Last week, in the biggest policy reversal of his prime ministership, aimed at wooing big businesses and the Liberal Party, Kevin Rudd announced important changes concerning Australia’s emission trading scheme.
Firstly, Prime Minister Rudd announced the delay of the scheme of one year, pushing back the start date to July 2011, in order to manage the impact of the global recession. Australia will also fix the trading price of carbon at AU$ 10 (US$ 7.35, € 5.50) a tonne until mid-2012 (instead of the AU$ 40 a tonne maximum price for emission permits originally proposed), making the scheme akin to a carbon tax in its first year. In addition, the government will increase free permit allocation by adding a “global recession buffer” in the early years. Industries eligible for 60 per cent of their permits issued free will receive a further 10 per cent, while energy intensive, trade exposed industries eligible for 90 per cent assistance will now receive an extra 5 per cent. This generous compensation for the nation’s heaviest polluters, illustrating the success of the country’s enormous oil, gas and coal lobbies, has been found repugnant by Rudd’s own expert, Professor Ross Garnaut.
The issue is that the Rudd government doesn’t have the power to implement any scheme because it doesn’t have the numbers in the Senate and faces a barrage of opposition from the Liberals, the Greens and independent Senators. Through accommodating the demands of business lobby groups, Rudd aimed at putting the Opposition Leader, Malcolm Turnbull, under business pressure to pass the emissions trading scheme in the Senate. But that was underestimating Turnbull’s stubbornness. Following its strategy of opposing anything and everything the Government says or does, the Federal Opposition said it will have an alternative proposal to the Government’s emissions trading scheme by the time it is debated in the Parliament next month. (ABC 10/05/09)
Secondly, Rudd announced a change to Australia’s 2020 emissions reduction target range. As a sop to environmentalists, he announced a heavily conditional commitment to increase from 15 per cent to 25 per cent the maximum amount by which greenhouse gases would be reduced by 2020. “I am in the practical business of responding to realistic challenges,” Mr Rudd said of his reversal, which would mean “a slower start” but a “stronger, greener conclusion” (SMH 05/05/09). The Government’s strategy was to win back public support for Labour’s climate policy by holding out the prospect that Australia was now supporting a stronger global agreement. However, this commitment would depend utterly on other countries, China and India included, making serious commitments at Copenhagen. The new deal was slammed by Green senators who consider the new target still too low and new corporate compensation too generous (SMH 10/05/09).
Today, hope around the two-fold Government strategy to win back support for its carbon scheme in Senate has evaporated. Australia remains deeply divided on how to build an ambitious national climate change policy. Four Opposition senators have even issued a report that says boosting Australia’s emissions could help the planet because if Australia reduced its emissions, that could mean industries moving offshore, where environmental standards were lower. Such initiative has reason to worry Climate Change Minister Penny Wong. She is determined to pass the emission trading scheme through Parliament in June; otherwise Australia’s negotiation credibility could be undermined at Copenhagen. But today it appears Wong will arrive in Copenhagen not only without a national commitment, but also without a national consensus.