Issue #1442      10 February 2010

Liberal or Labor

Profits win over environment

Anna Pha

Parliament has resumed and the Rudd Labor government is making a third attempt to get its “pay to pollute” emissions trading scheme (ETS) through the Senate. The Liberals have countered with a simplistic and equally inadequate “pay to reduce pollution” scheme. Both schemes are based on corporate welfare for the biggest polluters and rely on the “markets” to reduce emissions. The Australian Greens, the only voice of reason or commitment on climate change in Parliament, have put forward an interim compromise.

Liberal’s con job

The Liberal Party policy is a cynical and dangerous attempt to deceive the electorate that an Abbott government would take measures to halt global warming. The Christian fundamentalist Tony Abbott does not believe in climate change, let along accept that global warming is caused by human activity. To him climate change is “crap”.

The corporate polluters’ policy he released last week, opportunistically portrayed as “action” on climate change, centres on the establishment of an emissions reduction plan and sequestering of carbon in the soil. A few million dollars are also thrown at tree planting and solar conversion of homes.

The fund would have a $300 million allocation for 2011-2012, rising to $1 billion over three years to reward businesses that reduce emissions to below “business as usual” levels.

The fund is a rehash of an old Howard proposal. There would be no caps on pollution, not a single concrete measure, let alone targets or requirements to reduce emissions. It is a question of leave it to the market gods – or “business as usual” for the big corporate polluters.

As for sequestering carbon in the soil – enriching soil with organic matter – this is still unproven on the scale proposed.

Abbott’s “simpler and cheaper” scheme would be a joke if the situation were not so serious. It is a dangerous electoral stunt. The big polluters support it; they know it means business as usual with the bonus of corporate welfare if they actually reduce emissions.

Labor’s pay to pollute

Labor’s ETS (emissions trading scheme), the centrepiece of its Carbon Pollution Reduction Scheme (CPRS), is a far more expensive and complex exercise, which also fails to meet the requirements of science. It is a cap-and-trade scheme, which relies on market forces and subsidises the biggest polluters to enable them to not only continue on a “business as usual” basis, but even make profits out of permit trading!

In theory, an ETS involves a cap on greenhouse gas or carbon emissions and the sale of permits to pollute within that cap. The price of the permits is gradually raised and the cap on emissions is to be reduced over time. It creates an incentive for polluters to reduce emissions. Businesses that do not act face the possibility of being unable to compete with alternative energy sources and other more energy efficient methods of production.

Permits can be traded, with more efficient companies selling their excess permits to other companies and making a profit out of them. The government does not determine plant closures or new investments, let alone plan future development. It is left to market mechanisms.

Such schemes have operated in Europe for some time with very poor results. The finance sector has latched onto them as a new source of profit gouging. The permits become commodities to be traded – gambled with – on futures and other markets. They create the potential for a future crash.

The Rudd government’s ETS is seriously flawed. It in effect pays the largest polluters to go on polluting by buying their permits for them. For example, the Coal Sector Adjustment Scheme “provides free permits to the most emission intensive mines” to the value of $1.3 billion.

Under the Electricity Sector Adjustment Scheme, electricity generators will be receive $4 billion worth of permits over the next five years – in effect a payment for coal fired and other generators not to shut down. They will be subsidised to keep polluting for the next ten years.

Highly emission intensive activities related to trade will receive assistance at the rate of a 94.5 percent permit subsidy by the government, decreasing at an annual rate of 1.3 percent per annum. There are huge subsidies to assist the heaviest polluters with abatement measures.

“The CPRS is structured so that most of the revenue it raises will be recycled back to Australia’s largest polluters rather than used to finance the massive increase in investment in renewable energy needed if Australia is to cut its emissions and maintain its living standards,” Kenneth Davidson pointed out in his column in The Age (31-08-10).

“Worse, even as the cap on emissions is lowered, the big polluters will be able to meet their lower targets by buying dodgy emission permit offsets from Papua New Guinea and Indonesia so that, according to Treasury forecasts, actual emissions by Australia’s biggest polluters will be above 1990 levels until after 2035.”

In fact, using these offsets, they could more than meet their targets in theory, and make a killing selling excess government-funded, free permits at a huge profit. The CPRS places no limits on pollution credits – the carbon offsets – that can be purchased overseas.

The Australian government is relying heavily on international trade in credits to achieve its pathetic and disgraceful target of five percent below 2000 levels by 2020. Developing countries, desperate for money, will carry the burden of Australia technically meeting its targets while still increasing emissions.

Where polluters do pay for their permits, prices will rise. The government is offering a package to consumers to address price rises, funded by taxpayers.

The proposal for ongoing reductions in the cap on emissions – around one percent per annum – is far too slow as is the rise in the price of permits.

Both Liberal and Labor policies will result in a substantial hike in the cost of living – a high price to pay for policies that will not deliver the results required to arrest global warming.

Greens carbon tax

The Australian Greens have proposed a carbon tax of around $22 a tonne which would rise annually.

“We Greens are putting forward another possible proposal; to break the political deadlock and get Australia moving ahead to a clean future,” said Greens leader Senator Bob Brown. The tax would be within the framework of the CPRS and buy time to reach agreement on longer term solutions.

“The interim scheme is a building block for future action that’s got real teeth,” Senator Brown said.

It is a proposal based on the realities of the political forces in Parliament, would raise money immediately and would not be open to the sort of rorting that the ETS would produce.

The Greens argue that it would provide the government with income to support household, commercial, industrial and transport emission reductions. It is a better proposition than the ETS, but still leaves it very much to the markets to determine emission reductions and development.

The hypocrisy of Australian governments is illustrated by the signing off of a new contract between Richard Palmer’s Resourcehouse and China Power International on a $69 billion deal last week. Four underground and two open cut coal mines and a new coal port in Queensland will be opened. Premier Anna Bligh is ecstatic – 7,000 jobs in its construction and hundreds of millions of dollars in royalties.

The main obstacle to progress on reducing emissions is the private ownership and profit-driven motive of coal mining, energy production and other carbon intensive industries.

Any serious policy to address emission reductions must be planned and directed by government. It cannot be left to the private sector and whims of markets where profits come before global warming and the future of the planet.

Workers whose jobs are at risk from measures to protect the environment must be offered employment in environmentally friendly occupations and new green industries without loss of wages or any conditions and with full involvement of workers and their unions. This requires planning, centralised coordination and funding – a task beyond the private sector.

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