Julia Gillard

25 February 2011 –UPDATED – The Australian Financial Review today said in its editorial that it was time to “stop playing political games” with the carbon price issue., despite the ructions its introduction was bound to cause.

“The government’s proposed two-step carbon abatement mechanism is a practical way to inject a modest carbon price into the economy that should achieve some behavioural change and provide business with at least some more certainty about the longer-term direction,” it said.

Strong words from a key business and political influencer.

Sadly the AFR acknowledges there is “still scientific debate over the link between human activity and climate change without going into detail about the source of that debate or who is paying for it, but added: “the bulk of scientific evidence suggests human activity is contributing to global warming, with potentially huge mitigation and life-changing costs later this century.”

There’s more. The opposition’s fear mongering about energy price rises was a furphy because  uncertainty would drive up prices regardless, it said.

And: “Given the gradual introduction and the added stability of the initial fixed price, it is important that industry compensation is not allowed to blow out to the point where it negates the entire point of introducing a price.

“Business should now try to shape what is the third attempt at a carbon reduction scheme to ensure that it is introduced in a way that does not undermine Australia’s international competitiveness.”

These are encouraging words because like The Economist world wide, the AFR in Australia leads top political and business opinon.

What else does the media say?

Bernard Keane  at Crikey highlighted the key agreement between the government and The Greens:

  • A carbon pricing scheme to start on July 1, 2012, based on an emissions trading scheme with a fixed price (as yet undecided) for permits;
  • an initial fixed carbon permit price for 3-5 years – possibly out to 2017;
  • fixed price period to be followed by a transition to a flexible price-based scheme with a price linked to international markets and a 2020 carbon reduction target;
  • the length of initial period to be established in coming months;
  • scheme “hard-wired” to move to a flexible price system but with a review of transition to cap-and-trade a year out from commencement, with the possibility the transition may be delayed depending on the outcome of the review;
  • agriculture omitted from the scheme; it will cover the stationary energy sector, transport sector, the industrial processes sector, fugitive emissions (other than from decommissioned coal mines) and emissions from non-legacy waste. Climate Change Minister Greg Combet noted that a phased approach may be adopted in relation to different sectors;
  • compensation yet to be determined but “the overall package should take appropriate account of impacts on the competitiveness of all Australian industries, and the principle of energy security recognised that the introduction of the carbon price should be accompanied by measures that are necessary for maintaining energy security.”

Keen said: “This first, heavily caveated and detail-light announcement of a carbon price commitment reflects Labor’s decision late last year to abandon its pre-election recalcitrance on carbon pricing and participate in a process proposed by the Greens to break the Parliamentary deadlock on passing a carbon pricing scheme to start by July 1, 2012, legislated after the Greens take the balance of power in the Senate on July 1.

“It represents a win for the Greens, who proposed an initial fixed price followed by a cap-and-trade scheme in 2010, and received the backing of Professor Ross Garnaut in doing so.

“It also reflects a shift in thinking not merely within official circles but more widely that a fixed-price/carbon tax-type approach may be a simpler and more workable carbon abatement mechanism than a more complex cap-and-trade scheme until there is a robust international agreement for carbon trading.

“The Rudd government’s refusal to explain its Carbon Pollution Reduction Scheme and sell the case for climate change action set the scene for a political shift against Labor on the issue, climaxing in the Rudd government abandoning the CPRS in May last year.”

Independent Tony Windsor today told radio news he was still not committed; Rob Oakshott said he was.

The Grattan Institute‘s  chief executive officer John Daley said today: “Carbon pricing is necessary if we are serious about reducing emissions, is affordable, and must be designed the right way, as I spoke about in a presentation for the Melbourne Conversations program.

“In particular, we need to avoid the mistakes of the version proposed in December 2009, where excessive free permits were proposed for high emissions industries that compete internationally, as I explored with Tristan Edis in The AFR.

“Improving productivity is also gaining political priority. The AFR’s editorial on Thursday challenged the Australian Government to address our deteriorating productivity, referring to the “substantial report”, ‘Australia’s Productivity Challenge’ , recently released by Saul Eslake and Marcus Walsh.

Productivity will improve if we encourage competition in domestic industries, and minimise wasteful regulation.”

The Greens
The Australian Greens yesterday said it had agreed with the Gillard government in announcing an agreed pathway towards a carbon price that should commence on 1 July 1, 2012, “beginning the transformation of our economy from polluting fossil fuels to clean energy.”

Australian Greens Leader, Senator Bob Brown said the agreement was a major step towards implementation of the Greens’ proposal for a fixed carbon price starting as soon as possible, rising each year, with no international offsets allowed. The fixed price could be replaced in time with a well-designed emissions trading scheme.

He said: “This agreement is the Greens in action, delivering certainty to the Australian economy, community, investors and the environment after productive negotiations with the government.
“We proposed a fixed price on carbon in January last year as a way of breaking the deadlock the parliament had reached on climate action.

“The Multi-Party Climate Change Committee that was established at the instigation of the Greens to support the Gillard government, is paying dividends for all Australians.”

Australian Greens Deputy Leader, Senator Christine Milne, said: “This agreement to set a fixed, rising price on carbon with no international offsets means that, as of July next year, the transformation of our economy towards a zero emissions future can begin.

“This will be good for the community who face out-of-control energy price rises, it will stimulate the economy, create jobs and, of course, help protect the climate which sustains us all.

“The Greens’ agreement with the government sets out elements of a transition to emissions trading down the track once the parliament can agree on emission reduction targets.

“But it is important to note that, in the absence of agreement, the fixed price would continue and keep rising into the future, giving industry certainty that, from now on, change is inevitable.

“The carbon price would cover the energy sector, transport, industrial emissions and waste. There is agreement to support change in the land-use and forestry sectors but details are still under consideration.

“The agreement sets out points for compensation, including helping the community meet rising costs of living, but the details are still to be determined.

“This is a big step forward for climate action in Australia. For the first time, everybody in Australia will have a clear signal that the old, polluting ways will have to change and a new, exciting era is set to begin.”

the ABC website yesterday focused on Opposition Leader Tony Abbott’s vow to make introduction of the scheme as difficult as possible, and said it would bring a “people’s revolt”.