Pollution cap and other policies crucial tests in early move to emissions trading Media Release

Jul 14, 2013 - 12:06pm

Emissions trading puts not just a price, but also a limit, on carbon pollution. Any decision to bring it forward a year should come with a statement of increased ambition, strengthened domestic policy and a continued integral role for the independent Climate Change Authority, said John Connor, CEO of The Climate Institute today. 

“In moving from the fixed carbon price to a limit on carbon emissions, the interaction with other climate action becomes critical," he said. 

“Remember why we did all this in the first place: it is about reducing Australia's disproportionate contribution to climate change and making our high carbon economy competitive in the low-carbon reality of the 21st century." 

“As the Prime Minister noted on the last sitting day of Parliament, with global action increasing, climate change is now as much of a competitiveness issue for Australia as one about our national climate interest of avoiding a 2 degree increase in global temperature.” 

“In determining the new limit the Government should respect the legislated role for the independent Climate Change Authority, which is due to bring draft recommendations on future caps and targets in October with a final recommendation in February. That process can work with a decision to bring forward the emissions trading scheme to 1 July 2014.” 

“With the scheme’s linkage to Europe, the likely price facing businesses paying for their carbon pollution is already evident. What this shift requires is additional focus on our national ambition to cut pollution and our work with other countries taking action.”

“It is likely that for most if not all of the bipartisan backed 2020 range of pollution reductions from 5 to 25 per cent, our pollution permit price will be shaped by the European price.” 

"The Australian Industry Group has noted in its submission to the Climate Change Authority that the price facing business remains the same for 2020 targets higher than the unconditional 5 per cent, as Australia is largely a price taker in its linkage with EU." (See Figure 2 in the submission.)

“The debate should now be about taking targets of at least 25 per cent to global negotiations to help boost actions and avoid worsening climate impacts.” 

“But the lower price does heighten the importance of domestic policies on clean energy and energy efficiency and productivity.” 

“This is why alongside a fresh statement of climate ambition the Government should reaffirm support for the legislated renewable energy target and commit to boosting Australia’s lagging energy productivity.” 

“From our analysis and discussions with business, the budgetary impact of this move will be between $3 and $4 billion in 2014/15 or around 1 per cent of the Federal Budget. With improvements looking likely to the EU scheme, Treasury estimates for 2015/16 appear accurate, meaning the major impact will be felt in the year before the current strategic goal of surplus in 2015/16.” 

“Should any budgetary savings be needed, they shouldn’t undermine action in cutting pollution and boosting clean energy. There should be no cuts to clean technology, biodiversity or other clean energy programs.” 

“Finally with climate impacts hitting home, now it is time to step up our preparation for the growing impacts of global warming. We have been calling for a framework of action and disclosure around preparing for the impacts of two degrees warming, but also those for four degree warming towards which we are heading on current global commitments.” 

“Otherwise, we can keep walking backwards into the 21st century remaining oblivious to what the latest science is telling us. This would be an act of sheer recklessness.” 

The Climate Institute will shortly release its initial assessment of significant parties’ policies against key climate priorities, detailed in its policy brief Managing the Unavoidable while Avoiding the Unmanageable.

For more information

John Connor, CEO, The Climate Institute, 02 8239 6299 

Kistina Stefanova, Communications Director, The Climate Institute,  02 8239 6299   — 

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