Saying ‘Yes’ to what?

Originally posted on http://www.onlineopinion.com.au 

The Sunday before last, 45000 Australians converged on their capital cities to say YES to a price on pollution. Families, children, students, teachers, doctors and Abbott’s favourite ‘working class Australian’ came together, despite the confusion and hysteria of the recent media-storm, to demonstrate their support for a more sustainable Australia.

Evidently climate change has been well and truly back on the political agenda for some time, but it appears that this time round it has unprecedented support (despite what a few radio shock jocks and disproportionately loud coal lobby groups might say).

The difficult thing about saying “YES” is the inevitable follow up question… “Yes to what?” and, with the MPCCC still deliberating and the bill yet to go through parliament, this is a difficult question to answer.

A number of key reports have been released recently shedding light on this question – most recently Garnaut’s Report and the Productivity Commission Report. Whilst the trend in these documents seems to be “do something even if it is not enough”; they are useful sources of information when evaluating exactly what it is we’re saying YES to…

Let’s start with Garnaut.

Climate scientists are becoming the new media/political football. Garnaut is irrelevant and a government-pawn when his advice requires too much action, and he is the voice of scientific consensus and rationality when his recommendations comply with the vested interests of those with their fingers in the coal pie. So – rhetoric aside – Garnaut’s report highlighted a few key things for us.

Firstly, he aptly counters Abbott and Windsor’s favourite argument that we should wait for global action before putting a price on pollution. He roundly refutes the fiction that if we put a price on carbon we will be leaps and bounds ahead of other countries. In fact, 35 European countries have had a price on carbon since 2005, not to mention numerous others like China, India and New Zealand taking steps to tax carbon emissions. So there is no need to fear that Australia will be a global leader on this one.

Secondly, he emphasises the cost of inaction with natural disasters the Budget putting natural disasters at $9 billion and he reiterates Australia’s responsibility to keep up with international action. He quietens some of the hysteria around households crumpling under the weight of electricity bills with his proposal for tax cuts and raising the tax-free threshold. This, with the Government’s commitment to compensate any households that are adversely affected by the scheme should reassure those who are convinced the carbon price is a horrible trick rich celebrities like Cate Blanchet are playing on struggling families.

Most significantly, Garnaut advocates a starting price of $26 per tonne (with the Labor party subsequently narrowing that to a price they suggest will be between $19 and $23 per tonne). This is something, but if the carbon price is going to act as a cost incentive for big businesses to pollute less and renewable energy is going to be a viable alternative, then basic maths indicates that it’s not enough (Resource Minister Ferguson’s report showing the need for at least $40/tonne is probably more convincing than my basic maths). And here’s where that difficult question of “YES… to what?” rears its ugly head.

Garnaut’s report is 244 pages, but in the interests of starting a dialogue about the proposed price on carbon before it goes through parliament if you want more information, you can download all 244 pages of it here.

The most recent (and only slightly more dense) Productivity Commission Report has been used as ammunition from all sides of the field. The Government is holding it as proof that cap-and-trade is the most economically efficient way to transition away from coal. The Opposition, on the other hand, is using it as evidence that no other country will have an economy-wide emissions trading scheme (which incidentally is not even on the cards for Australia, so their vehement objections ring a little hollow).

There are a couple of clear messages that can be derived from the report, however.

First, the Productivity Commission asserts that pricing carbon directly “generally will deliver any given amount of abatement at least cost”. That makes common sense – send clear cost signals to businesses and they will respond. Easy.

It then launches into hundreds of pages of comparison and analysis of the measures implemented in Germany, Britain, China, India and the US but declares its inability to come up with carbon price equivalents in each country. Fair enough, I’m no economist but I assume there would be numerous variables in the way each country runs.

There has, however, been considerable backlash. As The Australian diplomatically put it “not all green policies are good policies”.

Quite right too.

Not quite so fair though to use the Productivity Report as evidence for Labor’s economic ineptitude… not to mention the Greens’ strange love affair with renewables and the Opposition’s bad habit of just being plain old wrong when it comes to climate change.

The Productivity Commission Report does not advocate for the abandonment of renewables (as The Australian implies, heavily). It says that the UK did well switching from coal to gas. It also doesn’t comment on how well they’ll be doing when the gas runs out… but most definitely does not say that Australia should switch to gas instead of renewables (or eat oranges instead of apples for that matter).

Equally, when The Australian said “the Commission.. is unable to make the obvious point – Australia would want to avoid the German model at all costs”, what it was actually trying to say is that the Productivity Report has concluded it cannot come up with scheme equivalents in each country. Rather, it can present a survey of what several countries are doing and what elements work, and what elements don’t in each of their respective contexts.

Thus, one can assume that the point is – Australia needs to come up with an “Australian made pollution price”. That is, a price that meets the needs of a historically resource-dependent economy whilst capitalising on being one of the sunniest and windiest countries in the world. That’s what we’ll say YES to.

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