I can already read tomorrow’s headlines, “Rudd changes climate on climate change” or “An expedient truth.” But, in actuality, today’s changes to the ETS are practical and sensible and if we can’t get a political coalition to pass this, then you can’t believe what those voting against it say about being serious about dealing with climate change.
[DDET But let’s review]
By far the most significant change is that, if this legislation passes, Australia will go to Copenhagen with a climate budget of a 25 percent emissions reduction to deal with. To go in with anything less had no rationale and the Government has seen the error of their ways. Phew.
Second, the scheme will be delayed for a year. Some will read this as breaking an election promise but, in reality, if this legislation passes, a year’s delay is completely inconsequential. This is because the price signals will impact on any investment that is expected to involve assets with more than a two year life. That means buildings, car purchases, and energy. The year gives big businesses breathing space to implement carbon accounting, etc, and also diminishes the whole “I can’t deal with this in the GFC” hysteria.
Third, the carbon price will be set at $10 for the first year. What does that mean? I think it means we will have a carbon tax that year.
Fourth, the government has left itself room to do all this by offsetting emissions which is something I have long argued is where there is great innovative potential.
Fifth, there is a finance mechanism — the Carbon Pollution Trust — that, if I understand it correctly is part benefit-contingent loan and part offset scheme. The last bit first, if you put in solar panels and this reduces electricity, then you can put money into the Trust to ensure that the permits get taken out of the system. Sound familiar? Yes, it was precisely what I thought the solution to the ‘voluntary conservation’ problem ought to be. Now it will be government sanctioned.
The second part of this is if you are a business and you want to spend lots in increasing energy efficiency of your buildings, then the government will lend you the money and you will pay it back based on the actual savings in energy (including carbon price I guess) that you would get. Is this the first non-educational application of something like an ‘income-contingent loan’?
In summary, if this can’t pass, nothing will and Australia will lose any claim to be dealing with climate change. Neither the Greens nor the Coalition should object. Indeed, each should declare victory and vote yes.