This is a copy of the speech given by Climate Change Minister Greg Combet to the Carbon Expo conference in Melbourne on Friday.
This time a year ago, a price on pollution became the law in Australia.
This was a major economic reform.
Today I’d like to review what has happened since the carbon price came into operation.
I’d like to give you some examples of how businesses and households have responded, and discuss the impact on the economy.
As the annual United Nations climate change negotiations start later this month in Doha, I will also make some observations about the state of international action.
The lived experience
Labor’s commitment to tackle climate change began in 1988. This was 18 years before John Howard proposed an emissions trading scheme in 2006. Since then the issue has been at the heart of the political debate.
The issue has been particularly dominant in the last 18 months.
Since the 2010 election, the Opposition has asked more questions in Parliament on the carbon price than on health, education, the economy, infrastructure and defence combined.
And we have seen many dire predictions made during this debate.
Before the carbon price started, industry associations, businesses, media commentators and other groups with vested interests made their predictions.
Some of these were balanced.
But many were gross exaggerations whose only motive was to stir fear.
Amongst all the hyperbole, there was a key ring-leader.
Ever since taking over the Liberal Party leadership at the end of 2009, Mr Abbott has run a relentless scare campaign on carbon pricing.
His aim has been to frighten people into voting for him, and to destabilise the Parliament to bring about an early election.
Mr Abbott’s strategy has failed. As a result the lies, deceit and base opportunism of his anti-carbon crusade have been exposed.
In the lead up to July 1, Mr Abbott told Australians it would, “swing like a wrecking ball through our economy” and cause “wholesale wealth destruction”.
Now we can assess whether he was telling the truth.
Since the carbon price started, Australia has continued to experience solid economic growth.
We are now the 12th biggest economy in the world – despite having only the 51st largest population.
Mr Abbott also went to worksites across the country and told workers that hundreds of thousands of jobs would go.
Yet in the first four months of the carbon price, more than 25,000extra jobs have been created; and our unemployment rate remains amongst the lowest of any of the advanced economies.
Mr Abbott said investment would be driven offshore.
Yet investment in Australia remains strong – with $180 billion worth of private investment expected this financial year.
Mr Abbott also warned Australians there would be “unimaginable” price increases once the carbon price came in.
Yet the September quarter CPI figures show inflation remains at an annual rate of 2 per cent, within the Reserve Bank’s target range for inflation.
Treasury modelling found the carbon price would add just 0.7 per cent to the Consumer Price Index in 2012-13.
To meet this modest price impact, the Government is providing assistance worth $10.10 on average per week to households, through tax cuts and increases to pensions and family payments.
Despite all the dire predictions, Australia is outperforming every other major advanced economy in the world – not bad for an economy supposed to have been smashed by a wrecking ball.
I have spent a large part of my working life representing working people. I have never done what Mr Abbott has done – stood in front of people and wilfully deceived them.
It is cynical and disrespectful of people.
He is and will continue to be judged very harshly by Australians for this deceit.
It is little wonder that, since carbon pricing began on July 1 this year, his polling has fallen and Labor’s has lifted.
I can assure you that the Government will fight hard every day to the election to explain and build support for our climate change policies – it is simply too important for our country, and for future generations, to cede a single millimetre of ground to a short-term political opportunist like Tony Abbott, or his media mates like Alan Jones.
Action in our businesses
So the sky didn’t fall in; our economy didn’t grind to a standstill.
But there’s more than that – we have also seen several positive developments since the carbon price was announced.
We’re starting to see a real transformation in our economy.
First, let’s look at the energy sector.
Putting a price on carbon directly benefits the least emissions-intensive forms of energy production, and makes them more competitive.
Since the carbon price came in, we’ve seen that in action.
The emissions intensity of electricity generation fell by around 8 per cent compared to 2011-12.
This trend should continue as significant investment in renewable energy is planned.
For example, there’s over 13,000MW of publicly announced wind farm projects in the National Electricity Market.
And we are not only cutting emissions in our energy sector.
There are similar developments in other industries.
In the retail sector, Woolworths committed to reduce its emissions by 40 per cent below projected levels in 2015.
The company now builds all new supermarkets to a “Green Store” level of sustainable construction guidelines.
This means using energy-efficient fans and LED lighting in display cases.
Woolworths is switching to less emissions-intensive refrigerants and using heat pumps instead of electric hot water systems.
They also use biodiesel in Woolworths-owned trucks.
The company has invested more than $66 million in energy efficiency measures since 2007 – and it expects this will deliver $111 million in savings by 2015.
In the transport sector there are similar approaches.
Virgin Australia has established a new target of sourcing at least 5 per cent of its jet fuel from sustainable aviation biofuel.
The company predicts this will save $2.2 million in costs while reducing its carbon footprint.Some companies are being assisted by the Government in this transition, with grants from the Clean Technology Investment Program which is funded from the carbon price revenue.
In the food processing sector, for example, Mackay Sugar in Queensland is installing a cogeneration plant with the help of funding from the carbon price.
The plant will not only supply clean energy to the company’s sugar mill but will also supply around a third of Mackay district’s electricity, generating additional income for the company.
Once up and running the cogeneration plant will reduce Mackay Sugar’s emissions to the point where the company is not expected to be liable for the carbon price.
This is the carbon price doing exactly what it was intended to do: stimulating investment that is improving energy efficiency and reducing carbon pollution.
In agriculture, the Carbon Farming Initiative is providing financial incentives for farmers to reduce greenhouse gas emissions on the land.
Blantyre Farm in NSW, for example, will now use pig manure to generate electricity and reduce its methane emissions at the same time.
The owners of the piggery will no longer pay $15,000 a month for electricity and gas.
Instead they will earn $5000 a month in new income from the power they sell back to the grid.
On top of this, they will also earn revenue for Carbon Farming Initiative credits.
These are just a few examples of the way businesses around the country are responding to the carbon price by investing in projects which reduce costs and reduce pollution.
But we are not just seeing a shift in businesses – households are also changing their behaviour.
Action at home
A recent report by the Climate Institute showed 70 per cent of Australians feel they have a responsibility to take action in their own daily lives.
And that’s what they are doing.
Take for example renewable energy.
A decade ago, only 1 in every 30,000 households had solar panels on their roof; now 1 in 11 households do so.
Sixty per cent of Australian households now use energy saving lights, saving consumers around $400 million each year.
And last year, 70,000 low-emission cars were sold in Australia – around one in every 10 new vehicle purchases.
We are seeing an encouraging trend of Australian businesses and households taking action to reduce their carbon footprint and, in doing so, many are finding there are financial rewards for their action.
This isn’t just a trend that’s specific to Australia; it’s a trend we see on a global scale.
That is important, because what we’re doing in Australia needs to be part of an international solution.
So I’d like to take this opportunity to outline what other countries are doing to tackle climate change and explain where I see climate change policy heading, particularly in the Asia-Pacific.
The first price on pollution was introduced in 1990 by Finland and the Netherlands. (Graph 1)
Over the past two decades more than 30 countries including the UK, France, Germany, Japan and New Zealand implemented carbon prices or emission trading schemes and Australia is now part of that group. (Graph 2)
And this momentum will continue to grow.
In 2013, South Africa will introduce a carbon tax; an ETS will start in California; and China, our largest trading partner, will start pilot emissions trading schemes covering over 2000 businesses. (Graph 3)
By next year, more than 50 national or sub-national regions are expected to have an emissions trading scheme or a carbon price, covering a combined population of 1.1 billion.
In Asia, we will see further action in the years ahead. (Graph 4)
Korea has already passed legislation for an ETS that will start in 2015 and covers 500 of the country’s biggest emitters.
Reports from Thailand show they are also looking to introduce a voluntary ETS in 2014; Chinawill move to a national emissions trading scheme after 2015 and Vietnam also intends to move towards a carbon price from 2018.
Action is expected to increase in Latin and South America too. Mexico, Chile, Brazil and Costa Rica are all considering market based approaches to reduce emissions. (Graph 5)
Back in 1990, when Finland and Netherlands first introduced a carbon tax, 20 million people lived in a place where polluters paid for their pollution.
By 2020, based on announced policies around the world, around 3 billion people will be living in a place where polluters pay for their pollution.
So much for claims that Australia is acting alone in pricing carbon.
Climate change action is now a global reality. (Graph 6 – 90 countries)
Governments around the world, of all political persuasions, have accepted the clear calculus: that delayed climate change action will have costs.
Last year, the carbon market was worth over $170 billion. Investment in the clean energy sector topped more than $250 billion and around 5 million people now work in renewable energy industries.
In Australia, we want to take advantage of these opportunities and the new investment and jobs they will create.
Paying for pollution is no longer the exception.
It’s increasingly becoming the rule as we move towards concluding the negotiations for a new legally-binding international agreement in 2015.
Countries which do not take action to prepare their economies will not only miss out on the opportunities, they will face significant economic costs for failing to act.
Doha and the Kyoto Protocol
I’d like to turn to the international arena and the approach Australia will take to the United Nations climate negotiations which start later this month in Doha.
The Australian Government’s approach to the UN international negotiations is to seek a comprehensive climate change regime based on the principles of wide global coverage and environmental effectiveness.
Last year’s UN conference in Durban achieved a major breakthrough towards this goal.
All nations agreed to start negotiations on a new agreement applicable to all countries, including the major emitters, and to finalise that agreement by 2015.
From 2020 we expect all countries – including the United States, the European Union, China, Japan, India, Indonesia and South Korea – will be part of a new agreement to reduce emissions.
This will bring all countries onto the same legal platform to reduce emissions.
In Durban, a range of developed countries also agreed to a second commitment period of the Kyoto Protocol commencing on 1 January 2013.
Although the Kyoto Protocol binds only a limited number of developed countries, it is still important in the international arena.
Without an extension of Kyoto, there would not have been agreement at Durban to launch negotiations on the new comprehensive agreement.
The Kyoto Protocol was the first global treaty to set binding obligations on countries to cut emissions.
It also created the world’s first global carbon market spanning developed and developing countries and the private sector.
The Kyoto Protocol establishes a strong set of rules and accounting procedures for emissions; and the Kyoto market mechanisms help developed countries meet their commitments and developing countries access clean technology.
The former Howard Government refused to ratify the Kyoto Protocol, a short-sighted and reactionary stance that undermined Australia’s international standing.
It was Labor that consistently pressed for the ratification of Kyoto and the introduction of credible domestic action through an emission trading scheme.
Australia’s accession to the Kyoto Protocol on 12 December 2007 was one of the first acts of the Labor Government.
And today I can announce that Australia is ready to join a second commitment period of the Kyoto Protocol.
Australia is taking this position to the UN Conference at Doha in a very clear context.
First, countries right around the world are increasingly taking real action to combat climate change.
Second, all countries are now working on the new global agreement that will be concluded by 2015, and take effect from 2020.
Let me be clear, this is not a blank cheque.
For Australia, there must be continued progress towards this new agreement by 2015, from developing and developed countries alike.
While Australia is doing our fair share, we expect the same from others.
The Kyoto Protocol is not enough on its own: it will cover less than 15 per cent of global greenhouse gas emissions and only from developed countries.
But by 2035, the historical share of emissions between OECD and non OECD countries is expected to be almost even.
So to be effective, the new 2015 agreement needs to cover all the major emissions sources.
Finalising a second commitment period of the Kyoto Protocol in Doha helps pave the way for the new agreement to be finalised in 2015.
Australia’s preparedness to join a second commitment period also relies on a continuation of the existing land sector rules and access to the Kyoto market mechanisms from 1 January 2013.
These mechanisms, and the Clean Development Mechanism in particular, will provide a reliable and cost-effective source of units for Australia’s liable entities.
So the understandings and context I have set out are important.
If these conditions are met in Doha, Australia will take on an emissions reduction target for the Kyoto Protocol’s second commitment period consistent with the bipartisan commitment to cut emissions by 5 per cent below 2000 levels by 2020.
As we’ve made clear before, the Government leaves on the table the potential to increase the target to up to 15 or 25 per cent, depending on the scale of global action.
This decision in no way constrains the role of the independent Climate Change Authority which will advise the Government on a national target by early 2014, taking into account global action to reduce emissions.
Joining a second commitment period will not affect the liabilities of companies covered under the carbon price, it will give them greater certainty of access to international carbon markets.
It will ensure Australian liable entities have access to international credits under the Clean Development Mechanism.
By signing onto Kyoto as well as linking our emissions trading scheme with the European Union, Australian liable entities will have now have access to almost all of the current global carbon market.
This will maximise the opportunity for businesses to reduce emissions at least cost.
Joining a second commitment period also provides new opportunities for our land sector and the Carbon Farming Initiative, with the inclusion of forest management activities and potential inclusion of additional sectors as well.
At the UN negotiations last year, there was a lot of interest from other countries about the legislation we had passed to put a price on carbon.
China and Korea in particular are looking to learn from Australia’s emissions trading scheme when they implement their own schemes in the coming years.
The message Australia will take to this year’s negotiations is that we have successfully implemented a carbon price.
We are taking action to reduce emissions and transform our economy.
We are playing our fair and responsible part in the international effort to tackle climate change.
Our businesses are finding innovative ways to cut emissions, cut energy consumption and increase their profits as a result.
I’m proud to have been part of the Government that, despite the challenges, has introduced and implemented this important reform in Australia.
I know that later today you will be hearing from the Coalition as to whether the carbon price is here to stay.
Tony Abbott’s ‘blood oath’ to repeal the carbon price is just more arrogant, aggressive bravado that can’t be believed. He cannot and will not repeal the carbon price.
And it’s time to put the Coalition’s policy under scrutiny – and I invite you to do so – because it’s all rubbish. It is not a serious alternative policy.
There is no alternative plan which would deliver over 750 million tonnes of emissions reductions in the period to 2020.
There is no alternative plan which will achieve emissions reductions at the lowest cost to our economy.
There is no alternative plan which fundamentally decouples growth in the economy from growth in pollution.
And, most importantly for a Labor Government, there is no alternative which is socially equitable and ensures those facing cost of living pressures are assisted.
This Labor Government has taken decisive action on greenhouse gas emissions.
This action will reduce almost 1.3 billion tonnes of domestic emissions between now and 2030 and effectively halve our net emissions per person.
We have secured a clean energy future for our industry – and when future generations of Australians look back at this period in history, they will be proud of what we achieved.