The Senate debate about the CPRS is getting close, and with views as diverse as those of Steve Fielding and Bob Brown it’s likely to be a cracker. Unfortunately, while there might be plenty of heat in the debate, whether the CPRS gets up or not will make no difference to global temperatures.
That fact has nothing to do with the tired observation that Australia only accounts for 1.5 per cent of world emissions. When you realise that there are 192 countries in the world, which entitles you to around half a per cent each, 1.5 per cent is actually quite an achievement. And when you factor in that we account for only 22 million of the world’s 6.7 billion people you get a clear picture of just how good at polluting we Australians really are.
The reason that the passage of the CPRS will have no impact on the world’s emissions is simpler than that. The fact is, the CPRS is irrelevant. It is irrelevant to the level of Australia’s emissions in 2020, and it is irrelevant to the world’s emissions in 2020. Both of these levels will be determined at Copenhagen or soon after. The treaty that comes out of Copenhagen will make no mention of the CPRS or its pathetic targets. Why Malcolm Turnbull would stake his leadership on something so meaningless defies logic.
So if the CPRS is so pointless, what’s all the fuss about? Unfortunately, it’s the old story of money, with a little bit of spin thrown in. But before analysing the farce surrounding the CPRS, let’s remove some misconceptions first.
The first thing that needs to be cleared up is that the CPRS targets have got nothing to do with the targets for Australia that will come out of the Copenhagen negotiations. As with Kyoto, Copenhagen will result in a series of different targets for different countries. Australia’s target will be determined by international arm twisting. Our negotiators will be in there arguing for the kind of pathetic targets to be found in the CPRS while other countries will be trying to drag us into the range supported by the civilised countries. The end result will be driven by diplomacy, not the passage of domestic legislation.
The second misunderstanding is that Copenhagen is about creating an international emissions trading scheme. It’s not. It’s about setting targets for countries to meet. How they meet them is up to them. Individual countries can implement domestic emissions trading schemes if they want to but they are also free to have a carbon tax or introduce Stalinist command and control policies. Countries who want to pollute more than their entitlement can trade with countries who want to pollute less. But Copenhagen is about developing targets for countries, not telling them how they should get there.
Thirdly, the world doesn’t give a damn whether the CPRS is passed or not. In Australia we are often told that the passage of the CPRS is somehow central to keeping the whole international push to tackle climate change on track. Without the CPRS the whole thing might crumble. Yeah right. The big countries will sort it out between themselves, the only issue for Australia is which side are we running cover for.
So again, what is all the fuss surrounding the CPRS about?
Let’s start with the money. Once Australia agrees to binding international targets at Copenhagen then something is going to have to change in Australia. Either we can reduce our emissions or we can spend a lot of money buying permits from other counties. The big polluters don’t want to do either as both would cost them money. What the CPRS does is give the big polluters certainty – certainty that they can keep polluting, certainty that they will get lots of compensation, and certainty that the carbon price won’t rise above $40 per tonne.
The point that has been missed in the Australian debate is that if the deal out of Copenhagen means Australia has to reduce emissions, but the CPRS has already assured the big polluters that they don’t have to lower their emissions, then something will have to give. That something will be the Australian taxpayer. If we are silly enough to give the big polluters ‘certainty’ while uncertainty about the outcome at Copenhagen remains then it will be the taxpayer who has to make up the difference. The taxpayer will have to pick up the tab for buying billions of dollars worth of credits from other counties while the CPRS gives a ‘right’ to the big polluters to carry on increasing their pollution.
You can see why the polluters are keen on rushing the scheme through.
And now for the spin. The Treasury modelling of the CPRS tells you all you really need to know about the CPRS. First, Australia’s domestic emissions will be no lower in 2019 than they were in 2008. Second, the carbon price will be so low that no coal fired power stations will be forced to close down. Third, all of the ‘reduction’ in emissions will come from importing permits from other counties.
Put simply the CPRS talks a good game, but it just doesn’t deliver.
The ‘clean energy revolution’ associated with the CPRS does not result in the closure of a single coal fired power station. The ‘transformation’ of the Australian economy does not even include higher petrol prices. And the ‘international leadership’ shown by Australia includes one of the least ambitious emission reduction targets in the developed world.
I can think of lots of reasons why Malcolm Turnbull might not want the leadership of the Coalition, but his party’s hostility to the CPRS wouldn’t be one of them.
Dr Richard Denniss is Executive Director of The Australia Institute www.tai.org.au.
First can I say that, you are right Dr Denniss, the Copenhagen Conference and the targets which emerge from it are the most relevant factors in this debate. However, I would like to point out why this does not mean that the CPRS is irrelevant.
My problem with your thesis is illustrated by what I believe to be two inconsistent comments you have made:
“The fact is, the CPRS is irrelevant”
and
“Our negotiators will be in there arguing for the kind of pathetic targets to be found in the CPRS”
The CPRS is very relevant because, if Australia goes to Copenhagen with locked-in CPRS legislation it does two things:
1. Australia can convincingly argue that a global agreement is a pre-condition before it can even think about cuts of anything greater than 5%; and
2. Australia can not legitimately go beyond the 25% cuts in emission which its legislature has (“presciently” and “proactively”) agreed upon.
The CPRS legislation may not be relevant for the right reasons, and this is what the Coalition fails to understand, but it allows the Australian negotiators to bring to the table at least some semblance of a justifiable range of cuts – consensual, settled and legislated emission cuts.
Without this legislation as one tool for negotiators, Australia’s negotiated emission cuts are pretty much at large. This means we could be exposed to greater cuts or agree to even more pathetic ones. And neither side should be comfortable with that.
This legislation is very relevant and I say, pass the bloody thing and lets begin those first baby steps to structural change. The CPRS first step may be a dribbling, stumbling stagger but it (to extend the analogy way too far) will build the (low emission) muscle for the heavy lifting and long walk ahead.
I must say I’m much more impressed by Dr Denniss’ contribution than those of his predecessor.
@KIT, that’s a rather cynical approach, to support locking ourselves into any kind of flawed system in the hopes that it will mean less concessions given at Copenhagen. Sounds too smart by half.
Great article, Richard, you’ve hit the point dead on. Rushing the CPRS is putting the donkey ahead of the cart. The Americans aren’t going to move on carbon emission legislation until late 2010, and if they decide on a different system to the one we implement, we’ll be in a real pickle.
The biggest problem of all, as you point out, is that the government is setting up a system that appears to reward polluters for doing what they are doing while dumping the tax burden onto the plebs. On top of that, by allowing companies (banks) who barely produce or consume carbon to buy and sell credits, they’re dooming the whole thing to the kind of price manipulation we see in the oil market.
The price of oil can triple in the space of a year, resulting in a massive tax hike on the whole population that goes straight into bank profits. How would carbon credits be any different?
Your other question asked why ex-Managing Director of Goldman Sachs, Malcolm Turnbull, is willing to stake his leadership on setting up a carbon trading system in the face of party-wide revolt? I think that question answers itself.
[Rushing the CPRS is putting the donkey ahead of the cart]
Jeebus, what do you hope of getting from the Copenhagen ‘cart’ that a locked-in ‘donkey’ will deny you? That is, when the Copenhagen conference finishes, what announcement will be made that will fundamentally change the form and/or content of our CPRS? The answer is that there is nothing in the CPRS which is inconsistent with the outcome of Copenhagen, whatever that outcome will be. Global agreement, no agreement, big cuts, small cuts… it doesn’t matter.
The Coalition says wait till Copenhagen, but the only point in waiting is delay. Emissions trading has been reviewed and reviewed and is the most economically efficient way to cut emissions – we can argue over the targets and we should be but we first have to stop arguing over the mechanism.
My point above, is that the CPRS legislation is not irrelevant to Copenhagen, but that doesn’t mean it’s the real game – its targets, targets and targets.
I can tell you, big polluters are very much enjoying the fact that real and enforceable legislation could be delayed, maybe forever. I wonder what the next Coalition-inspired delaying event will be? “We should wait for the US legislation to pass?” or “China, yes China is making a decision about emissions at the Communist Party’s 325th Politburo Standing Committee session in 2020, let’s just wait and see what emerges shall we?”.
“…It’s Copenhagen that counts…”
Wrong.
In the interests of keeping participants in the debate fully informed where would one – say a government MHR or senator facing a vote on this ‘scheme’ – get accurate (real-time) information about:
* the implementation cost of the proposed scheme;
* just what exactly is being proposed (energy transitions, timelines, etc.);
* the economic and social impacts of the proposed scheme;
* the short, medium and long-term effects on Australia’s balnace of trade, exports and international competitiveness
Rounded to the nearest dollar and percentile is acceptable.
Anyone?
Anyone?
Even the GST was fully costed out before it was voted on by Joe Public.
Why should one vote for a “trust us” scheme where the details will be “sorted out later” and befroe anyone else has done the same analysis for their own countries?
So we can brag about being first?
That’s wa