to criticisms about the ineffectiveness of voluntary action
Mr Rudd has also announced that households and businesses will be able to contribute to cutting Australia’s emissions through an Australian Carbon Trust comprising of an energy efficiency trust and an energy efficiency savings pledge fund.
Households would be able to calculate their energy use and then make donations to fund which would then buy and cancel carbon permits.
The scheme may not be perfect, but, on the face of it, the changes are sufficient for me to conclude that the Greens ought to be backing it, and seeking some further improvements, rather than holding out in the name of purity.
John Quiggin 
ProfQ,
From your research, what impact would such a scheme have on Australia’s economic growth and individuals/families disposable incomes?
At the risk of making this thread a list of questions John …
A regular criticism of Emissions trading (that I have heard) is that it constitutes a ‘privatisation of the atmosphere’ i.e. purchasing an emissions permit is effectively purchasing a chunk of air into which you can dump your carbon pollution. Is it fair to call ETS privatisation or a category mistake?
Sean, if expressed in terms of economic growth, the answer (not only from my research, BTW) is “a reduction of the order of 0.1 per cent in the average annnual growth rate”.
Tim, I don’t really see the usefulness of this kind of criticism. Just about everything we do dumps some amount of carbon dioxide into the atmosphere. So, saying that we now have to pay to do what we previously did free of charge seems like a step forward.
More to the point, people making this kind of criticism need to ask whether they are more concerned about property rights systems or about saving the planet. In my case, it’s the latter.
As I understand it the ALP scheme target of 25% is doubly conditional.
2 escape clauses.
The key words are ….”up to 25%”.
Thats a maximum of 25% at best. It could be 6%, or any lesser number than 25.
The second condition is….”if an international agreement is made later this year …”
IF.
In the light of the delay, the exclusion of major polluting sectors of the economy, the low carbon price, the soft ride given to big polluters I don’t think this qualifies as good news.
Its going to be a case of too little, too late.
I’ll reserve my final decision until I see the new draft legislation next week. The targets are definitely an improvement. I have a bit of a summary here. Some of the fine print is in a media release on Penny Wong’s web site which details conditions for different targets to be adopted.
I think it is unlikely that developing countries will accept emission reductions for Australia of 25% by 2020 as part of a global agreement that stabilises at 450 ppm. The legislation should be changed so that Australia will accept reductions of at least 25% as part of an agreement that stabilises at 450 ppm CO2-e.
The scheme caps and gateways approach to setting the trajectory should also be overhauled.
Two points:
1. The chances of a global agreement are Buckley’s to none. Rudd knows this, so 25% is a zero-risk proposition for the govt.
2. It doesn’t matter whether the Greens support the legislation or not, because Fielding won’t.
Bring on the DD election!
Half full or half empty?
In my view this is a postponement of the ETS with an indefinite palliative to mask the backtrack.
Of course Labor will cut emissions by 60% by 2050! I’ll drink a toast to that at my centenary birthday party and (John) I’ll send you an invite.
What about a firm Labor pledge to cut emissions by 90% by 2250?
Kevin Rudd had two distinctive policies going into the November 2007 election – the decision to get serious about climate change and the decision to create unemployment by restricting worker abilities to contract in labour markets. The rest was me-too-ism.
He has reneged on the first policy and the second will become increasingly more visibly stupid as an economy with strong fundamentals moves to 9% unemployment with huge public debt, huge tax burdens to repay the debt, a devalued currency and probably high inflation.
Give me the devil you know any day.
As fred points out ‘up to 25%’ is the classic weasel as it includes anything below (perhaps even 0%). Labor has only one ’emissions’ policy agenda – how to market the interests of the fossil fuel industry to the public such that they stay in power.
ACTU President, Sharan Burrow, summed it up;
“There are no jobs on a dead planet.”
Nanks, as Carbonsink points out;
“The chances of a global agreement are Buckley’s to none. Rudd knows this, so 25% is a zero-risk proposition for the govt”
What ever Australia does (even a 100% cut in emissions) it is not going to have an impact on the atmospheric carbon growth rate, But a 25% cut of world emissions would.
Notwithstanding the rest of the AGW science and what effect the carbon has, even a sceptic like me would like to see an abatement in the growth of atmospheric carbon. If the major polluters are not cutting now, then there is no reason to disadvantage our economy by cutting early. Eventually they will cut and Australia should align its cuts to that time. (when ever that is?)
I’m afraid I disagree that this is a good result. It is the second of possibly many postponements perhaps in the hope it will be overtaken by events. Do diet or anti-smoking programs advise indulging for another year?
If emissions in 2000 were around 500 Mt of CO2e then a 25% cut takes us to 375 Mt in 2020. The not so good news is that I think this might be achieved anyway by energy shortages relative to BAU not efficiency or new technology. Consider this; reduced Australian coal exports may account for up to 200Mt less global CO2 in the last year which makes the ETS seem rather pointless anyway.
Between now and 2020 expect a huge overseas clamour for our LNG even as our crude oil import bill grows wildly. In the meantime there are certain to be some major climate dramas that make the governments of the day look weak.
During that period I don’t expect renewable energy to fill the gap due to either technical limitations or lack of funds. The likely outcome of repeat postponement seems to be that we will sleepwalk our way towards a cliff when everything runs out.. fuels, water and solvent governments.
The devil is, as always in the detail.
The conditions required for the government to go to 25% have been strategically designed to make them impossible to achieve. One of
the conditions placed on the 25% target, for example, is that the rest of the world has to match Australia’s willingness to buy dodgy avoided deforestation credits from dodgy countries who cant even end illegal logging.
Heather Ridout was suitably dismissive of the 25% target.
On the voluntary stuff…where to start.
The Labor Senators in the Senate Economics Committee, having dedicated a whole chapter to the problems with the way the CPRS ignores voluntary action, concluded that ‘this must be adressed’. Unfortuantely, what we saw today was yet another attempt by this government to mislead the public into believing that they have adressed this issue.
Here is how their propsal works: Having reduced your emmissions by turning off your airconditioner you go to a new website. You calculate how much money you have saved by turning off your air conditioner. You donate the money to a new (tax deductible) fund run by Penny Wong. The government then buys a permit (a dodgy one perhaps?) from another country.
And if you dont go through all these step the answer to the question ‘if i turn off my air conditioner will it reduce emissions’ the answer is simple. No.
The ETS’s minimum target should be at least 15% not 5%.
yeah I think it might be a bit early to be accusing the Greens of being purity trolls if they hold off on supporting this new version of the CPRS John. You might want to read the fine print and take full stock of not only the cost of the delay, but the unlimited printing of emissions permits at $10.
And as Richard says, rather than the old version where my household reductions merely freed up another permit for polluting domestic industry, now my emissions & my further donation can be used by the government to go buy more permits on their behalf! Talk about dodgy.
And still Turnbull hasn’t moved – either because he’s just that bad, or more likely I sadly expect, he can smell blood in the water and will now push for yet more concessions.
From the Greens,
“Chancellor Alistair Darling said on Wednesday that Britain would cut emissions 34 per cent below 1990 by 2020, regardless of whether a new international climate treaty was signed this year. When recalibrated to the same baseline, the Australian Government’s minimum proposed 2020 target equates to a 4 per cent cut.”
And Wong’s response,
“Under the Kyoto Protocol, Australia’s emissions were allowed to rise between 1990 and 2012, whereas Britain was required to make a cut. It meant Australia’s maximum target of 15 per cent below 2000 levels would involve the same amount of work over the coming decade as Britain’s 34 per cent cut below 1990 levels, she said.”
Maybe so, but our emissions should not have been allowed to rise under Kyoto and Wong’s maximum conditional target of 15% is vapour to UK’s unconditional 34%.
If the Government wants to assist trade exposed industries, and in the absence of worldwide agreement they should, why not help them to achieve energy efficiency instead of this stalling nonsense. Other assistance could be to subsidise large scale renewables instalations where they could be of maximum benefit to those industries.
There must be lots of tricks at the government’s disposal to assist industry to mitigate emissions instead of making it easier to continue polluting.
The Greens have said they will support a minimum unconditional target of 25%. If they stick to it there will be some fun and games.
ProfQ wrote:
Not its not. You’re dead wrong. Its a total cop out.
Agree with carbonsink. I don’t believe we’ll ever see that 25% cut, no matter what happens in Copenhagen. Our parochial polluters will ensure we remain scabs.
The delay means that if we did implement that sort of cut the economic disruption would be far worse because we won’t have made a start until much too late. Which is of course the excuse the government of the day will make at the time for not doing it.
The GFC excuse Rudd gave is pathetic. The whole point about quotas is that as the level of economic activity rises and falls so does the price of the permits – it’s the major advantage of an ETS versus a carbon tax. A recession just means that the price will be very low and therefore impose no cost burdens. It only imposes a cost burden when things are booming, which is when we can afford it.
This is the future of the planet, FFS! This Labor voter is now a permanent Green voter, depite strongly disagreeing with Green positions on many other issues. It’s a matter of priorities.
How will the new government-facilitated voluntary scheme compare with (say) paying more to get ‘green’ electricity, paying Qantas more for offsets etc.? A new bureaucracy to do the same thing? Have public service numbers increased during the tenure of the Rudd Government?
A carbon tax for the first 12 months. Why not a carbon tax for the first 12 years instead?
Maybe not a year, but neither do they suggest acting impulsively. Research, planning and simply getting used to the idea of change have been demonstrated to be important for success in treating personal addictions.
Likewise, a CO2 program that starts slowly but works is clearly preferential to one that creates a slew of antagonists – in addition to it’s natural enemies – and falls over. CO2 reduction is rational but it has requires an uncommonly long-term justification in comparison to most public policy (and private actions.) CO2 policy will require ongoing support because there’s an ongoing cost. The cost will be eventually become a normalised part of the paying your dues but this will take some time.
As an aside, I’m wondering if there might have been a bit of a Machiavellian plan in this policy process: Either to bring in a strong policy and get it watered down by SIGs, opposition, etc, or, (2) start with a weak policy and bump it up in response to criticism?
Really?! You gave your first preference to Labor? I didn’t think anyone did that any more…
Id like to know why tax cuts for the rich are still going ahead – not happy on the delay re ETS although the target is better. Im not happy on upper income tax cuts in the budget either, given whats been happening to inequality – its time taxes went up for the rich, and down for the unemployed and lower income earners (ridiculous). One of my good friends rang to say she is miserable and now finding it hard. Both her son (21) and her husband have been made redundant recently, the father only this week. The way the son is being treated by Centrelink is atrocious. This kid has been working for the past 5 years and now he has to go to training three days a week at one of those private job placement agencies, has to attend 10 interviews or something a week and its been weeks now,Centrelink is snowed under and keep changing his appointment (by extending it two weeks at a time) and he still has received not one penny. (weeks). She says its costing him money he doesnt have to get to all these delayed appointments and undertake these requirements and he is now desperate. How many more are there this is happening to? Federal money is pouring into private job agencies, and it should be being used to fix Centrelink.
Sorry for being off topic on this. Its not a great day for policy.
Not happy Wayne.
But then would I want the libs back? No – there would be no ETS and they would ignore the unemployed.
carbonsink, there’s always the Senate. There’s also my modest donations.
One of the nastiest details in the earlier proposals was the use of international credits as offsets for carbon emitted in Australia. The treatment indicated in the recent press statement is a bit more hopeful.
‘If the world achieves this agreement, Australia will meet this 25 per cent target by harnessing the CPRS, the expanded Renewable Energy Target, and with substantial investment in clean, renewable energy and energy efficiency and strategic investment in carbon capture and storage.
Up to 5 percentage points of this target could be met by purchasing international credits, such as avoided deforestation credits, using CPRS revenue no earlier than 2015.’
The upper limit of these offsets is to be five percentage points, they are not to be used before 2015. That is hopeful because it means that our target of 25% will be at least a well measured 20% in Australia.
If we demand promises to not cut down trees, even at $1/ton of CO2, we may find the supply of promises very elastic. I am sure we will be able to find the full five percentage points on that market. If we are not smart enough even to do that I am sure there will be a lot of honest brokers who will supply us with them at $2/ton.
Pr Q says:
Rudd has made two changes to the ETS:
– delaying implementation by one year, and
– (conditionally) raising the upper bound cuts
I would like to take this opportunity to claim bragging rights about a confirmed prediction.
On March 11th, 2009 at 1:50 pm I predicted that Rudd would swing to the Left on climate change policy by raising carbon emission cuts going into Copenhagen. I also predicted that Rudd would make these larger cuts ALP policy in the run-up to the 2010 election. With implementation post-2010, following a GST-style mandate after a likely ALP victory in 2010.
[pause for polite smattering of applause, fidgety guests stifling yawns]
FWIW, and to me its worth quite a bit, a few weeks later the gracious host of this blog roughly concurred with my analysis and prediction:
# 6 jquiggin Says: April 19th, 2009 at 3:09 pm
The politics of climate change are not rocket-science. Most of the general populace believe it are willing to pay insurance premium to cover themselves from catastrophe. (Why dont politicians use this metaphor – its all about risk management!)
Its most likely that both Rudd and Obama, running on responsible but effective carbon emission cutting policies, will win resounding electoral victories in 2010-12. In which case we can be reasonably confident that the Anglospheric states will now sign onto an effective Copenhagen target.
Right-wing parties will fall into line or face electoral oblivion.
My biggest concern about climate change is about policy, not politics.
I think Pr Q is:
– barking up the wrong tree with carbon trading rather than carbon taxing. ETS is bound to be rorted, thats why it was embraced by the finance industry.
– over-optimistic about the overall cost of getting global agreements. Its going to cost alot more than 1% of growth to re-fit the BRICA countries power plants.
All the agreements in the world wont achieve anything unless someone picks up the tab. The PRC and IND are not about to sacrifice their future growth for our past waste. So the OECD will have to wind up levying a large carbon tax on their own carbon users in order to fund massive green energy projects in BRICA countries.
On 27 March 2009 I argued that:
I think its time climate changers started talking more realistically about the likely costs of re-fitting BRICA nations with green power and the most effective mode of financing such a changeover.
Carbon tax for silicon power is my slogan.
David Murray, my interpretation is different. The 25% target includes the purchase by government of 5% of emissions. The legislation previously allowed for firms to account for their emissions by purchasing an unlimited amount of CDM credits. We will have to wait for the updated legislation next week, but I don’t think this has changed (unless people make a sufficient amount of noise).