Climate policy in contention

• Michelle Grattan
• The Age, July 11, 2008
• http://www.theage.com.au/opinion/climate-policy-in-contention-20080710-3d4n.html?page=-1

THIS week's split between developed and developing countries in Japan over climate change is a timely reminder that whether an international deal on reducing emissions can be clinched at Copenhagen in December next year remains uncertain. Copenhagen is supposed to be the Bali road map's terminus.

In Japan the developed countries committed to a "vision" of a 50% cut in world emissions by 2050. But developing countries would not climb on board without more specificity from the rich countries.

There's much preliminary posturing in the climate debate, so we can't get a definitive steer from this latest argy-bargy. Still, there is mounting speculation that December 2009 might be too early for a comprehensive climate deal, and the whole process could drag on beyond that.

In normal circumstances this would not be of great significance for Australia. But the Rudd Government will by then be on the brink of introducing Australia's emissions trading scheme, due to start in 2010, and also facing an election. The timing could be very tricky.

That's presumably one reason Brendan Nelson is playing hard ball — at some cost to his and the Opposition's credibility — by suggesting Australia should not enter a scheme before big emitters such as China, India and the United States have made commitments to also pull their weight.

Rudd has been anxious to move quickly on climate issues; before the election he set a tight 2010 introduction date for the emissions trading scheme (there's recently been speculation about slippage).

The Howard government believed a 2011-12 date was more practical; the Coalition now says a scheme should start by "at least 2012". If Copenhagen falls short of its promise and the domestic politics goes badly, Rudd might come to wish he'd given himself until 2012 too.

Next Wednesday, with the release of its green paper, the Government takes the important next step. This paper will have options but is expected to give guidance about the Government's thinking.

People will be looking for what it says about coverage. The scheme is expected to include petrol — the real interest will be in any ideas canvassed about offsets for motorists. Also eagerly scanned will be what is said about compensation.

Key issues are: what proportion of the revenue available from the sale of carbon permits should be dedicated to households; in what form should that compensation be delivered; who will be the winners and the relative losers out of that?

Similarly, with industry. Which industries should qualify for help and what form should it take? In particular, how should electricity generators — which are disadvantaged by the scheme and also producers of big emissions — be treated?

The paper won't set medium-term targets, which are waiting on modelling done by the Garnaut inquiry and Treasury. We do not know, however, whether it will canvass the prospect of Australia having "layered" targets — what Australia would commit to regardless, and what more it would do depending on other countries' pledges. It is likely that this approach will be adopted by Australia at Copenhagen.

The green paper will sharpen the debate for the Government — this will put its views to the public, rather than those of its adviser, Professor Ross Garnaut, whose report was issued last Friday and whose ideas may be accepted or rejected by the Government.

As the Government moves to canvassing some of the fine detail for its scheme, the Opposition is wallowing in a policy shambles, which worsened yesterday with frontbencher Tony Abbott declaring a unilateral Australian scheme would be futile.

The dangers of a deep split in the Opposition is that the Coalition makes itself the centre of unwanted attention, and Nelson leaves himself open to the accusation of playing down the issue of climate change itself.

Environment spokesman Greg Hunt, treasury spokesman Malcolm Turnbull and deputy leader Julie Bishop have stuck to the line decided in a discussion by the Opposition leadership last Friday — that Australia's scheme should begin by 2012 whatever other countries do.

Over the past few days the three have had individual conversations with Nelson, who apparently has had no problem with what they've been saying.

But Nelson yesterday continued to freelance with his harder line, insisting the Howard government policy had provided that Australia could not move alone without the rest of the world committing to meaningful action.

Indeed in the election campaign, Howard did say, "We can't have a situation where Australian industry is bound to take steps to curb greenhouse gas emissions, but competitive countries like China are not bound."

Howard's context was a Labor snafu in which Peter Garrett had said a Labor Government might sign a new global agreement without developing countries committing themselves to binding positions. Rudd was desperate to shut down the controversy sparked by Garrett's comment and so had him issue a statement saying that "appropriate developing country commitments" would be an essential prerequisite for Australia signing up to an international deal.

Although this is a separate (but related) issue from a domestic emissions scheme, the fact that Rudd had Labor quickly give that assurance shows that he recognised the political sensitivity of Australia being seen to be disadvantaged.

This debate could return with a vengeance if Copenhagen goes bad or is unfinished business.

In those circumstances, the Australian emissions trading scheme would have to start very gently indeed. Even so, there would be plenty of room for a Liberal scare campaign, laced with a good dash of old-fashioned nationalism.

Michelle Grattan is political editor.