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October 19, 2009

As expected, the Coalition's key amendments to Labor’s flawed CPRS are even more pro-business than that proposed by Rudd under his emissions trading scheme. It can be inferred from these that the Liberal Party has no commitment to using the market to drive change: as a tool for allocating capital and for effecting social change.

A cap-and-trade system works by making it expensive to emit greenhouse gases. As a result, the owners of an emissions source are motivated to replace it with something less damaging to the environment. However, Rudd's CPRS is flawed because the CPRS will in fact have little or no impact on the conduct of the coal-fired electricity generation industry. So much for the "transformation" of the coal-fired power industry that results from the CPRS and the transition to a low carbon economy. So much for cleaner energy.

The Coalition is proposing a massive increase in the already substantial assistance to heavy emissions-intensive industries such as steel-making, aluminium and cement, and a guarantee that government assistance continues for longer. It's sole concern is to protect Australian industry and jobs from the cost of greenhouse emissions.

Whereas the government has promised that the most emissions-intensive industries will get 95 per cent of their permits for free, and a second tier of industries will get 66 per cent of permits for free, the Coalition wants all the emissions-intensive industries boosted into the 95 per cent free category, and a lower cut-off threshold so more will be included. And it wants to abandon the planned automatic decrease in this assistance in the early years, and for the government to pledge that it continues until 80per cent of international competitors face a carbon price.

So instead of $3.5bn worth of free permits offered by the government to make up for plummeting asset values when the scheme is introduced, saying this amount should be almost trebled to $10bn. The coal fired power stations become sheltered workshops. What is the economic case for the billions of taxpayers’ dollars that are to be given to the polluters and what are the arguments about the need to protect our polluters?

The opposition also wants dairy and food processing included in the compensation scheme -- both important industries in the regions--- to ensure food price increases are minimised.

The strength of a cap-and-trade program is that they function as a carrot and a stick. They add costs and difficulties to environmentally damaging processes, such as emitting greenhouse gases, and by allowing the trading of pollution permits, they transform those costs into incentives that reward emitters for changing their behavior. In Australia all the emphasis is on minimizing the costs in the form of protecting polluters from change with little emphasis on growing clean energy jobs.

| Posted by Gary Sauer-Thompson at 8:15 AM | | Comments (3)


Instead of strengthening and passing the CPRS the legislation the Coalition is making it made ineffective by its backwards steps to greater protection for polluters.

Whenever there's a major breakdown of the neglected transport system, we hear a public outcry. Usually it can be traced back to politicians and bureaucrats not having the BALLS to make serious, important, long-term decisions. For fear of voter backlash.

If the clowns can't guarantee that the trains will run on time...

The ravages of
economic rationalism
have finally come down to
the casting of spells
and aspersions
Consumerism is the requiem mass
We have finally reached the
coal face
cap in hand