by Lynne Blundell and Tina Perinotto
Kevin Rudd’s spectacular backflip on the carbon pollution reduction scheme (CPRS), delaying its introduction by a year looks to backfire on a number of fronts.
While the scheme is unlikely to get passed in the senate, the scheme has split the environmental movement in two, and the built environment lobby says a great opportunity for cheap fast emissions savings has been missed by not factoring in the powerful potential contribution of the building sector.
Rudd announced on Monday (4 May) that the scheme would be delayed by a year, and a one year fixed price period will be introduced. Permits will cost $10 a tonne of carbon in 2011-2012 with full market trading to begin on 1 July 2012.
The only concession to a call for higher emissions cuts target is a change in the upper limit, which has been increased to 25 per cent; the minimum target for emissions reductions remains unchanged at 5 per cent.
Emissions intensive trade-exposed industries would also receive a “global recession buffer” – of 10 per cent for those who are eligible for 60 per cent assistance and 5 per cent for those eligible for 90 per cent assistance.
According to chief executive of the Green Building Council, Romilly Madew, what was missing was complementary measures for the built environment.
Even before Rudd’s announcement, she told the Senate Select Committee on Climate Policy in Brisbane on 28 April, that with commercial and residential buildings accounting for 23 per cent of Australia’s annual emissions, the industry was vital in any carbon pollution reduction scheme.
“That is, abatement in the built environment actually saves the economy money,” Madew said.
(See Madew’s article on this in Spinifex).
ASBEC President, Tom Roper, a former Victorian government minister, also took the same line, telling TFE that the findings of ASBEC’s Second Plank report pointed to reductions of up to 60 million tonnes of greenhouse gasses available from the building sector.
On the broader political level, Australian Greens Deputy Leader, Senator Christine Milne, said that the Rudd announcement had provoked a strong response to Greens offices from people wanting to know how to register their protest.
The backflip would not just delay climate change action but would hand polluters $2.2 billion over five years and essentially mean no action to reduce emission before July 2012, Milne said.
“Australians know that Rudd and Wong’s CPRS changes would see polluters paid more, the community pay more and the climate lose out in the bargain,” Milne said.
“Our offices are once again seeing an outstanding degree of interest from the community asking what they can do to register their protest at the Government’s refusal to act responsibly on climate change and help us get action.
“Kevin Rudd and Penny Wong have tried to pull the wool over the eyes of all those mums and dads who are troubled by the fact that their efforts to reduce their footprint will simply make it cheaper for big polluters to keep polluting.”
Milne said the Government’s claim of holding out 25 per cent cuts as a distant goal to help global negotiations was dishonest. Penny Wong had already conceded that the world would not agree to Australia’s offer and the 25 per cent should not be taken seriously, Milne said.
The Australian Conservation Foundation, the World Wildlife Fund and the Climate Institute registered support for the scheme, albeit muted.
The Climate Institute took a pragmatic line.
The scheme sent industry “immediate signals” of risk for risks of future investments in high-polluting assets and was better targeted at a global agreement, the Institute said in a media release.
“This reform package is worthy of support because it focuses our minds on the real prize – an effective global climate agreement, said chief executive office of the Climate Institute, John Connor.
“High-emitting assets, such as coal-fired powered power stations, will become less attractive and higher risk investments.
“On balance, the Climate Institute believes the yesterday’s announcements along with the Renewable Energy Target and the foundations of a national energy efficiency strategy outlined by COAG last week form a solid base to position Australia as a country prepared to reap the benefits of a low emission recovery.
“We will of course continue to argue more needs to be done in other areas but the time for endless debate is over and the time for action has come,” Connor said.
From the Federal Opposition there was no shifting leader Malcolm Turnbull.
Rudd’s announcement was an embarrassing backflip and his party still would not support the modified scheme, Turnbull said.
Without the Coalition on side for the scheme the Government will be seven votes short in the Senate.
Even before its watering-down the scheme had been attacked from all sides for its inconsistencies, high costs and low emissions reduction targets.
The Government is in turn accusing the scheme’s opponents of “lunacy”, economic irresponsibility and hypocrisy.
Independent report says more analysis needed
The Opposition on 30 April released an independent review of the proposed CPRS that it says confirms the scheme was flawed and economically irresponsible.
The report, prepared by David Pearce at the Centre for International Economics, recommended more critical analysis be done on the costs and alternatives before finalising a scheme, even if this meant delays to its start date.
It said an independent body such as the Productivity Commission should do such analysis.
While the report took no issue with the Government’s projections beyond 2040, it concluded the lack of analysis meant the government had little idea of the costs and effectiveness of the proposed scheme over the 20 to 30 year transition period.
The scheme potentially threatened the financial viability of a number key industries and meant householders would face higher energy bills.
Parliamentary Secretary for Climate Change, Greg Combet, countered with an accusation that it was the Opposition that was irresponsible for failing to reveal its policy on emissions trading.
Greens unrealistic says Combet
Addressing the board of the Australian Financial Markets Association (AFMA) in Sydney in April, Combet said if the scheme was defeated in the Senate it “would result in a high level of uncertainty for business and investors, which will have a negative impact on our economy and jobs.”
He attacked the Greens for their unrealistic demands, describing their call for a 40 per cent reduction in emissions by 2010 as “economic lunacy”.
“If the Greens persist with economically and politically unachievable goals, and vote against the CPRS in the Senate, they will have to take responsibility for delivering absolutely no cut in Australia’s emissions at all – which would be a terrible environmental outcome,” Mr Combet said.
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