Emissions trading - how to avoid action on climate change

February 28, 2009

The Rudd government's proposed Carbon Pollution Reduction Scheme (CPRS) is not just bad, it's dangerous.

How to respond to the proposed scheme was widely discussed and debated by more than 500 people at the Climate Action Summit in Canberra last month. The consensus decision: we must prevent the CPRS from becoming law.

As debate about the controversial scheme grows, increasing numbers of people are beginning to realise just how astoundingly inadequate it really is as a response to the climate emergency. PM Kevin Rudd's government is on the defensive.

In her attempts to defend the scheme, minister for promoting climate change Penny Wong has repeatedly argued that reducing Australia's emissions will take a lot of the one thing we no longer have: time.

The harsh reality is that climate tipping points — what scientists refer to as "points of no return" — are being passed now. A serious climate policy would acknowledge that carbon emissions cuts of at least 5% per year is the minimum required for a safe climate future. Science and global justice dictates this approach. Politics must fall into line. The government's pathetic target of a 5% reduction by 2020 must be rejected.

The problems with the CPRS are manifest. Even compared to the emissions trading scheme employed in the European Union — a scheme widely acknowledged to have failed spectacularly to reduce emissions — the CPRS is a dud. It is a reflection of just how beholden the Rudd government is to the shady corporate interests of the "greenhouse mafia", as the big polluters call themselves.

The biggest problem with the CPRS, however, is that it's simply not designed to reduce emissions to safe levels. Nor is it fashioned to spark a transformation of Australia's fossil-fuel dependent economy, promote green jobs or encourage the establishment of a sustainable energy grid based on renewables.

Rather, it's carefully designed to prevent the serious action required and instead protect the profit margins of the dirtiest industries. Under the government's emissions trading scheme, some of Australia's biggest polluters are even expected to expand production.

Polluter gets rich

Nine billion dollars of public funds will be awarded to Australia's biggest polluters in the form of free permits and subsidies under the scheme. The government insists it must compensate the dirtiest, most energy-intensive industries for the "inconvenience" of wreaking havoc on the Earth's biosphere 5% less than they have until now.

Perversely, this compensation scheme constitutes a big reward for the companies that have made the least effort to reduce their emissions over the past decades.

Money and resources that could be directed towards fast-tracking renewable energy and public transport will instead be handed over to major emitters including Rio Tinto, Alcoa and BHP. This entirely negates the polluter-pays principle.

Under Rudd and Wong's scheme it's working people who pay; polluters get rich.

Under current government policy, energy-intensive industries like coal and aluminium refining already receive an estimated $9 billion annually in subsidies.

In contrast, the Rudd government has budgeted just $500 million dollars towards the research and development of renewable energy.

Furthermore, if Rudd and Wong's emissions trading scheme is introduced, individual efforts to reduce emissions will have absolutely zero impact on the total level of emissions in Australia.

The Australia Institute's Richard Denniss explained on February 2 on Inside.org.au: "Let's be clear about this. When the CPRS comes in, it won't matter how many solar hot water systems are installed, how many airconditioners sit unused on a summer's day or how small our cars are. Unless the CPRS is either amended or defeated in the Senate, it will be impossible for individuals to reduce Australia's emissions below the 5% target decreed by the government."

Lower energy use in households, or in any one industry, will simply free up extra permits for the big polluters. The corporations who make fractional emission reductions will be able to profit from selling "excess" permits to another corporation to use.

The only things individuals or communities will be able to achieve under the scheme "is to alter the percentage of emissions that come from the household sector and the percentage of emissions generated by the big polluters. On behalf of the big polluters, the Rudd government would like to urge households to do everything they can to reduce their own emissions. It won't help the environment, but it will make life much easier for the biggest emitters", Denniss concluded.

Under pressure from the mounting criticisms about how the CPRS cancels out the benefits from individual emissions reductions, Wong responded on the ABC's 7.30 Report on February 23 that individual reductions will allow the government to increase carbon targets in subsequent years.

This prompted an incredulous response from Andrew Macintosh, associate director of the Australian National University Centre for Climate Law and Policy. "Either Wong doesn't understand her own scheme or she is deliberately lying", he wrote on Crikey.com.au on February 24.

The proposed legislation dictates that emission caps will be set for a minimum of 5 years, and possibly longer.

Make no mistake. Penny Wong understands her own scheme very well.

Of course, individual actions provide no solution to the climate crisis regardless. Nothing less than a far-reaching transformation of our economy is required to meet the immense scale of the problem. But the fact that the Rudd government's version of emissions trading eradicates even small improvements made by individuals underlines that its purpose is not to reduce emissions to safe levels.

The next sub-prime?

Last month, the European emissions trading scheme effectively collapsed for the second time. Fears have been raised about a European "carbon bubble". The British Guardian reported on January 30 that such concerns about emissions trading have even come from a surprising source: a major European energy company — EDF Energy.

Speculators, warned British EDF Energy CEO Vincent de Rivaz, threatened to turn carbon into a new kind of "sub-prime tool".

The development of low-carbon technology is grinding to a halt under the EU scheme, but carbon "traders" certainly appreciate the spike in profits generated.

The same article noted that a March 2008 study commissioned by the World Wildlife Fund and prepared by Point Carbon estimated profits of between €23 billion and €71 billion would be made from carbon trading alone between 2008 and 2012. British companies will make up to €15 billion simply through selling-on carbon credits they don't use themselves.

In Australia, the CPRS will be open to very similar abuse from profit-driven speculators. With the global economic system in turmoil — a crisis Rudd freely admits has no end in sight — allowing market forces to dictate the pace of the transition to a sustainable economy is sheer folly.

The quickest way to guarantee that renewables, for example, are taken up at the speed needed to limit greenhouse gas increases is not to leave the job to the market and private industry — even green industry. What's really required is to create an adequately funded, publicly owned renewable energy network.

The Rudd government must be forced to abandon the CPRS, go back to the drawing board and come back with a policy that sharply reduces emissions and promotes green jobs. Climate action groups across the country will be organising community actions outside the offices of parliamentarians and corporate polluters on March 27 to demand this.

It's crucially important that the Australian Greens hold a firm line on this and are not seduced into accepting a rotten compromise. The ALP might, for instance, offer to rework the CPRS to allow individuals' actions to count for more. But such a tiny concession would make an equally tiny difference overall.

The greatest chance to sink this regressive legislation, barring the climate denier-riddled Coalition agreeing to it, is for the Greens to vote it down in the Senate. Were this to occur, it would signal a big victory in the fight for a safe climate future.

Ultimately, it's naive to believe we can make this CPRS work. Like all emissions trading schemes it is designed not to work. That's the whole idea.

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