News | 5th Aug, 2013

Carbon choices clearly on the table

5 August 2013

Marcus Priest, Australian Financial Review

Climate change policy will be a key electoral battleground in the election.

Both Labor and the opposition are committed to reducing carbon emissions by at least 5 per cent by 2020, despite some in the Coalition who are sceptical of the science of climate change.

But there is a big difference in how they propose to achieve it and who pays for cutting carbon.

Under the carbon scheme, companies must pay for every tonne of greenhouse gases they emit. Under the Coalition’s Direct Action policy, the government will pay companies to reduce emissions.

If re-elected, Labor is proposing changes to the carbon price scheme negotiated with the Greens and regional NSW independents in 2011.

In July, Prime Minister Kevin Rudd announced Labor would “terminate” the carbon tax by bringing forward the start of emissions trading to July 1, 2014 and ending the three-year fixed price period one year early.

As a result of the Australian scheme being linked to the European ETS, the price of carbon is likely to fall from $24.15 to about $6. This would mean revenue from the scheme would be $3.8 billion lower.

To fund this change, cuts will be made to grant schemes funded by the carbon tax; $362 million will be cut from the Clean Technology program that provides assistance to manufacturers to upgrade plant and equipment; compensation for brown-coal generators will be reduced by $770 million; $200 million in funding for carbon capture and storage will be deferred; and $213 million from the Biodiversity Fund, established to fund carbon land sector projects, will be cut. Personal tax cuts introduced to cushion the impact of the higher carbon tax will be kept…

…While the Coalition and Labor are divided over carbon, there is apparent agreement to retain the 2020 Renewable Energy Target. This year, Labor accepted the recommendation of the Climate Change Authority to not alter the target to produce 41,000 gigawatts of renewable energy by 2020, and the Coalition has pledged to do likewise.

But unlike Labor, the Coalition has pledged to review the RET again next year and has indicated it may be prepared to reduce it if power demand keeps falling.

The Coalition is also promising a “one-stop shop” for environmental approvals. This would see powers under the Environment Protection and Biodiversity Conservation Act delegated to states, so that federal and state approvals can occur at the same time.
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