Combet, the Greens and that carbon price

Getting the settings in place to curb our relentlessly rising carbon emissions is the public policy challenge of our age. At year’s end there’s some hope that we might be making progress. [28 December 2010 | Peter Boyer]

It’s always a blessed relief at each year’s end to get some peace from the noise of politics, especially so as this tumultuous year staggers to its close. At last we have a chance to think.

THE JOB AHEAD OF THEM: Greg Combet (left) and Blair Comley (right), who will take over as departmental secretary in March next year, will share the big job of formulating new climate policy with Dr Martin Parkinson, who will move from Climate Change to Treasury in March, taking over from Ken Henry. 2011 will be a very busy year for all of them.

THE JOB AHEAD OF THEM: Greg Combet (left) and Blair Comley (right), soon to take the reins as Combet’s departmental secretary, will share the task of formulating new climate policy with Dr Martin Parkinson, who will move from his present role as Climate Change Secretary in March to take over the running of Treasury from the retiring Dr Ken Henry. 2011 will be a very busy year for all of them.

So how have we travelled along the climate road in 2010? We’ve had another 12 months to work out that human-induced climate change is indeed the challenge of the century and that there are no saviours or simple solutions on the horizon.

We’ve learned that households, communities, and government at local and state level all have much to do. We’ve also learned that this will be ineffectual without large-scale reallocation of resources, which requires decisive action at a national level.

As the year has passed it’s become clearer that creating public policy to deal with climate change is a challenge of unprecedented size and complexity. The experience of past wars and depressions are only partial guides. We’re mostly flying blind, and it’s not a pretty sight.

When the year began, prospects weren’t bright. With Malcolm Turnbull’s leadership and the Copenhagen summit relegated to the museum of failed dreams, Tony Abbott sought to do the same to the Rudd government’s carbon pricing plans. He succeeded beyond his wildest imaginings.

Looking for ways to counter Abbott’s “great big new tax” attack on Labor’s emissions trading scheme, Rudd dithered for months before announcing late in April that the scheme was to be “postponed”. The move failed completely, creating a massive policy vacuum while also making it seem that Abbott had won the carbon price war.

After everything that’s happened since — Julia Gillard becoming our first female prime minister, a rambunctious election campaign with a knife-edge finish, and weeks of bargaining to set up a new government —Rudd’s policy vacuum remains with us. As a nation, we still haven’t decided on our principle policy weapons to deal with climate change.

A few weeks ago I lamented our relentlessly rising fossil fuel emissions while government seemed receptive to business pressure to set a low carbon price and abandon complementary measures. The Australian Industry Group’s Heather Ridout then came out and said that one of these measures, the 20 per cent renewable energy target, is an expensive flop.

But governments are up against it, forced to juggle competing business and community interests while trying to secure viable international accord. As climate minister Greg Combet told a Sydney meeting of the Investor Group on Climate Change on December 17, “this will not be easy”.

Combet had much more to say in that speech. International negotiations, now “back on track”, would involve a delicate balance of economic power between the rising power of China, now the top national carbon emitter, and the established power of number two emitter the United States.

“This does not even take into account the need for individual countries to come to grips with the domestic political challenges that they may each face in reducing pollution within their own economy,” he said.

Pointing to the need to “decouple economic growth from growth in carbon pollution”, Combet said a market-based carbon pricing scheme was an essential economic reform, creating incentives to cut pollution, establishing better conditions for low-carbon investment, and enhancing Australia’s long-term economic competitiveness and negotiating strength.

“We either grasp this opportunity for an orderly, planned and gradual transition [to a low-carbon economy] or face the later prospect of economic adjustment at greater cost and dislocation [and] where other countries have taken the lead and the competitive advantage,” he said.

Now, in the wake of the third meeting of Gillard’s multi-party climate committee (which includes independent MPs and Greens senators), old policy antagonisms may be starting to ease.

The Greens’ climate spokesperson Senator Christine Milne has been a strong and effective critic of government climate policy. In January she and Greens leader Bob Brown floated Professor Ross Garnaut’s idea of an interim fixed-price carbon levy ahead of fully-fledged emissions trading.

In February Rudd rejected the idea; now Combet has signalled it’s back on the table. Milne might have sought to make a political point, but instead has welcomed the government’s shift in position and applauded its “spirit of openness and cooperation”.

The plan is for a climate policy centred on a market-based carbon pricing scheme but which Combet has indicated will include other complementary measures (notwithstanding Ridout’s opposition). The contentious 2020 reduction target of five per cent, and the even more contentious starting price for a ton of carbon, are yet to be determined.

The package will be taking shape in time for some elements to be introduced in July, when recently-elected senators take their seats to give Labor and the Greens a clear majority.

Both Combet and Milne have signalled that there’s still much to be done, but there are signs that something substantial may soon be filling the climate policy vacuum. Let’s hope so.

Guiding principles for a carbon price scheme

Agreeing that a carbon pricing mechanism is the best way to cut Australia’s carbon pollution, Julia Gillard’s multi-party climate change committee agreed last week that the scheme must provide:

environment effectiveness in reducing carbon pollution.

economic efficiency, harnessing cost-effective options.

budget-neutrality, having no impact on the budget bottom line.

commercial competitiveness, taking account of carbon prices in other countries.

energy security, continuing to meet energy needs.

investment certainty in low emissions technology.

fairness so that households and communities get help when needed to adjust to a carbon price.

flexibility in response to changing international circumstances and climate science.

administrative simplicity, to minimise compliance costs and risks.

clear accountability to promote business and community confidence.

support for international obligations to limit the global temperature rise to less than 2°C.

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