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| SA Premier Jay Weatherill says the states could go it alone on carbon. Alex Ellinghausen |
South Australian premier Jay Weatherill says he will push the states to go it alone on climate change after the federal government caved to pressure from the right wing and rejected looking at a carbon scheme for the electricity sector.
Despite expert advice that an emissions intensity scheme on electricity generators was the lowest cost and most secure option to transition towards gas and renewable energy while meeting Australia's 2030 emissions reduction target, the government slammed the door on the option after a backlash from conservatives, as well as minster Christopher Pyne, who argued it could be seen as putting a price on carbon.
The Premiers and Prime Minister were to discuss the option at Friday's Council of Australian Governments meeting in Canberra on Friday.
The Australian Financial Review reported that Chief Scientist Alan Finkel, who in October was put in charge of the review into Australia's National Energy Market following the blackouts in SA, approved of an emissions intensity scheme for the electricity sector in a preliminary report to COAG. He had intended to advocate its consideration in a verbal briefing to Premiers, sources said.
In a discussion paper to be put to COAG, it is understood he endorses the concept which is already supported by the Climate Change Authority, the CSIRO and the Australian Energy Market Commission, which is a COAG advisory body.
Mr Weatherill told ABC radio on Thursday that "in the absence of national leadership", he would be urging the states to team up and implement a nationally consistent scheme of their own.
More so given the experts say it would actually reduce power prices and increase energy security.
"It would clean up our energy system," said Mr Weatherill who will sound out his colleagues ahead of Friday's COAG meeting.
"Our first instinct is of course to seek a national scheme," he said. Mr Weatherill said preliminary advice showed a scheme could be established without federal government support.
An emissions intensity scheme is not a carbon price or carbon tax in that it does not raise revenue by charging for emissions. Instead it would penalise generators who pollute above a baseline limit.
Cleaner emitters who stayed below the baseline would not pay anything and would receive free credits which they could to trade to bigger polluters.
The policy is similar to the Coalition's current direct action policy that has a "safeguards mechanism" designed to penalise emitters for exceeding limits. Polluters are currently paid from the budget to reduce emissions but this is considered unsustainable beyond 2020.
Experts said the government was now limited to high cost options in order to meet the 2030 targets. These were expanding the renewable energy target or to keep pouring money from the budget into direct action to pay polluters to reduce emissions.
Despite this, Mr Turnbull and his ministers insisted on Thursday the government was committed to low electricity prices.
Mr Turnbull said Mr Weatherill would be putting at risk jobs and business with his plan to go it alone.
"We believe that policies should be national," he said.
Treasurer Scott Morrison said: "We are not interested in a carbon tax. The Prime Minister has never supported a carbon tax. Whether it is an ETS or whatever you want to say. That was settled by the Coalition years ago".
"We are interested in engaging in the engineering of ensuring that our electricity costs, pressures on those are reduced and ensuring we have the sufficient supply, whether it is gas or other important areas that will ensure that energy prices have the cost pressures on them reduced."
The backflip came just 36 hours after Energy Minster Josh Frydenberg released on Monday the terms of reference for a review of climate policy for the decade beyond 2020.
This was promised by Tony Abbott in 2015. On Thursday, Mr Morrison dismissed it as "a very low level, housekeeping review".
The terms of reference opened the door to the purchase of cheap international permits to help meet Australia's 2030 emissions reduction target but made no provision for an emissions trading scheme or a carbon tax. But Mr Frydenberg left open the prospect of an emissions intensity scheme for the electricity industry which produces one-third of the nation's carbon emissions.
"We know that there's been a large number of bodies that have recommended an emissions intensity scheme, which is effectively a baseline and credit scheme. We'll look at that," he said in an interview.
Following the backlash and a cabinet meeting on Tuesday afternoon, Mr Frydenberg said:
"The government will not introduce an emissions intensity scheme, which is a form of trading scheme that operates within the electricity generation sector."
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