Garnaut told a conference in Melbourne on Friday that such a move – in effect a reluctant embrace of Clive Palmer’s carbon pricing proposal, but using the infrastructure already in place, rather than starting anew – would result in a carbon price of “barely above zero”.
However, he said this would allow Australia to have the means to respond if, and when, its major trading partners adopted robust emissions reductions targets and trading schemes. He noted that this was the caveat of not just Palmer, but also the current federal government.
The Coalition, he said, came to the election with a policy of lifting its own emissions reduction targets to 15 per cent if other developed countries are making comparable efforts and important developing countries making substantial reductions below business as usual; and by 25 per cent in the context of a global agreement that holds out good prospects for containing human-induced warming to within 2 degrees Celsius.
Garnaut described Australian policy as a mess, with the likelihood that the carbon price would be repealed, no Direct Action passed by parliament, and the fate of other institutions such as the Climate Change Authority, the Clean Energy Finance Corporation and the Australian Renewable Energy Agency hanging in the balance and the hands of an unpredictable Senate.
He said it was clear that under the current policy it would be difficult to meet its own 5 per cent reduction target, let alone the 19 per cent recommended by himself, the CCA and others, and risked damaging international efforts.
“This set of policies puts Australian official policy in a difficult place. It will be difficult to meet the unconditional 5 percent target —the renewable energy target will secure large reductions in emissions from the electricity sector, but there will be no mechanism to reduce emissions elsewhere, including the rapidly growing fugitive emissions from LNG and coal production. It can safely be said that it will be impossible to meet the emissions reduction targets required by other countries’ action.
“Unless Australia moves from this place, it risks damaging the international effort to reduce the risks of dangerous climate change; seriously damaging important international relationships at a time when the United States, China and the major European countries amongst others are gearing up for a strong outcome at the 2015 Paris meeting of the United Nations Framework Convention on Climate Change; and greatly increasing the cost of reducing emissions when delayed action is undertaken under international and domestic political pressure on compressed timetables.
“Today I suggest one small modification of the emerging policy framework that would be a long way from anyone’s preferred position including my own, but much better from every perspective than the position in which climate policy has landed. The suggestion retains many elements of what has become Australian climate policy, keeping modification to a minimum in the interests simply of political feasibility.
“The modification would allow Australia to meet its international commitments, assist rather than retard current international efforts to accelerate international action on climate change; and avoid difficulties in Australia’s relations with the United States and other important international partners as we work through the G20 meetings later this year and the series of United Nations meetings on climate change leading up to Paris in ￼December 2015.
“Its effects on electricity and gas prices to users would be indistinguishable from the effects of repealing the carbon pricing laws. For the Government, it would remove the domestic political costs of explaining repeated failure to meet announced targets on emissions reductions or blow-outs of costs.
“I suggest that all parties consider the advantages of keeping the Emissions Trading System structure established by existing legislation, remove the fixed price, and for the time being allow unlimited access to United Nations CDM credits. The price of emissions permits would fall to less than a dollar.
“The Climate Change Authority would advise on targets as required by existing legislation. The current limits to use of CDM credits would be restored if and when the Climate Change Authority certified that such restoration would leave the Australian climate change mitigation effort and the cost of that effort no higher than in China, the United States, Korea, Japan and the European Union.
“This formulation would allow the Australian commitments to the United Nations effort to be met in full, whatever the extent of international effort. It would be met at a carbon price barely above zero until such time as there was sound evidence that the five specified countries and regions were making substantial efforts. The second large advantage of the suggested modification is that it would keep alive the framework of the emissions trading system.
“It would give practical form to the Palmer United Party’s commitment to reintroduce an ETS, initially with a zero carbon price until such time as there was substantial mitigation action in the five specified countries and regions. It would avoid what would eventually be felt as the necessity to introduce multiple intrusive regulatory interventions along the lines introduced in the United States since the failure to establish a national emissions trading system in 2010.
“The system without the constraints on use of CDM credits, would generate a modest amount of revenue, in the vicinity of $100 million per annum in the immediate future, which could be allocated according to Government preferences.”
Environment Minister Greg Hunt, appearing at the same conference, rejected the idea. According to AAP, Hunt said the carbon pricing legislation would go “lock, stock, and barrel.” (Insert joke about pork).