Australian emissions trading scheme

The Garnaut report is out – as a draft at least – with a hard outlook for Australian’s, and an even harder sell. The most recent science is confirming that what were once considered extreme outcomes as being more likely than not.

The long history of Climate change science is littered with scientists refusing to confirm expectations due to a lack of evidence, and data to properly support what climatologists suspected from the little information we had. This doubt was seen as a confirmation that the science was flawed, and allowed sceptics and antagonists to claim it was all speculation. But this is the way of good science, although slow it is a true and accurate way to develop understanding of natural processes.

Now however as more and more data comes in, as more details of ocean temperature changes, ice cap melting and global temperature changes are amassed – climate modelling is leaning towards the extreme end of the change spectrum.

The Garnaut report suggests Australia is in for more extreme summers more often, droughts and heat waves more regularly. It also suggests the need for an emissions trading scheme to ensure Australia meets targets for carbon emission reductions. This last is the most contentious part of the report and as always the various sides of the argument say the report doesn’t take proper account of their views.

Economic arguments against a trading scheme have not really change over the last decade – if we put a price on carbon that will make things more expensive for users – cost will be passed down the line to all consumers. The real problem with this is not that the costs are incurred or passed down the line – but that this will reduce profit margins for businesses and or reduce consumer spending, and that this will slow economic development.

The counter argument is that this is exactly what emissions trading is designed to do – slow spending on those things with the greatest emissions. The effect will be to make less polluting energy sources more attractive to both consumers and investors increasing the percentage of energy from these sources. It has also been argued since long before the Stern report but most noticeably in that report, that the economic opportunities generated by taking up the challenge of emissions reductions far out weigh the costs of not taking the challenge.

The opportunities are there for new industry and expertise, but at the expense of traditional, polluting industries.

Unfortunately in Australia this is our dirty energy industry – most of our electricity and most of our transport. It is accurately surmised that increases in costs of these two will directly hit the poorest people with electricity and food costs increasing. In the short term any trading scheme needs to account for this, maybe a health card emissions discount can be applied rather than protecting these industries per se.