Dec 21, 2008 - 12:00am
The independent Climate Institute said today it was considering
withdrawing its support for the Government’s flawed emissions trading
scheme after preliminary analysis shows ballooning levels of
compensation to polluters jeopardises the ability even to reach modest
emission reductions of 15 per cent.
“The Government has said it is
willing to go to 15 per cent reductions, as part of a global deal, but
has designed a scheme that sabotages its chances because of the high
levels of support to polluters,” said John Connor, CEO of the Climate
Institute.
“Even on the minimal 5 per cent 2020 emissions
reduction target, polluter handouts mean companies receiving free
permits will be able to increase their pollution by 20 per cent,
relative to 2000 levels, forcing the rest of the economy to reduce their
emissions by 18 per cent.”
The White Paper is also explicit that if these polluters grow faster than expected the Government would have to bear the risk.1
A
scheme that requires Government to dig ever deeper into the public
purse - or for other parts of the economy to work harder - to compensate
polluters as their emissions increase would be politically and
economically unsustainable - this a potentially fatal flaw and may sink
hopes of achieving the 15 per cent target reduction, undermining
progress toward a global deal.”
Further analysis by the Climate
Institute of the White Paper package, using Treasury’s CPRS-5 scenario,
emissions from industries receiving free permits are projected to rise
to 20% above 2000 levels by 2020, but the rest of the economy would have
to cut emissions to 18% below 2000 levels.
If this same
approach were maintained under Treasury’s CPRS -15% scenario (or where
the Government moved to a 15% reduction target), these industries would
increase emissions by 13 per cent while the rest of the economy would
need to cut emissions by 29%.
“There are fundamental questions
about whether this scheme can deliver even the halfway house to our
national interest that a 15 per cent target implies and make the 25 per
cent reductions needed impossible, as part of a global effort, to reach
the national interest goal of reducing global greenhouse gas levels to
450ppm or lower,” Mr Connor said.
The findings follow earlier
Institute analysis that the Government has increased the potential
handouts in 2020 to polluters by close to 50% – from the level outlined
in the July Green Paper – while more than halving the energy efficiency
or “carbon productivity” requirements to a mere 1.3 per cent improvement
per year for recipients of the free permits.
The Institute’s Mr Connor described that finding as “corporate welfare without the corporate cleanup.”
“The
more we look, the worse this package appears and we will have to
seriously look at recommending the whole package goes back to the
drawing board.
“The extraordinary level of support for polluters
is like a cancer in the heart of our climate and low carbon economy
ambitions. It’s time for a fundamental rethink.”
1 Carbon Pollution Reduction Scheme White Paper Box 12.15; page 12