Sep 17, 2008 - 1:00am
Proposals from Government and special pleading from business groups
that emission intensive trade exposed companies should receive handouts
are likely to come at a substantial economic cost to the wider
community, according to independent economic analysis commissioned by
The Climate Institute for it’s submission to the Government’s Green
Handouts under current proposals are estimated to be worth
around $3 to $6 billion a year, more than half of total Government
spending on infrastructure, transport and energy or about one third of
the total spending on education.
“We need a detailed study into
‘carbon leakage’ before handing over what could simply become windfall
profits for some of our biggest polluters. Revenue would be better spent
driving investment into the shift to a low carbon economy,” Climate
Institute CEO John Connor said.
The analysis from McLennan
Magasanik and Associates (MMA) examines Government and Business Council
of Australia proposals – including the Aluminium and LNG sectors - and
questions the extent to which companies will shift investments offshore.
highlights that current proposals to hand out free permits to existing
polluters are not likely to deliver a net benefit to the economy and are
unlikely to impact on investment decisions. The foregone revenue may be
better spent driving emission reductions and reducing other economic
distortions such as reducing inefficient taxes.
MMA concludes a
more effective and economically efficient approach would be to provide
direct assistance to companies to implement world’s best practice
emission reduction technologies.
“Rather than the overhyped
claims of carbon leakage we need a serious discussion on industry
assistance and industry plans to reduce carbon pollution and how to grow
our low-carbon economy,” Mr Connor said.
“Accordingly, if limited
one off assistance is given to selected generators, it should be on the
condition of achieving clean energy outcomes.”
Other key recommendations and findings in the TCI submission include:
national carbon pollution reduction target needs to “speak to” how
Australia will do its bit to help developed countries achieving the Bali
Roadmap (25%-40 % emissions reductions off 1990 levels by 2020.
Australia should reduce by at least 25%.
- Proposals for a soft
start and/or fixed carbon prices will only prolong business, political
and environmental uncertainty and should be rejected.
petrol excise offset should be rejected with the billions of dollar
savings better directed to assist vulnerable communities and public
- A reserve bank style independent
regulator to set annual cap extensions and transparently direct
assistance to strongly affected exporters and generators.
- A Carbon Trust style body to administer energy efficiency initiatives in residential, commercial and industrial sectors.
direct proportion of revenue to be committed to helping developing
countries clean-up development, afforestation and adaptation – a crucial
negotiating asset in global talks
- A clear focus on the opportunities of the transition to a low carbon economy.
need a laser like focus on driving clean investment and opportunities
in the low carbon economy, not ‘loser-lite’ strategies that shield
polluters with unjustified claims and inaction,” concluded Mr Connor.