Wednesday, July 16, 2008

An options paper, with the option to save our future?

By Anna Rose and Amanda McKenzie

ABC News Online, Posted 1 hour 21 minutes ago
Updated 49 minutes ago

The Federal Government launched its green paper yesterday with a statement from Senator Penny Wong, "We are called to protect the inheritance of future generations".

This accords with the simple vision of young Australians - we want to be able to enjoy the same stable climate that has allowed previous generations to thrive and prosper. We want a Murray River that flows and supports Australia's great farming tradition and a Great Barrier Reef filled with coral and marine life. We don't want rising sea levels destroying homes here and in the Pacific, and for Australia to be plagued by more frequent droughts and extreme weather.

Failing to adequately reduce emissions today, will mean that our generation will suffer the consequences of a changed climate tomorrow.

However, unfortunately the Government's proposed scheme fails to protect our inheritance. Instead, it is a giveaway bonanza, with the Government proposing to give 30 per cent of permits away for free to compensate to some of the most polluting industries in Australia.

Permits to pollute

The focus of the green paper is the introduction of an emissions trading scheme, an avenue for placing a price on carbon to makes polluting less profitable. One of the most important decisions is whether permits, rights to pollute, are given to polluting industries for free or are auctioned. Free allocation would generate high transaction costs, be highly complex to administer and require value-based judgments for determining entitlement to permits. In the European emissions trading scheme governments were subjected to huge pressure by industry to give large amounts of free permits, the political wrangle that ensued resulted in an over allocation. Once the market realised there were too many permits the price crashed and the purpose of the scheme - to reduce emissions - was undermined.

In contrast auctioning is a transparent system that is independent from the political scrum. A distinct advantage of auctioning is that it creates a carbon price and a functioning market instantaneously, encouraging certainty and investor confidence. The revenue can be utilised to soften the burden on households and invest in transitioning to a sustainable Australian economy.

Why should polluting industries be compensated? Companies will pass the cost of permits onto consumers regardless of how they get them. This was illustrated in the European emissions trading scheme where polluting industries given free permits simply passed the cost on to consumers, and reaped windfall profits.

We must invest in the solution, rather than compensating the very industries which have caused the problem. The green paper states it will directly compensate coal-fired generators, "to ameliorate the risk of adversely affecting the investment environment". The whole point of a cap and trade scheme is to change the investment environment to discourage new carbon-intensive electricity. For every dollar or free permit given to polluting industries, there is a dollar less that can go to greater energy efficiency and insulation programs for households, or a dollar less for a new wind farm and transitioning to a clean energy economy.

However, some industries which rely on international trade cannot pass their costs onto consumers. This does not mean these companies should be "compensated". To create a safe future we must reduce emissions, that means all revenue from auctioning should support that objective. Any assistance should be carefully tied to push companies to transition into the clean energy economy, to invest in renewable energy and energy efficiency.

Fossil fuel madness

Similarly while it is important that the green paper focuses on assistance to low-income households, this assistance must be aimed at reducing their reliance on fossil fuels. This would give permanent relief from rising fuel and energy prices and supports the scheme's goal of reducing greenhouse emissions. This means energy efficiency programs and huge investments in public transport in outer suburban areas. In this regard, cutting the fuel excise is madness, and means billions of dollars that could have been invested in public transport are no longer available to do so.

In assessing whether the green paper is actually going to ensure a safe future for young Australians, we must also consider what it does not address. While coal is responsible for 75 per cent of Australia's energy emissions and is one of the world's most energy intensive industries, the Rudd Government, in concert with the state governments, is expanding the coal industry.

The Rudd Government cannot expect us to believe they are serious about addressing climate change without addressing coal.

The reliance placed on unproven "clean coal" is misplaced. The coal industry itself acknowledges that geosequestration technology, if it ever works, is 10 to 20 years off, while scientists tell us we must start addressing climate change immediately. Addressing our coal problem is going to take a brave and bold leader that is willing to prioritise the interests of future generations above vested interests, and create a just transition for coal workers and communities.

Missing the mark

We want to see strong leadership from our Government - a scheme that will turn emissions around in the next two years, supported with investment in renewable energy and a fair transition plan to phase out coal-fired power. That transition would create new green jobs for our generation in truly sustainable industries and make Australia a world leader. That is what the youth of Australian want, and the Government missed the mark yesterday.

Solving climate change is about safeguarding the future for our generation and those to come. We take it personally, because it is personal for us. If we don't solve this climate emergency, the world will soon be a very different one to the one we grew up in.

Green papers are supposed to canvass a number of options for solving problems. We are still waiting for a green paper that includes the option of saving our future.

Anna Rose and Amanda McKenzie are the co-directors of the Australian Youth Climate Coalition.

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