The legislation for an emission trading system goes before the Australia's Federal Parliament tomorrow. It is a bad idea. The legislation is at best too early and at worst is not needed.
Australia is a small economy, it just edges into the G20 and its emissions are at best two per cent of the world's out put, with 43 per cent coming from Australia's key primary industries: agriculture, mining and forestry. What ever Australia does will not count for much in the context of an emissions trading scheme which because it creates a commodity will be related to other trading schemes globally. Australia should focus instead on fiscal ideas to reduce its greenhouse gases. A trading scheme should be 10 years away, if it arrives at all.
We now know from the experience of the EU ETS that carbon is like any other commodity, it goes up and down. That doesn't make for great planning if you need to reduce emissions in a rush, a key claim by Australia's climate change minister. Ultimately, a trading system needs to be supported by a national inventory of the lifecycle of key products. Australia is not even close to getting this in place. No one is sdriving a set of national standards, the timetable is in a mess, the State Governments are clueless and consultants are doing well providing similar products to each state. An inventory should come before a trading scheme so that there is a framwework to pass the cost of carbon into the economy.
The Federal Govenment, beyond feedback from talkfests, knows little about the science and how it specifically applies to Australia which more than many countries has a rapidly changing climate and, always has. Afteralll, only 30,000 years ago there was an inland sea! That science needs to be tested. At present it is all based on sentiment. The opposition parties, led by Malcolm Turnball, are trying to stall the introduction of a trading scheme but fundamentally they agree wth it. It is an opposition without a leadership agenda. The Green parties quibble from the sidelines.
Big business has accepted the inevitability of a trading scheme and has selfishly switched their efforts to securing the best terms for themselves. Many have woked out, as their colleagues in Europe have discovered, that a cap and trade system is an opportunity for windfall profits. Time is better spent securing generous and free credits, overstating their emissions issues and getting generous allocations. Given the current Federal Government's capacity to exaggerate a problem and its response to it, they are in for some good times.
This leaves the cost to be pick up by the public which is where it should be anyway. There doesn't need to be the intermediary of a trading exchange. If we wish to reduce emissions, and we should, then let's look at taxes, direct taxes on the use of high emmissions products and services. If that is done, you'll find that business will find a way of getting its emissions down. Renault, as an example, has done just that in the last 10 years and well before a trading scheme was in place.
Australia is rushing something that doesn't need to be rushed. A trading scheme hasn't been well thought through, there are doubts that the current Government could ever be that thoughtful, and if Australians are, as opinion polls suggest passionate about climate change, then tax goods with high emissions and test the public's resolve. It might mean that those cheap imports from China will go up.
