If you were frustrated by Penny Wong’s smug evasion on 4 Corners last night about when and why the Government has caved in to big polluters while developing its White Paper, that’s okay. The “why” was tortuously extracted by the Greens at Estimates the week before last.
Christine Milne diligently pursued the issue with Wong and her officials. In particular, why, when the Government’s own modelling of the ETS conducted by Treasury had demonstrated there would be minimal “leakage” of either jobs or carbon, was the Government bending over backwards to reward big polluters with 60% or 90% of their permits free?
Climate Change Deputy Secretary Blair Comley — previously a senior Treasury economist — admitted the point when he said “if you only had one of those objectives and it was purely a carbon leakage objective, then, other things being equal, you would have less generous assistance than is provided under the policy.”
So why was the Government more generous? Wong summarised the issue best when she replied, “We did take into account the Treasury modelling, which has a range of assumptions in it, as you know. We also took into account the consultation that was engaged with between different sectors of industry as well as the community and the government about the impact of the scheme.”
In short, the shift to extend handouts to big polluters, thereby neutering the ETS, was undertaken in response to “the consultation that was engaged with between different sectors of industry as well as the community and the government”. Hands up anyone in the “community” who was consulted. Anyone?
That much we guessed. But officials from the Department of Climate, under questioning from Senator Milne, went further and explained the basis for the Government’s change.
Milne: What I am hearing from you is that there is no real data there at all to support your argument that they deserve up to 90% on the basis of leakage.
Comley replied: I think the argument that industry is only raising the carbon leakage argument is not the experience I have had in consultations. It is both the carbon leakage and the question of the level of profitability for particular firms.
So let’s be clear: the Government’s rationale for amending its already-generous ETS so that it rewarded big polluters was not to prevent the loss of jobs and emissions overseas, but to ensure the profitability of big polluters.
As the Australian Conservation Foundation has shown via a study conducted by Innovest, the biggest beneficiaries of this approach will be Rio Tinto (Australia/UK), Bluescope Steel, Alcoa (US), Norsk Hydro (Norway), Alumina Ltd, BP (UK), Shell (UK/Netherlands), Onesteel, CSR, Chevron (US) and a number of other multinationals and large local companies. They’ll share around $1.5b in free permits.
UK, Hong Kong and Japanese power companies and the NSW and Queensland Governments will also reap more than $2b from the electricity sector adjustment arrangements. By 2015, nearly half of assistance to emissions-intensive, trade-exposed industries will be flowing offshore to multinational companies based in the US, UK and Europe.
The biggest risk of the Government’s approach is not carbon leakage or jobs leakage but profit leakage.
With luck these issues will be pursued by the Senate inquiry agreed between the Greens and the Coalition last night. The terms of reference are still to be finalised by the respective party rooms this morning but will go beyond the Wayne Swan-initiated TOR that the Coalition, in a Malcolm Turnbull smartarse moment, originally wanted to exactly copy. The Coalition’s own inquiry, by Centre for International Economics’s David Pearce, has been delayed a fortnight after Pearce was flooded with submissions inspired by the Swan shenanigans. The report is due with the Coalition within a week, and will be released with a Coalition response after that.
That will keep a lid on the issue within Coalition ranks for the moment, but it will have to come off at some point.
I fail to understand why we have to roll over and accept this nonsense. Carbon is not a primary, or even secondary, ‘greenhouse’ gas at current and higher levels – due to the logarithmic decrease in effect with increased concentration. Neither is it a ‘pollutant’ or ‘poison’ in the context used by those whom would rather starve in dark cold holes.
This is far to serious an issue to be so soft on… I am very dissapoointed with the government’s handling of this issue.
The message to big polluters should call there bluff “If you can’t make profits cleanly then go make them some place else”
Id rather be unemployed than underwater…
Ms Wong continues to fascinate me. How in the name of this planet was someone without the faintest interest in the environment-or anything else-given this job? Her lumpen performance on 4Corners revealed a person devoid of passion for her subject matter and a total disinterest about her own country. Why, Kevin Rudd, did you put two people with lack-lustre creds into jobs which, prior to your election, you avowed to be so concerned? I refer, of course, to Peter Garrett and Penny Wong. Ms Wong might perhaps have shown less interest if the subject had been a mildly torn cuticle. The less said about Garrett the better.
What was the terrible threat-enough to make a government do a complete ‘U’ turn on their promises-called upon by big business? That they would ignore Australia’s interest and export solely to foreign countries? Perhaps they threatened to withdraw donations to the Labor Party? Whatever the threat was; how could it have been worse than having a few bombs dropped into their mines? Which a government surely would have the right to drop. Or would Mr Rudd have to get bumface’s permission?
Certainly these are inane questions, they are meant to be, because we in Australia now know the utter banality and sheer inanity of the present Labor government. (Lindsay Tanner excepted)
The big man with the deep voice who spoke for the oil industry-fortunately his name escapes me- looked as if he had spent years tearing wings of butterflies, or molesting Chihuahuas.
What is the difference between the Rudd Government and a mad bull? The mad bull has got some principles.
It’s a very tricky issue. We’re a country of only 20 million people, but our export industries supply minerals and energy to tens/hundreds of millions more around the world. As a result we are directly responsible for a not insignificant chunk of global carbon emissions.
On the flip side, as the world moves to a carbon free economy, Australia’s largest export (coal) loses value, so it makes economic sense to sell as much as possible now. And the thinking goes that if we don’t sell it, China will just source their product elsewhere – and these companies will uproot to the third world to make that possible.
So yes, these free ETS permits are indeed subsidies intended to keep those businesses operating in Australia, and to retain our largest foreign currency earners. The government will remain in this untenable situation until the rest of the world (read: America) picks up its game and initiates a global ETS. It’s up to Obama to save the world, yet again.
I feel an odd sort of dissonance here. First, we’re told that any cuts we might make here, whether 5 or 40 percent won’t make one iota’s difference to global GHG emissions – which is probably true given our output relative to China, India, US, Europe, even with massive fossil fuel exports. Then we’re told that the Government’s proposed scheme stinks because the cuts won’t be meaningful.
The real question is how to adequately incentivise a CTS to make it attractive to industry because what would happen if you started a scheme and no-one came or if participation in the scheme destroyed the short/medium-term competitiveness of participants? Whose interests would that serve? There’s plenty of coal in other places. Over time, permits will become more valuable because of GDP and global growth, won’t they? Should we start with a small first step that doesn’t drive investment in Australian resources offshore during a recession or go for a huge leap which delivers a warm, greenhouse-friendly glow but which is not cost-effective for companies we need to depend on to make any scheme like this work?
It looks like sh*t stirring to me.