Carbon pricing FAQ

 

How much has Australia’s carbon price cooled the planet?

This is a line that denialists may think is clever. Sometimes it might even be a genuine question. But often it goes back to people who set out to confuse and mislead.

Warren Truss – who under Tony Abbott is Australia’s Deputy Prime Minister, believe it or not, because he is Leader of the Nationals – has actually stood up in Parliament and questioned “how an emissions trading scheme will lower the temperature”. But the point of Australia’s carbon price is to do our part to minimise the warming that is actually happening.

Do any other countries have a carbon price?

Yes. Over a billion people, and rising, now live in countries or in States/provinces with a carbon price. By 2016 over three billion people will be living in countries or States with a carbon price.

The European Union scheme is still the single biggest in the world. In 2013 China commenced carbon pricing schemes in six provinces which between them cover 200 million people. In the US, just California has a bigger economy than Australia, and has a carbon price (introduced by Republican Governor Arnold Schwarzenegger).

Is the carbon price reducing Australia’s emissions?

Yes. In the areas where the carbon price applies, Australia’s emissions are coming down. As the Grattan Institute said (in their submission to the Senate inquiry on the “direct action” policy), market mechanisms “work because they minimise the need for government to predict the future”. The carbon price is bringing Australia’s emissions down below where they would have gone if we hadn’t acted.

But Tony Abbott’s environment minister said the carbon price wasn’t working?

Tony Abbott’s environment Minister Greg Hunt is trying to blame the carbon price for not reducing emissions in areas where even he knows the carbon price didn’t apply. This is just dishonest. His claims suggest that a carbon price of $24 per tonne, was somehow costing more than a thousand times that amount for emissions abated. Even Joe Hockey can count better than that. (The Murdoch press can’t, or won’t, though: the Sunday Telegraph reported abatement costs of $21,000 a tonne.)

But Greg Hunt said the carbon price was costing the Australian economy $7.6 billion?

Greg Hunt is either a sad fool or a liar. You decide. He should learn some economics, or stop treating the Australian people like we don’t know any.

Companies with carbon price liabilities (the biggest ones of the 348 in total are mostly power companies) paid $6.6 billion in the first full year of carbon pricing. This is very close to what was forecast by the grown-ups at Treasury.

Greg Hunt’s figures add in related schemes for charges on aviation fuel and refrigeration gases. Fair enough. But then he equates all this with a $7.6 billion cost to the economy.

Either he doesn’t know this is rubbish and he is stunningly incompetent, or he knows but is just trying to mislead people:

  • No mention of consumers and industry making savings through energy efficiency in response to carbon pricing: one of the things those economists predicted for a carbon price, and one of the things that is actually happening.
  • No mention of consumers and industry substituting less emissions intensive energy sources for more intensive energy sources among the available options – another one of those first year (or even high school) economics ideas behind carbon pricing, and one of the things that is actually happening.
  • No mention of innovation to develop and apply new, more efficient and cheaper technologies in response to carbon pricing (and the other clean energy measures introduced alongside carbon pricing and funded by it).

Innovation in clean technology is one of the things that is actually happening faster than even most of the designers and supporters of carbon pricing could have predicted, thanks to the creativity of industry and scientists in Australia and around the world.

Tony Abbott clearly doesn’t support renewable energy, or science and innovation. But carbon pricing is helping them happen anyway.

How much per tonne was the carbon price?

For the fixed price period, the price was set at $23 per tonne of CO2 for 2012-13, rising to $24.15 per tonne for 2013-14 and $24.50 per tonne for financial year 2014-15. This was expected to fall when the scheme transitioned to an Emissions Trading Scheme, as provided for in Labor’s legislation.

Isn’t that the world’s highest, like the Liberals have said?

No. Some countries do have lower headline figures than Australia, but others are higher. Also, carbon prices vary around the world in models, coverage, and exceptions, as well as in the headline figures.

Tony Abbott says no other country has an economy wide carbon price. But here’s what independent assessment by politifact said:

not only is Australia’s not really “economy-wide”, but other jurisdictions have now announced schemes that will cover an equal or larger amount of their carbon pollution.

As Politifact also pointed out, the carbon price involves a tiny percentage of Australia’s GDP – about 0.005% of our $1.5 trillion GDP – and some of this is spent on compensation for trade affected industry. They said:

when you look at the effective taxation on CO2, as calculated by the OECD, Australia comes in very close to the cheapest.

Why did some industries get free permits?

To start with, free permits were allocated to particularly carbon intensive trade exposed industries and power generators. This was done so that firms would have time to adjust to carbon pricing, by moving to less carbon intensive methods, instead of experiencing a sudden shock like Tony Abbott claimed they would.

It also meant that the real initial carbon price for industry was often much less than the headline price.

For example, while Tony Abbott claimed that aluminium smelters faced a carbon price here of $23 a tonne (and then blamed this for smelters relocating, even when they specifically stated this wasn’t part of the reason) the real price they faced was actually under $1.30 a tonne.

The initial rate of assistance for the most energy intensive and trade exposed industries was 94.5% and 66 % for moderately exposed industries.

The scheme provided, however, for these free permits and other assistance to industry to taper down over time, so there would be clear signals about the need to change.

How does an Emissions Trading Scheme work?

We need a cap on emissions if we are going to stay within a carbon budget.

Legislation for an ETS provides for setting a cap. An independent agency like the Climate Change Authority ensures that the cap is based on science and administered properly. Then an ETS divides up emissions covered by the scheme, and provides that these need to be covered by permits.

Permits can be bought and traded. So a firm that can work out ways to operate using less emissions than were needed before for the same output, will have less permits it needs to buy, or will have spare permits it can sell to another firm that does need them.

So an ETS creates market incentives for firms to use cleaner energy and use energy more efficiently.

Tony Abbott’s Deputy Prime Minister (National Party Leader Warren Truss) claims to believe that this is all too complex for Australians to understand, and that Labor never explained how “the buying and selling of pieces of paper was actually going to change the climate”. His own explanations of big public policy initiatives must be really special.

Isn’t an ETS the same as a carbon tax?

No. As Mark Butler said in Parliament, people in politics who are saying that an ETS is the same as a tax, are either trying to mislead the community, or they haven’t understood the basic economics of the two models. It’s clear from previous statements that Tony Abbott does actually know that an ETS and a carbon tax are different things.

So what’s the difference between an ETS and a carbon tax?

The “T” in ETS is for trade. A business can’t ordinarily trade its tax liabilities, to take just one point of difference.

English economist Sir Arthur Pigou came up with the idea in 1920 of taxes as a way of dealing with “externalities” – things like pollution that impose costs on other people, but which aren’t otherwise built into the price of the activity in question. This is very much mainstream economics now.

As Labor’s Dr Andrew Leigh (former ANU Economics Professor) has said,

This is not some complicated economic theory. It is based on lessons from first-year economics.

Labor’s Brendan O’Connor put it simply:

If you do not price pollution, you get too much of it. If you price pollution in the right way and then let the market rip, market forces are ignited to produce less pollution.

Dumping greenhouse gases into the atmosphere is a classic case of externalities (as Labor’s Mark Dreyfus has said, “perhaps the greatest market failure the world has even seen”).

Using fossil fuels helped us build modern societies. But it’s involved costs, that we didn’t know enough about until recently, which weren’t built into the costs of the firms and organisations responsible.

Tony Abbott himself once remembered, or admitted to, enough knowledge about economics to ask why we wouldn’t just impose a simple tax to reduce greenhouse emissions.

Labor, however, with most economists, has preferred an ETS rather than a carbon tax.

An ETS expressly includes a cap on pollution, and gives a way of building into the scheme what the science is telling us on what a cap should be. A tax just says pollution has to be paid for – it doesn’t say how much someone can pollute, as long as they’re prepared to pay for it.

A tax which the government just collects, and then keeps or distributes, is certainly easier to explain than a market. We wouldn’t need market economists much for a system like that. But it’s pretty ironic to see supposed conservatives under Tony Abbott claiming to oppose market measures because markets are harder to understand compared to governments just taking taxes and doing everything.

There’s always a temptation for governments to use taxpayers money to pick winners among their friends – like the slush fund built into Tony Abbott’s “direct action”, which will have to be paid for out of taxes whether or not there’s a specific “carbon tax”.

Would the carbon price go down when the scheme shifts to an ETS?

Yes. The headline price was always expected to go down as we moved from the initial fixed price period to a more flexible ETS.

One reason for this is that initial transitional measures like free permits for trade exposed industries and power generators were always just that – transitional. So these measures are phased out over time. With the phasing out of free permits for some firms, the “headline price” is able to shift down closer to what has been the real overall price built into the scheme.

This shift was made more formal with the announcement, by Greg Combet in 2012, of the move to link Australia’s flexible ETS (when it comes in) with what is still the biggest ETS internationally, the European scheme.

European economies are still suffering the effects of the Global Financial Crisis, which Australia’s Labor government did so much to avoid for Australia. So European markets, including Europe’s carbon market, are still at lower levels than they would have been without the GFC.

Labor remains committed to linking Australia’s carbon price to European markets. Reasons for this include the environmental benefits this will give through closer linkages with European firms which are operating under the European scheme and are taking initiatives in renewable energy technologies.

Longer term, prices per tonne of greenhouse emissions are expected to go up from current European levels, as economies around the world eventually recover from the recession Australia didn’t have, and as we get closer to the limits of the world’s carbon budget.

Based on this, Tony Abbott is trying another of his scare campaigns, about carbon prices per tonne in 2050.

But this misses the point that by 2050, most areas of our economy will be far less emissions intensive. This has to happen, and technology is going that way faster than almost anyone thought even in the last 5 years. So any price per tonne will have much less impact on our lives than it would now.

If electricity is 100% from renewables or close to it by 2050, for example, carbon pricing will show up barely or not at all in electricity bills, no matter what the price per tonne is. Pick a very large number of your choice and multiply by zero, and you still get zero.

Don’t the same things Tony Abbott’s team has said about trading schemes and the real world apply to things like shares, mortgages, licenses and money?

Yes. This is one reason we know Tony Abbott and his team are just pursuing cheap political lines, not real policy for a grown-up government of a modern economy like Australia. Even they can’t really as dim as they make out, or as ill-informed as they hope enough of the Australian public are.

Warren Truss – who (believe it or not) is Deputy Prime Minister in Tony Abbott’s government, because he is leader of the Nationals – asked in Parliament

how traders sitting in capital city buildings selling one another bits of paper is going to lower the sea level.

The farmers of Australia are much more sophisticated people than Warren Truss might like to make out, of course. They can be very thankful that Paul Keating rather than Warren Truss was in charge for opening up the Australian economy and floating the dollar!

But even Warren Truss can’t really be as ignorant as he pretends, or as distrustful of numbers on paper as a way of influencing the real world as his statements suggest. As far as we know he still has a bank account, for example.

What practical things are businesses and other organisations doing in response to the carbon price?

Here’s just a few examples Greg Combet gave in one of his bulletins correcting Tony Abbott’s misinformation scheme.

  • Farmers and meat-processors are using methane from animal waste to generate electricity
  • Ice cream and frozen food manufacturers are replacing old freezers with new, energy efficient ones
  • Sugar mills are recycling waste from sugar cane to power their operations
  • Winemakers are switching to solar to power their wineries
  • Efficient lighting has been installed at community halls, sporting clubs and in street lamps across the country
  • Rubbish tips are using methane emissions from decomposing landfill to generate renewable electricity.

Across the country, businesses are looking for ways to reduce emissions and learning there are usually financial and/or productivity benefits in doing so. The carbon price has created an incentive for these projects.

Many have been supported by Government programs funded by carbon price revenue or other complementary Government climate change policies like the Renewable Energy Target. At events to mark some of these initiatives Abbott Government MPs have been happy to turn up but haven’t disclosed that they oppose measures that made them possible.

Who pays the carbon price?

The scheme requires entities which emit over 25,000 tonnes per year of CO2 or equivalent greenhouse gases (apart from entities in transport or agriculture) to surrender emissions permits.

A list is published by the Clean Energy Regulator – a body which Tony Abbott said he’d abolish as a “draconian new police force chasing an invisible, odourless, weightless, tasteless substance”, but which his government has fortunately kept so far.

Liable entities comprise a small group, mostly comprising large fossil fuel powered generators and large industrial plants. The list from the Clean Energy Regulator shows around 370 firms. The number of firms with actual liabilities for 2013-13 is around half that, once related companies are grouped together.

12 of the top 15 entities listed are electricity generators. Together with Woodside (LNG); Bluescope (Iron and steel) and Alcoa (aluminium), these made up around 70 per cent of carbon price liabilities for 2012-13. So we are not exactly talking about the corner shop here.

Aviation has an equivalent but separate scheme, with road transport intended to follow in 2014-15. Refrigeration gases that are much more powerful greenhouse gases than CO2 also have a scheme (which John Howard started but which the Coalition now makes the subject of a misinformation campaign too). Agricultural emissions were left out because of difficulties in setting benchmarks and measurement.

Of course, while some costs will be reduced or avoided by innovation (like the stunning rate of development of clean energy), some of the costs get passed through to other firms and to consumers. This is why Labor introduced such an extensive compensation package.

Did people get compensated for the impacts of the carbon price?

Yes. A Household Assistance Package, including offsetting increases to pensions and tax free thresholds, was an essential part of the Clean Energy package. The Treasury forecasts of limited CPI impact on which these offsets were based proved very accurate; the claims from Tony Abbott and his team proved total rubbish.

Tony Abbott promised to retain the Household Assistance Package in its entirety. Surprise, surprise: his clean energy repeal legislation includes abolishing the tax cuts legislated for households for future years.

What’s the point of the carbon price if people get compensation back anyway?

If people spent all the compensation money on products and services with exactly the same carbon intensity as before, and industry didn’t change the carbon intensity in how it produces in response to carbon pricing, then no, there really wouldn’t be much point.

But this isn’t at all what economics tells us to expect, and in fact we know it isn’t what’s happened.

Power utilities have added more wind and solar, and are using some of their coal fired generators less. Consumers and businesses have invested more in energy efficient devices (even things like lights). And there are over a million Australian roofs with solar panels now.

Using prices and markets, instead of just relying on “direct action”, leaves people free to make their own decisions, with carbon pricing helping to take those decisions in the direction the planet needs.

Will scrapping the carbon price save families money?

Tony Abbott is misleading the public in claiming that abolishing carbon pricing would mean businesses will cut their prices.

The head of the Australian Industry Group has said that many businesses were not able to pass on the cost of the carbon tax in the first place; and that many price changes, if the carbon price is abolished, are likely to be limited.

Certainly, electricity prices have gone up – that’s one of the things the compensation package was for. But would they go down with scrapping carbon pricing, and would they go down much if they did? Don’t hold your breath. Most of the rise in electricity prices over the last decade has been from network costs, not the carbon price.

Here for example are quotes from a story in the Fairfax papers in February 2014:

Electricity retailers have warned that abolishing the carbon tax after July 1 is unlikely to lead to power prices falling by 9 per cent, as claimed by some in the federal government. Soft wholesale electricity prices, coupled with continued rises in distribution charges, could offset a large part of any prospective price decline. ”The weak wholesale price is already reflected in the prices paid by households on market offers,” one retailer executive said. ”This means that removing the carbon tax will not see household prices fall by a further 9 per cent. ”At the same time, distribution prices are continuing to rise, which will offset a key part of any price decline.”

The NSW government has said that, from July 1, electricity distributors will increase their domestic customers’ charges by as much as 2.5 per cent as they continue to invest in their networks to meet rising demand.

Isn’t the point of the carbon price to make energy more expensive so we use less of it?

No. The main point of carbon pricing is to shift from more to less carbon intensive energy generation. It’s not the same at all as a straight “energy tax”.

People putting solar panels on their roof, or energy utilities installing more wind and solar themselves and finding that this is already getting cheaper than coal powered electricity now, are taking exactly the sort of “tax avoidance” action that Labor intended to happen.

Wasn’t the carbon price a Greens Party idea that they made Labor agree to in 2010?

No, it wasn’t. The ETS was recommended by the Garnaut report – a report which was a Labor initiative, to implement the platform on climate change that Labor has had since 1998, and a report accepted and ultimately implemented by a Labor government.

Did the Liberals actually support an ETS before Tony Abbott took over from Malcolm Turnbull?

Yes, they did. The Liberal Party took an ETS policy to the 2007 election. Their ‘Strong, Prosperous and Secure’ policy released in October 2007 said:

To reduce domestic emissions at least economic cost, we will establish a world-class domestic emissions trading scheme in Australia (planned to commence in 2011). We are also committed to capturing the opportunities from being among the first movers on carbon trading in the Asia-Pacific region.

Labor’s Dr Andrew Leigh has compiled some of their statements since then. (If you know of another one that isn’t here, do let us know.)

Tony Abbott himself said (on 27 November 2009):

You cannot have a climate change policy without supporting this ETS at this time

Back in 2008, Greg Hunt, now Minister “for” the Environment, said

perhaps the most important domestic policy was the decision of the Howard government that Australia will implement a national carbon-trading scheme.

(As Melissa Parke MP pointed out in the Clean Energy Bills debate in 2011, Greg Hunt also said in 2009:

Managing climate change will be one of the great challenges of the 21st century: it represents an important economic shift, and will require a portfolio of responses. In Australia’s case, we are moving toward the progressive pricing in of the cost of carbon into the way our economy operates. This is ‘big history’ in the making—perhaps the most significant economic decision in a generation.)

Joe Hockey, now Treasurer, told Q&A on 19 February 2009:

Our very strong view is, we were the initiators of an emissions trading scheme, and we believe in a market-based approach.

Julie Bishop, who is now the only woman in Tony Abbott’s Cabinet (!) said (in her electorate newsletter in September 2008):

The Liberal Party has a policy of both protecting the planet and protecting Australia. We support, in principle, an Emissions Trading Scheme.

Christopher Pyne, now Minister for Education, said in 2009:

Let’s not forget: it was the Liberal Party that first proposed an emissions-trading scheme when we were in government. The idea that somehow the Liberal Party is opposed to an emissions-trading scheme is quite frankly ludicrous.

Ian Macfarlane, now Industry Minister, said on the ABC on 29 September 2009:

We did take that policy to the last election and it was clearly enunciated as an emissions trading scheme that would be introduced perhaps in 2011 but most likely 2012.

Scott Morrison, now Minister for Immigration, said in Parliament on 3 June 2009:

There are a suite of tools we need to embrace to reduce emissions. I believe an emissions trading scheme, in one form or another, is one of those tools. Placing a price on carbon, as the Leader of the Opposition has said, is inevitable.

Andrew Robb, now Minister for Trade, said on ABC News on 27 July 2009:

We are very supportive of a price on carbon. We introduced the scheme to do that. … We are serious about good policy in this area. We are serious about a price on carbon.

Malcolm Turnbull, now the Minister for Communications, a man who has stuck to his principles except for actually voting for them when it counted, said on Q&A on 5 July 2010:

You won’t find an economist anywhere that will tell you anything other than that the most efficient and effective way to cut emissions is by putting a price on carbon.

The Liberal member for Aston, Alan Tudge, writing in the Australian on 13 February 2007, said:

Government’s role should be to create the market environment that will lead to the outcomes sought either through putting a price on CO2 or placing a cap on how much CO2 will be emitted and then allowing companies to trade CO2 entitlements … The decisions should be left to the market.

The Liberal member for Bowman, Andrew Laming, said in Parliament on 29 October 2010:

I will be working as hard as I can to have [the Carbon Pollution Reduction Bill no. 2 for an ETS] passed. I will be working with colleagues of mine in both chambers to see that it is passed.

The Liberal member for Bradfield, Paul Fletcher, said (on ABC News on 1 December 2009):

I am supportive of the position that the parliamentary party has taken on the ETS and that remains my position.

The Liberal member for Brisbane, Teresa Gambaro, said on 20 September 2007:

We are also developing a world-class national emissions trading system to further drive investment in low emission technologies.

The Liberal member for Canning, Don Randall, said in his electorate newsletter in September 2007:

In moving towards the world’s most comprehensive domestic emissions trading scheme by 2012 … the Howard Government is committed to setting sensible long-term targets that will not impact on Australia’s economy, jobs and families.

The Liberal member for Casey, Tony Smith, said in an interview on 16 November 2009:

I take my cue from the science and that is to give the planet the benefit of the doubt, and that’s why we’ve always said that an emissions trading scheme is useful …

The Liberal member for Dunkley, Bruce Billson, said in Parliament on 29 October 2009:

It was actually the coalition that instigated work on the emissions trading scheme … in a report that I helped author back in 1998 which talks about regulatory arrangements for trading in greenhouse gas emissions in 1998 … The coalition’s commitment to an ETS is demonstrable.

The Liberal member for Farrer, Susan Ley, said in Parliament on 29 October 2009:

We went to the last election with an ETS policy—many have forgotten that fact. … The coalition had a well-designed policy in 2007.

The Liberal member for Fadden, Stuart Robert, said on Doors on 26 May 2009:

We went to the last election with an Emissions Trading Scheme.

The Liberal member for Higgins, Kelly O’Dwyer, was quoted in the Stonnington Leader on 1 December 2009:

Ms O’Dwyer said she supported an emissions trading scheme and would ‘support the party’s policy’ and that ‘Malcolm Turnbull as leader has got my full support’.

The Liberal member for Mayo, Jamie Briggs, said in Parliament:

I believe an emissions trading scheme is one of the policy levers that can be used to change the energy mix in Australia.

The Liberal member for Moncrieff, Steven Ciobo, said (on Sky on 21 July 2009):

We want to work constructively because we recognise that in the future around the world in most developed economies if not all there will be an ETS of some sort.

The Liberal member for Murray, Sharman Stone said in a media release on 20 June 2007:

Sharman Stone welcomed initiatives announced by the Prime Minister including … a ‘cap and trade’ emissions trading scheme that would help Australia substantially lower domestic greenhouse gas emissions at the lowest cost.

The Liberal member for Swan, Steve Irons, said in Parliament on 4 September 2009:

I understand the need for action to cut the world’s carbon pollution … That is why the coalition supports, in principle, an ETS as part of a three pillars approach to climate change.

Even one of the Nationals’ members has spoken expressly in support of an ETS, despite Nationals leader Warren Truss now claiming to be puzzled about

how traders sitting in capital city buildings selling one another bits of paper is going to lower the sea level.

The Nationals member for Cowper, Luke Hartsuyker, said in Parliament on 27 August 2008 :

As members would be aware, the coalition has a strong record in relation to an ETS. Indeed, the National Greenhouse and Energy Reporting Act, which was put in place last year provided the platform for the introduction of an ETS.

None of them have offered any reasonable and public explanation of their apparent change of position. The best we have is this from Tony Abbott, as reported by Malcolm Turnbull:

Tony himself has, in just four or five months, publicly advocated the blocking of the [emissions trading scheme], the passing of the ETS, the amending of the ETS and, if the amendments were satisfactory, passing it, and now the blocking of it. His only redeeming virtue in this remarkable lack of conviction is that every time he announced a new position to me he would preface it with “Mate, mate, I know I am a bit of a weathervane on this, but …

Where can I find out what politicians are saying about clean energy in Parliament?

The official record of Parliamentary debates all the way back to 2001 is at www.aph.gov.au . On Twitter, @parlecowatch is seeking to monitor the environmental record of Federal parliamentarians.

Stand by for more links here including Labor speeches on the 2011 Clean Energy Package, and speeches defending the package against repeal in 2013/2014.

Did Tony Abbot ever speak publicly in favour of an ETS?

Yes. In his speech “A realists guide to climate change” in 2009 he said:

There is much to be said for an emissions trading scheme. It was, after all, the mechanism for emission reduction ultimately chosen by the Howard government. It enables an increasing market price to be set for carbon through capping volumes of emissions. The allocation of permits should mean that more carbon-efficient businesses have a surplus that can be sold to more carbon-intensive ones. 

Has he denied ever supporting an ETS, though?

Yes. In a July 2011 radio interview for example he said:

I’ve never been in favour of a carbon tax or an emissions trading scheme…

Has Tony Abbott acknowledged in the past the difference between an ETS and a tax?

Yes. In his speech “A realists guide to climate change” in 2009 he said

The Coalition has always been instinctively cautious about new or increased taxes. That’s one of the reasons why the former government opted for an emissions trading scheme over a straight-forward carbon tax.

Did the claims Tony Abbott’s team made about the impacts of a carbon price come true?

No. As pointed out by Greg Combet:

  • A lamb roast does not cost $100, as Barnaby Joyce (now part of Tony Abbott’s Cabinet) claimed it would; in fact the price of lamb has fallen by 10 per cent in the last year
  • Abbatoirs are not paying half a million dollars per cow, as Barnaby Joyce predicted.
  • Whyalla has not been wiped out—it is still there
  • The carbon price has not put a “wrecking ball” through the economy, or been a “cobra strike” or a “python squeeze”, as Tony Abbott said it would be. 140,000 jobs were created in the economy from when the carbon price began up to late 2013, and the stock market has grown by 32 per cent.

As Greg Combet said, the only python in the carbon price debate was Tony Abbott’s python, Monty.

We’re losing manufacturing jobs. Isn’t the carbon price to blame?

No. None of the economic experts agree with this claim. Understandably, many businesses would like to have any cost removed that they can. But they don’t get to cut costs by dumping other waste for free, either. The ACTU backs the clean energy package as a means for creating, not reducing, employment.

The impact of the carbon price on the cost of a new car, for example, is tiny compared to other pressures facing the industry, like fluctuations in the value of the Australian dollar.

Tony Abbott will blame anyone except his own government when a business strikes trouble. Tony Abbott said in 2012 that BHP had blamed the carbon price for putting the Olympic Dam mine project on hold. They hadn’t, and Tony Abbott had to say on TV that he hadn’t read the report where he said they had.

George Brandis (now Tony Abbott’s Attorney General) even blamed the carbon price for newspapers shedding jobs!

Their new favourite target is to blame the workers and the unions. Senate Leader Eric Abetz said conditions for workers at Ardmona in Shepparton were too “generous”, even though wages are below not just average wages overall but average wages for manufacturing too.

Their line on the carbon price and manufacturing is just as untruthful.

Meanwhile, even with a conservative leader, Germany for example has a high wage economy that makes world leading cars, as well as cutting edge renewable energy technology, and action on climate change.

What should we make of Tony Abbott’s claims about carbon price impacts on small business?

Greg Combet has exposed the Coalition’s favourite techniques for exaggeration of small business impacts of carbon pricing:

  1. refer to dollar figures not to percentage of turnover (generally 0.2%);
  2. blame all electricity cost increases on carbon price;
  3. selectively quote only one component of an electricity bill;
  4. falsely claim that small business gets no assistance;
  5. ignore the household assistance package that enables customers to deal with costs that have to be passed on.

Is the carbon price to blame for high electricity prices?

Tony Abbott says so … Don’t believe it.

It is correct that electricity prices have been rising, and rising much faster than the CPI throughout the last decade. But this well and truly pre-dates the carbon price.

Household electricity prices are up 90 per cent in the last five years, and tens of billions of dollars spent on electricity networks are the primary driver of this.

Households received offsets as part of the Clean Energy package for price impacts from the carbon price, including power price impacts, including through pension increases and changes to tax thresholds. These offsets were based on Treasury’s estimates of what the modest impacts of the carbon price would be. These estimates turned out to be very accurate.

But there hasn’t been compensation from State governments or privatised utilities to offset all the other price increases we’ve seen.

The biggest factor over the whole period, according to independent experts and the Australian Energy Market Regulator, has been rising network costs. Costs have varied from State to State but appear to have been driven largely by previous shortfalls in investment; and heavy recent investment to cover peak demand periods.

There are also issues with State governments or privatised operators raking off billions in dividends.

As RenewEconomy (specialist renewables news service) has put it:

Australians pay more than any other country for network costs and retailers take a hefty margin (in NSW and Queensland, for instance, households are slugged between $100 and $150 a year just so the electricity retailers have a big enough kitty to offer discounts to other customers).

Carbon pricing, and other Clean Energy measures, are actually taking some of the pressure off for more network investment to cover peak energy demand: through promoting energy efficiency measures by business and households, and through incentives for business and households to generate more of their own electricity. Information on the performance of rooftop solar energy during the January heatwaves in Adelaide and Melbourne supports this.

This hasn’t stopped Tony Abbott trying to run the line that renewable energy is expensive – a line that is getting less true all the time thanks to innovation and science.

Perhaps Tony Abbott just hasn’t kept up because he decided his Government could do without a Science Minister – the first since 1931. Surely he wouldn’t say something he actually knows isn’t true?

But didn’t Tony Abbott blame rising electricity bills on the carbon price before there even was a carbon price?

Well, yes, he did. For example on ABC radio in March 2010 Tony Abbott said:

Their ETS is already adding $300 to power bills here in New South Wales.

Problem is, Labor’s legislation for the ETS didn’t even go through Parliament until November 2011 … But you wouldn’t have known that just by taking Tony Abbott’s word for it on the radio. So it makes it even harder to rely on Tony Abbott and his team’s claims about the impact of carbon pricing now that there actually is a carbon price.

Are you saying Tony Abbott hasn’t been telling the Australian people the truth?

Well yes, that’s exactly what we’re saying.

Hasn’t the carbon price made the cost of refrigeration shoot up?

No. This is another claim from Tony Abbott’s team that isn’t true, and shows reckless disregard for the truth and your children’s future.

The carbon price applies to various synthetic refrigerant gases – because they are greenhouse gases too, and they leak out over time. As greenhouse gases, some are more than 1000 times as powerful as C02.

The Howard government imposed an import levy for these gases, which the clean energy package then increased. But Tony Abbott’s team opposed this and wants to reverse it.

Warren Truss, who is now Australia’s Deputy Prime Minister because he is leader of the National Party, claimed in Parliament that the cost of servicing a domestic fridge would go up $300 a year. As Greg Combet pointed out in one of the many bulletins he had to issue to correct misleading Coalition claims on carbon pricing, to spend that much extra you’d have to get all the gas replaced every five days.

If renewable energy prices are dropping anyway, why do we still need a carbon price?

Carbon pricing was a big success in contributing to a shift to renewable energy and energy efficiency. But it still didn’t get us all the way to where we need to be  – and the risks, if we don’t get there soon enough, are huge.

We don’t generally discontinue a policy just because it has starting working. If you’re heading for a car crash, or off a cliff, you don’t take stop braking just because the car has started slowing down.

It’s becoming clearer all the time that we are way over the limit in greenhouse emissions. Science tells us we need to act effectively and urgently. The Climate Change Authority has said in its draft report that we need to increase our ambitions for emissions reduction, now. The economists tell us that carbon pricing is the most efficient tool in the toolbox. Only someone as reckless as Tony Abbott would try to throw it away now.

Did the carbon pricing scheme allow use of international permits?

Yes. The Clean Energy legislation allowed liable firms to meet up to half of their liability through purchase of international permits.

Should we use international permits?

Yes, we should.

The use of international permits has been criticised by some advocates as “outsourcing our climate responsibilities”. But Labor has been clear in response. As Pat Conroy MP said in Parliament defending the Clean Energy legislation in November 2013:

credible internationally linked emissions trading schemes are so important, particularly for emissions-intensive economies such as ours. They allow pollution to be cut at the lowest cost wherever it can be achieved. There is after all only one atmosphere, and a reduction in pollution anywhere in the world has the same environmental benefit. The coalition’s policy of prohibiting the trade of carbon permits with other countries is economic xenophobia. It is sending a signal that it is somehow dubious to trade with foreigners. It is typical dog-whistle politics and is in fact a white carbon policy.

If Australia meeting its obligations by buying overseas permits actually did mean asking people in poorer countries to take cuts in living standards so that we can continue with our first world lifestyles, then that would be a big problem for a party like Labor with objectives around social justice. But it’s not true.

Finding ways to have first world banks and other firms finance the preservation of the world’s forests instead of their destruction – through turning preservation into carbon credits tradeable on international markets – will serve justice for the people of these areas as well as the environment.

Investment in clean energy, too, doesn’t mean reduced living standards worldwide to allow us to just go on at other people’s expense. It means hundreds of millions more people having access to electricity affordably or for the first time at all. 

Are people actually complaining at the idea that Australian businesses might save money by behaving more responsibly overseas than they have found profitable to do at home so far? To say the least, that would be the reverse of the usual environmental concerns that many of us have …

Does Tony Abbott’s “direct action” allow use of international permits?

No. The Liberal Party, supposedly the party of free markets, has run a xenophobic and blatantly dishonest campaign against international trade in this particular area.

One obvious result of refusing to allow Australian businesses to achieve emissions reductions through international permits, is that it closes off options for achieving reductions at least cost.

Do Australian businesses want to be able to use international permits?

Yes. The Australian Industry Group for example has argued in favour of use of international permits by Australian businesses.

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