RAPID REACTION: Carbon pricing legislation passed through House of Representatives – experts respond

Wed Oct 12, 2011

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The Government’s carbon pricing legislation passed the Lower House by 74 votes to 72 on October 12, 2011, after weeks of debate. Here experts discuss the implications.

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Professor Roger Jones is a Professorial Research Fellow in the Centre for Strategic Economic Studies at Victoria University in Melbourne

“It is good to see this legislation passed. Its main benefit will be in creating institutions and markets focussed on lower carbon technology, emissions production and in generating services for greater efficiency. It is clear from the number of industry comments so far, that this capacity is ready to go in many areas. The 2020 target is useful and can be amended but the critical target in the legislation is that of 80% reductions by 2050.

It’s also clear that the public wants to learn more about the legislation, what its benefits are and how both the costs and benefits affect them. A great deal of misinformation in the media and elsewhere has hindered this. The motives of those who cast doubt on the science in order to further their own agenda needs to be seriously questioned.

Some key points are:
• The legislation gives Australia credibility in ongoing negotiations for international climate policy, where it is currently with Norway involved in crafting a proposal to move forward.
• Australia is not going it alone. From a global business as usual case a few years ago that would have given a roughly 50% chance of exceeding 5°C warming by 2100, the current policy mix ends up at around 3.5°C but could go either way.
• Australia faces an estimated reduction of 160 million tonnes of CO2 equivalent to reach the 5% target by 2020. This is equivalent to a 0.0038°C reduction in global warming by 2100. A far more important figure is the 80% reduction by 2050 target. That would reduce global warming by about 0.02°C and sees 115 million tonnes CO2 equivalent emitted compared to 577 Mt in 2010.
• In comparison, Kejun Jiang from the Energy Research Institute in China was in Australia last month and showed that current Chinese policies would save an estimated 1,800 million tonnes CO2e by 2020 and 3,800 by 2050 from their baseline. A more stringent set of policy scenarios they are looking at would double that benefit by 2050. China is also investigating a carbon price and are looking closely at Australia.
• Similar plans are being developed in a number of US states, the EU, various Asian countries. Research in the US to reduce emissions is ongoing, even if it’s not influencing policy just yet. So Australia is not going it alone and stands to benefit from their own actions and those of other countries.
• For example, the benefits to Australia by 2050 of their own actions could see somewhere between 23-55 square kilometres of the Great Barrier Reef kept below critical bleaching. The benefits bestowed by other countries would be far greater. However these benefits will only be realised if global warming is kept below 3°C. Preventing the bulk of the GBR from being critically affected would require a much lower peak warming.”

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Dr Frank Jotzo is Director of the Centre for Climate Economics and Policy in the Crawford School of Economics and Government at The Australian National University in Canberra

“The carbon pricing legislation gives businesses more certainty for their investments, after many years of policy uncertainty. Companies will adapt their operations to the carbon price, and investment decisions will be taken with more consideration of emissions savings and energy efficiency. Once the scheme is in place, most industries will not be too eager to get rid of it again, especially if it means that it would be replaced by a different set of policies. The detailed design will always be contentious, and no doubt the scheme will evolve over time, along with changes to the overall policy landscape affecting greenhouse gas emissions. But the fundamental point is that putting a price on carbon is the economically best way of reigning in emissions growth. What was voted in today could well be the first step on the journey to effective and economically sensible climate policy in Australia.”

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Professor John Cole is Director of the Australian Centre for Sustainable Business and Development at The University of Southern Queensland

“Political hype aside, today Australia took a once in a generation step forward as a progressive member of the international community. Climate change unchecked ranks as the greatest threat to the future of humanity and today Australia began to pull its weight consistent with its capacities. Admittedly, there is a long way to go in the transition to a low carbon world. Irrespective of what politicians may say and threaten to do with the carbon tax, the suite of measures is so complex, so embracing, and has been achieved with so much political capital spent – on all sides – that to talk about a future where we will go back to the past is simply to strain the bounds of credulity.”

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Professor Snow Barlow is Professor of Horticulture and Viticulture at the Melbourne School of Land and Environment at the University of Melbourne

“The passing of the carbon bills through the House of Representatives today is an historic moment for Australians because it is the most significant move the nation has yet made to address Anthropogenic Climate Change. It will restructure the economy to dramatically decrease its carbon intensity and position current and future generations for continued prosperity. The bills cover the major sources of fossil fuel emissions within our economy, energy generation and transport.

Perhaps more importantly, the well-conceived architecture of these carbon pricing bills gives government the capacity to meet current and future national and international emissions reduction targets while encouraging the development of less carbon intensive industries.

Contrary to much of the public debate we are not ‘going it alone’. We are in the very good company of many of our major trading partners such as China, Korea, the nation state of California and the EU, who are concurrently introducing measures to decrease the carbon intensity of their economies. This well-structured carbon pricing package, competently implemented, has an excellent chance of achieving its objectives of controlling emissions, promoting low carbon innovation and ensuring that disadvantaged sectors of the community and industry do not suffer unfairly.

Within my particular area of expertise in the land-based sector, the package provides a much needed research, development and demonstration program. This will equip land managers to generate carbon credits by decreasing the carbon intensity of their activities while maintaining productivity and improving sustainability. Although agriculture is not a covered sector in the first phase of pricing carbon, the income flows will allow the sector to reconfigure the landscape into a more sustainable design while preparing our food production industries to remain competitive internationally in a future carbon-constrained world.”

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Prof John Foster is Director of the UQ Energy Economics and Management Group at The University of Queensland

“It is NOT a ‘carbon tax’!! It is an emissions trading scheme with a temporary fixed price period (all such schemes have a temporary period where there is a fixed price as the system beds down).

I really despair when even science journalists are completely incapable of being clear on this and, in so doing just confuse the public, many of whom still think that they will see a carbon tax charge on their receipts, just like the GST.”

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Professor Steven Sherwood is co-Director of the Climate Change Research Centre at The University of New South Wales

“This policy is only the first step compared to what will be needed in the years ahead to avert severe global warming. That will ultimately require leaving a lot of economically viable coal, shale oil, and other resources in the ground forever, or else capturing the carbon as they are burned — not just burning through them all a bit more slowly. The policy passed today seems to be as large a step as can be justified now; people will have to adjust to it, other nations will have to take further steps, and the consequences will have to be assessed. Then in a few more years, as we begin to adjust to new realities and learn from this experiment, we and the rest of the world will have to decide what stronger steps should follow it. We are in for a very long haul on this issue.”

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Dr Richard Corkish is Head of the School of Photovoltaic and Renewable Energy Engineering at The University of New South Wales

“The advent of the carbon pricing legislation and the associated support for clean energy developments in the coming years is very exciting. It will bring this issue of global warming back to its rightful place as the most important facing our generation and bring to prominence Australia’s special place in the world as an R&D leader in renewable energy technology. It will encourage us to discuss our special advantages that allow us to be one of the few developed countries that could very easily be 100% reliant on renewable energy. This is a very positive step!”

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