A price on pollution, not market fundamentalism

The price on pollution, along with the Clean Energy Futures Package, has been a modest success. Last financial year, Australian carbon emissions dropped slightly. Renewable sources supply around 25% of electricity production. Energy companies, such as Origin, are feeling threatened enough to launch advertising campaigns against the Renewable Energy Target. Tim Flannery, usually infamous for his pessimism, suggested that 2012 might have seen the peak of Australian carbon emissions. While the current program is nowhere near enough to forestall the worst effects of climate change, it is a beginning.

The recent decision to introduce an floating price in 2014 is a leap backwards. Currently, the European price on carbon is six dollars per ton. This is significantly lower than the current Australian price, which is approximately 25 dollars a ton. In the United States, the EPA uses cost of carbon emissions at 38 dollars a ton in the new regulatory framework implemented by the Obama government. This throws the lauded decision to scrap subsidies to coal power generators into stark relief. The polluters do not need compensation, because they will not suffer. The current European price is so low that it doesn’t make sense to innovate because it can be safely passed on to consumers. There is no need for costly, and potentially destabilising innovation. The same old businesses can carry out the same old activities, parasitising both the environment and the public purse.

Worse, money will be stripped from the Biodiversity Fund, the Carbon Farming Futures Program and the Clean Technology Program to make up for the drop in revenue. This comes on top of cuts to renewable energy in the 2013-2014 budget. A carbon neutral future requires more than market forces: direct investment in green innovation is vital.

You might call this move populist, if you didn’t know that most people are not worried about the price on pollution. While not the most popular policy implemented by the Gillard ministry, polling shows people have come to accept that it is both necessary and relatively harmless to standards of living. For the most part, people appear not to care: health, education and workers rights are much more important issues in the next election. On a more positive note, the ‘compensation package’ is so popular that Abbott must promise to keep it, even while he promises to scrap the carbon tax. The rage against the price on pollution, is largely the preserve of the Coalition and their allies in the media.

The genuine enemy of the price on pollution is big business, the big polluters. They will use their wealth and influence to arrange our economy in their interests. They will stop at nothing to protect their right to carve wealth from the soil, even if doing so invites eventual catastrophe. It seems they have got to Rudd.

Michael Robson is studying a Juris Doctor at the University of Melbourne and is national secretary of LEAN (Labor Environment Action Network) – this article expresses his personal views and not necessarily those of LEAN.

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One comment

  1. Martin Dickens · · Reply

    Thankyou Michael for providing this frank and informative contribution relating to the Labor Government’s decision to bring forward an ETS. The policy decisions made by the government over the last few days are a definite step back when it comes to addressing the climate change crisis. I sincerely hope that the government commits to a capped ETS rather than simply implement a floating price. It is time we acted on climate change before it is really too late!

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