12/09/2016

Climate Change Policy Needs Market Mechanism

The Age - Editorial

The public brawl being played out in the Climate Change Authority is a fresh story, and yet a highly familiar one. It is not surprising people plucked from differing walks of life to advise the government on global warming would have sharply conflicting views.
A majority of board members, most appointed by the Coalition, have recommended the government build on current policy settings to meet existing greenhouse gas reduction targets. They have been challenged by two members, scientist David Karoly and academic and author Clive Hamilton, who believe the majority has failed by not stressing Australia needs to cut emissions much more rapidly if it is to play its part in limiting global warming to less than 2 degrees – a benchmark agreed under the Paris climate deal.
Could you people hurry up and get serious, please? Photo: Nick Cobbing/Greenpeace
The pair would like to see what would effectively be a reboot – scrapping the Direct Action emissions reduction fund and introducing the type of emissions trading scheme both major parties used to once support. They also want a dramatic scaling up for the renewable energy target. It is a battle over what is achievable and what is desirable.
Australia's political class has been having this sort of argument since 2007, when both the Howard government and the Rudd opposition went to an election supporting a market-based scheme.
In this case, the dissenting report is more clearly playing the role the authority was intended to – providing independent advice, and leaving the politics to the politicians. Under no calculation does an emissions cut of 28 per cent below 2005 levels by 2030 – the maximum proposed by the Coalition – measure up to Australia playing its part. The majority report only acknowledges this discrepancy in passing. That is a mistake. More than 2 degrees of warming will be catastrophic for millions of people and countless species. Everything must be done to avoid it. If our lawmakers ever get properly serious about cutting emissions, they will find they can be brought down more rapidly and at lower cost than those who argue against taking action claim.
The country should adopt the targets the authority recommended last year, including a cut of at least 45 per cent by 2030 and net zero emissions by mid-century. The current approach is a pseudo climate policy, more about planting trees than cutting industrial emissions. Wise heads in both major parties know this, and want an end to the years of aggressively oppositional politics on climate change. They are also hearing the increasingly vocal call from interest groups – spanning business, unions, the welfare lobby and environmental organisations – for a meaningful bipartisan deal.
This could take a range of forms, and there are suggestions in both the majority and minority report worth considering. To be serious, they must include a market-based scheme that requires polluters to either reduce emissions or pay a significant cost for their greenhouse pollution.
With a pure cap-and-trade scheme unlikely to win support, this could be achieved by converting the existing "safeguard mechanism" into a baseline-and-credit scheme that required industrial players to pay for emissions above a set level. That level would be reduced year-on-year.
This – complemented by an extended clean energy target and a plan for orderly closure of coal-fired plants, including helping communities where jobs will be lost – would be a significant start towards Australia delivering on its international commitments.
The Age urges both parties to drop the political point-scoring and ideological frolics in the pursuit of this compromise. It is time to get started in earnest.

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