Emissions trading scheme ruffles feathers

The Minerals Council of Australia (MCA) has said measured transitional arrangements will be the key to ensuring the proposed emissions trading scheme achieves its environmental objectives without compromising economic growth, community living standards and the competitiveness of Australian industry.

According to the MCA’s chief executive Mitchell Hooke, the Emissions trading scheme will be the most substantial reform of the Australian economy in recent years.

“We cannot underestimate the scale of the challenge for Australia in making substantial reductions in emissions in the short-term. This is particularly the case until low emissions technologies are developed into commercial reality,” Hooke said.

“It is critical that all Australians have a realistic expectation of what we can do and what we should aspire to. This is not an argument for inaction, indeed quite the contrary. It is an argument that Australia must match its aspirations with its capability.

“This reality check underscores the critical importance of a measured transition to a lower emissions economy building genuine support for a global framework, developing low emissions technologies and introducing an environmentally effective and economically efficient emissions trading scheme,” he said.

The MCA’s submission to the Garnaut Climate Change Review, supports the introduction of an effective Emissions Trading Scheme (ETS) that covers all greenhouse gases, a broad range of sectors and is founded in transitional arrangements to ensure a more sustainable long term reduction in greenhouse gas emissions.

“Australia must be an integral part of a global solution to the global challenge. We agree with Garnaut’s conclusion that Australia should not wait until a global framework is established, but in proceeding ahead of other countries the design of the Australian ETS should not compromise the international competitiveness of the Australian industry and the Australian economy,” Hooke said.

“Accordingly, the design of the ETS must be founded in a measured transition to full operation”, Mr Hooke said.

This will entail transitional arrangements, specifically in a cautious approach to interim targets — implied interim cuts of around 30% on 1990 levels by 2020 will require cuts of around 44% on current projections; a gradual ramp-up in the carbon price signal — it is the expectation of a higher carbon price coupled with research and development that will stimulate the deployment of low emissions technologies.

Other transitional arrangements include establishing a price cap in the initial stages of the scheme — this is a critical safeguard against high prices and volatility beyond industries’ and the economy’s capacity to adjust; the phased introduction of full auctioning of permits — initial administrative allocations to disproportionately affected industries phasing to full auctioning; ensuring that it does not compromise the competitiveness of trade exposed emissions intensive industries with unintended economic and environmental consequences.

Additionally, the MCA contests the Garnaut Review’s embrace of uniform per capita emissions targets as a basis for a future global framework.

According to the MCA, this presumes that all economies are the same in terms of geography, resource endowment, composition of exports and the rates of economic and population growth.

But no two economies are the same. Australia shares the same population as the Netherlands and Denmark, but on a land mass 99.8 times larger.

The MCA submission also advocates other policy measures to facilitate a transition to a low emissions future, including devoting a share of revenues from emissions trading to forge a stronger partnership between government, industry and researchers to develop low emission technologies including renewable energy sources and carbon capture and storage and ensuring the mandatory 20 percent Renewable Energy Target (RET) by 2020 does not contradict the purpose of emissions trading, which is to direct investment towards least cost abatement options.


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