Nov 13, 2014 - 12:01pmThe historic US-China emissions reduction agreement further reveals the inadequacy of the government’s Emission Reduction Fund (ERF), which will need to be significantly altered to be able to address Australia’s post-2020 emissions reduction responsibilities, or will cost taxpayers tens of billions, said The Climate Institute today.
“If the ERF is the primary tool to match even US efforts, the government’s proposed ‘safeguard measures’ imposing limits on polluters are going to need to be super strong and renewable energy targets strengthened, otherwise the budget could face a $9 to $30 billion a year slug,” said John Connor, CEO of The Climate Institute.
“We should return to a framework where the polluters pay, rather than the taxpayers, for emissions reduction.”
“Yesterday’s historic US-China emissions reduction agreement is reshaping international and economic alignments. The announcement spotlights the ludicrous inadequacy of the Emissions Reduction Fund as a primary pollution policy.”
“Even using numbers generous to the government, with the ERF as the primary pollution policy, taxpayers would pay $9 to 30 billion a year just to match the US 2025 reduction target.”
“Adjusting for baseline years, the US 2025 target of 26–28 per cent reduction from 2005 is equivalent to Australia cutting emissions by about 30 per cent below 2000 levels. Making the taxpayers pay rather than polluters for that sort of reduction would require billions and billions of dollars from a budget we are repeatedly told is under stress.”
The Climate Institute has calculated that assuming the $2.55 billion ERF can reach its minimum 2020 target of 5 per cent requires taxpayers to pay around $8 a tonne of carbon. At that price, getting to 30 per cent by 2025 would mean $9 billion a year. Using low end Treasury figures of estimated global carbon prices at that time would mean $30 billion a year.
"Plainly, the ERF by itself does not add up to credible climate policy. It needs to be replaced or significantly boosted with policies that put the responsibility back on the polluter. This means adding super strong safeguard measures and regulatory limits on major emitters and access to international markets.”
“The US-China agreement is very important in that it means the world’s two biggest polluters are working together towards a successful international agreement next year, reversing some of the past rivalry that damaged efforts five years ago.”
"The agreement is perhaps even more important because the world’s two biggest economies have given clear direction that cleaning up the global economy is a priority, and that economic opportunities of this century lie in climate solutions like renewable energy.”
“The Australian Government needs to revisit the adequacy of the ERF in of ignoring global action. The government should be strengthening, not weakening, policies like the renewable energy target and making the polluter, rather than the taxpayer, responsible for emissions reductions.”
For more information
Kristina Stefanova, Communications Director, The Climate Institute, 02 8239 6299