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Gillard, Greens unveil fixed carbon price

The government and the Greens today unveiled the first concrete result from the cross-party “Climate Change Committee” process established following the 2010 election, a commitment to start carbon pricing via a fixed carbon price.

The agreement announced this morning proposes a process involving:

  • a carbon pricing scheme to start on July 1, 2012, based on an emissions trading scheme with a fixed price (as yet undecided) for permits;
  • an initial fixed carbon permit price for 3-5 years — possibly out to 2017;
  • fixed price period to be followed by a transition to a flexible price-based scheme with a price linked to international markets and a 2020 carbon reduction target;
  • the length of initial period to be established in coming months;
  • scheme “hard-wired” to move to a flexible price system but with a review of transition to cap-and-trade a year out from commencement, with the possibility the transition may be delayed depending on the outcome of the review;
  • agriculture omitted from the scheme; it will cover the stationary energy sector, transport sector, the industrial processes sector, fugitive emissions (other than from decommissioned coal mines) and emissions from non-legacy waste. Climate Change Minister Greg Combet noted that a phased approach may be adopted in relation to different sectors;
  • compensation yet to be determined but “the overall package should take appropriate account of impacts on the competitiveness of all Australian industries, and the principle of energy security recognised that the introduction of the carbon price should be accompanied by measures that are necessary for maintaining energy security.”

The framework has been agreed between the government and the Greens but other members of the Climate Change Committee, Rob Oakeshott and Tony Windsor, have only agreed to the release of framework to enable consultation.

This first, heavily caveated and detail-light announcement of a carbon price commitment reflects Labor’s decision late last year to abandon its pre-election recalcitrance on carbon pricing and participate in a process proposed by the Greens to break the Parliamentary deadlock on passing a carbon pricing scheme to start by  July 1, 2012, legislated after the Greens take the balance of power in the Senate on July 1. It represents a win for the Greens, who proposed an initial fixed price followed by a cap-and-trade scheme in 2010, and received the backing of Professor Ross Garnaut in doing so.

It also reflects a shift in thinking not merely within official circles but more widely that a fixed-price/carbon tax-type approach may be a simpler and more workable carbon abatement mechanism than a more complex cap-and-trade scheme until there is a robust international agreement for carbon trading. The Rudd government’s refusal to explain its Carbon Pollution Reduction Scheme and sell the case for climate change action set the scene for a political shift against Labor on the issue, climaxing in the Rudd government abandoning the CPRS in May last year.

Windsor insisted he was not yet committed to the proposal, saying today’s announcement was only “the start” of further discussions.

114
  • 1
    Peter Phelps
    Posted Thursday, 24 February 2011 at 1:18 pm | Permalink

    LOL. Gillard must really hate Keneally.

  • 2
    MLF
    Posted Thursday, 24 February 2011 at 1:23 pm | Permalink

    Kudos to Bob.

  • 3
    Dr Strangelove
    Posted Thursday, 24 February 2011 at 1:24 pm | Permalink

    Applies to transport sector as well. Interesting - can already hear Abbott’s Army squealing about petrol prices now. zzz.

    A momentous day. Hooray!

  • 4
    Astro
    Posted Thursday, 24 February 2011 at 1:27 pm | Permalink

    Here we go again another Labor tax that will make Australia uncompetitive on global markets

  • 5
    Jim Reiher
    Posted Thursday, 24 February 2011 at 1:32 pm | Permalink

    Something very positive out of the minority government! If this does actually get through, then it will be a good encouragment that such a form of government can actually get things done. And things that just would not have been done if Labor or Liberal alone were ruling.

  • 6
    S
    Posted Thursday, 24 February 2011 at 1:34 pm | Permalink

    What happens if there is a big bushfire? Does carbon emission become more expensive?

  • 7
    Roger Clifton
    Posted Thursday, 24 February 2011 at 1:36 pm | Permalink

    It also needs a leakage clause: that imports pay carbon tax and exports get a rebate.

  • 8
    paddy
    Posted Thursday, 24 February 2011 at 1:38 pm | Permalink

    Let’s just hope, that in years to come, this morning’s press conference proves to be as important as it felt while watching it. The fact that the govt has finally *begun* to grasp the nettle of CC, is a bloody good start. Meanwhile, it will ensure a lively question time in parliament today. :-)

  • 9
    Astro
    Posted Thursday, 24 February 2011 at 1:43 pm | Permalink

    Bob Brown is PM of Australia, and Gillard knows it.

  • 10
    Jim Reiher
    Posted Thursday, 24 February 2011 at 1:47 pm | Permalink

    Astro: there are some of us who actually wish it were true!

  • 11
    Frank Campbell
    Posted Thursday, 24 February 2011 at 1:50 pm | Permalink

    Mr Keane omits the intellectual banalities contained in Gillard’s statement today. He seeks to spare Crikey readers bouts of nausea, but I have no such qualms.

    Gillard justified her carbon tax thus: the pioneering countries of the industrial revolution jumped straight in. They seized the day. Billionaire Bill Gates didn’t say “I’ll wait 15 years and see if this computer thing takes off”- he seized the garage.

    Dishonest as well as banal. Seeking to rationalise a damaging, pointless tax with specious analogies. Get in on the ground floor, she says. But the lift’s going down, not up.

  • 12
    Jimmy
    Posted Thursday, 24 February 2011 at 2:04 pm | Permalink

    Astro - “another Labor tax that will make Australia uncompetitive on global markets” what are the others?

    Bob Brown is PM of Australia, and Gillard knows it.” - when the Greens will hold the balance of power in the senate and a crucial vote in the lower house it makes perfect sense that the ALP negotiate with the Greens otherwise nothing would get done.

    Jim Reiher - “Something very positive out of the minority government!” - to me the minority govt seems to be working pretty well so far, Gillard is being pragmatic and the minor parties are being realisitc with their requests. By the end of the year the govt will have been able to get this through, plus the MRRT (which will probably be beefed up a bit by the greens) plus the flood levy and be well ahead in the polls as Abbott’s oppose everything approach will become irrelevant.

  • 13
    Hogarth
    Posted Thursday, 24 February 2011 at 2:06 pm | Permalink

    I love this bit…. “agriculture omitted from the scheme”.

    The only sector that actively sinks carbon, gets exempted so they cannot paid for the carbon they store.

    Wankers.

  • 14
    Apathy
    Posted Thursday, 24 February 2011 at 2:07 pm | Permalink

    Astro – can you please provide details of previous Labor (or Liberal for that matter) taxes that has made us uncompetitive in world markets. From where I stand, Australia seems to be competing on world markets quite nicely. It is not a personal attack, just wanting you to back up that statement with hard evidence. So many times in the past, vested interest groups have destroyed any meaningful debate we had with blanket statements of “Makes us uncompetitive” “Cost Jobs” “Bad for the Economy” etc. They said it about the FBT, CGT, tariff reduction, Native Title, Waterfront Reform, GST, even Gun Control was allegedly going to cost Australia export dollars. As history has shown, none of their dooms day predictions have come true. I’m happy to be convinced if you can back it up with independently verifiable data, not just political rhetoric.

  • 15
    Astro
    Posted Thursday, 24 February 2011 at 2:10 pm | Permalink

    One person stood for a Carbon Tax in the House of Reps at the 2010 election and was elected. Gillard the day before election, said she would not introduce a carbon tax. Either Gillard was not telling the truth or other forces are at play.

  • 16
    Barry 09
    Posted Thursday, 24 February 2011 at 2:16 pm | Permalink

    Apathy , you want Astro to back up that statement with FACTS ???? Astro don’t do facts. Just look at when he was a “Telstra Worker ” and bagged the NBN with his “Liberal Talking points “
    Hogarth - GO back and read the article , they are removed from PAYING the Carbon Price , BUT will be able to make money from this and their land.

  • 17
    Jimmy
    Posted Thursday, 24 February 2011 at 2:19 pm | Permalink

    Hogarth - “The only sector that actively sinks carbon” While agriculture has the ability to sink carbon (the success of which is still being debated) it would require a shift from current farming practices and belching from cows and sheep is a massive source of emmissions, I don’t think you will see to many farmers complaining about the exemption.

    Astro - “Either Gillard was not telling the truth or other forces are at play.” - Not sure if you have noticed but the ALP does not have a majority in either house, so Gillard can either keep her word that there will be no carbon tax and achieve nothing or keep her word that there will be action on climate change and achieve something. I think it will only be the climate change deniers who will be upset with the current path.

  • 18
    Astro
    Posted Thursday, 24 February 2011 at 2:19 pm | Permalink

    Hi Barry09

    Its is facts mate, turn on ABC1 and hear it for yourself. She ruled out a Carbon Tax on August 20, 2010

  • 19
    Barry 09
    Posted Thursday, 24 February 2011 at 2:20 pm | Permalink

    Go the Julie and Bob show.

  • 20
    Jimmy
    Posted Thursday, 24 February 2011 at 2:21 pm | Permalink

    Astro - We are asking for facts on the other economy crippling taxes you referred to not Gillards promise!!

  • 21
    Hogarth
    Posted Thursday, 24 February 2011 at 2:28 pm | Permalink

    @Jimmy.

    ” While agriculture has the ability to sink carbon (the success of which is still being debated) “

    There is no debate. Pastures and cereal crops sink huge amounts of carbon. A modern rye grass can grow 1 mile of roots in 24 hours during peak growing periods.

    Most horticulturists and crop farmers in Australia are moving to a “terra preta” model for soil composition.

    I can see the ALP’s logic in removing it, no one gets a carrot… just big sticks to the back of the head.

  • 22
    Captain Planet
    Posted Thursday, 24 February 2011 at 2:29 pm | Permalink

    The most important news story of 2011, and possibly this century.

    Astro, Bob Brown isn’t PM of Australia yet, but there is still a chance that he, or his Greens successor, one day will be. The sooner the better.

    Roger Clifton, very good point.

  • 23
    Astro
    Posted Thursday, 24 February 2011 at 2:30 pm | Permalink

    Jimmy,

    The Mining Tax - a wildcat tax to fix a budget hole - causing uncertainly regarding Australia and our stability and certainty.

    The Flood Tax - using a National disaster to grab more tax, when we should have been funding reconstuction from other savings and means. They was no Cyclone tax.

    The Gun Buyback tax and others like it on both sides also fall into the same category.

    There is too much waste in Australia. State Governments are a waste as well.

  • 24
    Barry 09
    Posted Thursday, 24 February 2011 at 2:35 pm | Permalink

    Astro , how come you didn’t whine about Howard’s GREAT BIG TAX the GST or the 6 levies he slugged us with ?? Remember the -Gun Levy
    Stevedoring Levy
    East Timor Levy
    Milk Levy (11 cents a litre )
    Sugar Levy (3 cents a kilo )
    Ansett Levy
    and the Bail out of Howard’s Brother’s company levy.
    Astro , BOB has spoken. We will catch up to the rest of the world some day .

  • 25
    Dr Strangelove
    Posted Thursday, 24 February 2011 at 2:36 pm | Permalink

    @S

    Bushfires would only be included if LULUCF were included in the accounting framework, which at this stage it is not.

    That whole area of emissions reductions/expansions is pretty hard to accurately determine and very easy to fudge the numbers - hence Howard wanting to include it in the kyoto protocol… Australia met its targets when Beattie pulled out of land clearing: VOILA!

  • 26
    Jimmy
    Posted Thursday, 24 February 2011 at 2:43 pm | Permalink

    Hogarth - “Most horticulturists and crop farmers in Australia are moving to a “terra preta” model for soil composition.
    I can see the ALP’s logic in removing it, no one gets a carrot… just big sticks to the back of the head.” As I said it will require a change in current farming practises and as Barry 09 said they will be able to get the carrot they just don’t get the stick.

    Astro - The Flood tax raising $1.8b in a $1 trillion economy for one year only and aimed largley at the wealthy is going to make us uncompetitive?! Every economist I have heard has said it will make almost no difference do you have some evidence to back you up or are we just to take your word?
    The mining tax - this will have very little impact on investment in the miinng industry and will fund a tax reduction for other companies and provide funds for infrastructure spending are you sure this will make us uncompetitive or are you just going on what Tony said!!

    The Gun buyback - so now a howard govt tax is a Labor tax or did you just run out of examples

  • 27
    Captain Planet
    Posted Thursday, 24 February 2011 at 2:47 pm | Permalink

    The omission of Agriculture from the scheme is a huge mistake, and Australia’s primary producers and rural towns are going to miss out on very significant investment and job creation as a result. There is an opportunity to revitalise many of our declining rural areas, going begging.

  • 28
    Kevin Herbert
    Posted Thursday, 24 February 2011 at 2:53 pm | Permalink

    flip flop flip flop…the sound of Labor climate change policy developments.

    Who can believe anything these incompetent bastards decide.

  • 29
    Scott
    Posted Thursday, 24 February 2011 at 2:54 pm | Permalink

    Look, its only the release of a mission statement at this stage but still nice to get something off the ground that isn’t too adverse to any of the stakeholders.
    The devil will be in the detail as it always is, and this statement is as vanilla as it can be. I’m just glad that there are some pro-business and pro-investment principles in there however and just hope that the Government/Greens don’t over reach in their pricing of carbon and/or industry subsidies.

  • 30
    Jimmy
    Posted Thursday, 24 February 2011 at 2:55 pm | Permalink

    Captian Planet - Here is an extract from the agreement

    Another important matter to be determined is how to maintain and enhance the carbon carrying capacity of the landscape, which would have important sustainability and biodiversity conservation co-benefits. Land use and water issues are also important. Options
    to provide economic value to activities which store or reduce carbon in the land sector could potentially include the use of Kyoto-compliant credits in the carbon price mechanism or alternative funding arrangements for the land sector.”

    Unless I am reading this wrong to me it seems to say that agricultural activities that store or reduce Carbon probably will get some economic value.

  • 31
    Liz45
    Posted Thursday, 24 February 2011 at 3:24 pm | Permalink

    @ASTRO - I have a SMH article prior to the ‘98?Election, where are 16 months Costello answered a question from Simon Crean re Costello’s pledge to know introduce any new taxes or increase charges etc. There was a total of (from memory) 30. Some were new taxes, others were increases in charges already in place. Where were you then? Howard was the biggest ‘taxer’ ever!

    Very selective in your opposition to taxes aren’t you? BHP Billiton has just announced, what $5 Billion in profits and that’s just for 6 months? Why shouldn’t they pay a super tax on their super profits? If workers get a pay increase, they pay more tax? Why shouldn’t the billionaires pay more on huge profits of OUR resources? They cried poor, bellyached and belched over it - spent millions on a lying crusade, and Gillard ‘took to the hills’?

  • 32
    jimD
    Posted Thursday, 24 February 2011 at 3:24 pm | Permalink

    @Hogarth;

    The reason agriculture is omitted from the scheme is that many farmers would pay very significant amounts for their carbon emissions, before any method for compensating those who are effectively sequestering carbon exists. Including agriculture in the scheme under these circumstances would have been a political nightmare. I suggest that if farmers see your proposal to include them now, they might ask you quite impolitely to refrain from helping, right now.

  • 33
    Jimmy
    Posted Thursday, 24 February 2011 at 3:29 pm | Permalink

    Jimd - there is also the question of measurement and also reporting for farmers.

  • 34
    Apathy
    Posted Thursday, 24 February 2011 at 3:39 pm | Permalink

    Astro - your comments are in the same genre as political rhetoric. You haven’t addressed the question with any numbers and the data.

  • 35
    Hogarth
    Posted Thursday, 24 February 2011 at 3:44 pm | Permalink

    @JIMD.

    I don’t buy your premise. You start out with the fact the government will tax them for emissions first. A government bureaucrat may think like that, but it does not have to be that way.

    There is plenty of data already available on the various capacity of crops and soils to sequester carbon.

    Organic, low input and tree farmers would cheer, high input farmers (the NPK mob) and high density feed lots would cop most of it.

    Most farmers have only 2 heavy carbon inputs. Fuel and Fertiliser.

    If I remember correctly, during the Koyto protocol meetings, there was a big argument over the carbon capacity of the Nullabor plain. It has since been shown to be a huge sink.

  • 36
    Astro
    Posted Thursday, 24 February 2011 at 3:46 pm | Permalink

    @ Hogarth

    Cattle produce huge methane emissions as do elephants etc.

  • 37
    Jimmy
    Posted Thursday, 24 February 2011 at 3:56 pm | Permalink

    Hogarth - Firstly I’ll point out again that under this agreement farmers will get access to the benefits just not pay for emmissions so it is a win win.

    Secondly - “Organic, low input and tree farmers would cheer” What is the percentage of Organic farmers currently, pretty low, tree farmers have all gone broke since the industry was largely supported by unrealisitic tax incentives and I would need a better definition of low input before I could comment on that.

    Thirdly - Fuel and Fertiliser are the two major carbon inputs but they are massive expenses for farmers, especially crops so just because there aren’t many in number doesn’t diminsh their impact, plus you are excluding the production of methane.

    Finally soils only sequester carbon if they remain untilled and your assertion earlier that “Most horticulturists and crop farmers in Australia are moving to a “terra preta” model for soil composition” doesn’t mesh with my experience in dealing with them daily in both a professional and personal capacity but if you have some evidence I would be happy to see it.

  • 38
    Hogarth
    Posted Thursday, 24 February 2011 at 3:56 pm | Permalink

    @Astro.

    The Queensland DPI recently released a report showing that beef farming in Queensland is almost carbon neutral.

    With a bit of selective breeding and better pasture management, zero is not far away.

    Even the “hardcore” can see that agriculture has a bright future in a carbon taxed world.
    http://www.greenleft.org.au/node/41760

    My next door neighbor is an organic farmer of 30 years and his reaction was this:

    If farmers cannot make money from a carbon tax, then we are all screwed.”

  • 39
    Liz45
    Posted Thursday, 24 February 2011 at 3:59 pm | Permalink

    @ASTRO - On this I agree with you. A steak is an inefficient way to get protein, as is a lamb chop etc in many ways, some of which are the cost to the environment. I eat very little of it myself. I heard on ABC Country Hour(NSW) that there’s investigations being conducted as we speak to try and gauge what is causing flatulence in cattle; that is, what sort of food and how much are they eating. This may lead to ways in which it can be reduced - the same would be done to sheep. (I’d also like to know how much of the antibiotics given end up in the meat? Could be a contributory reason as to why so many antibiotics aren’t working any more?) I know this has nothing to do with emissions, just interested. Also, are animals given growth hormones that could lead to people being overweight or obese?(I recall at least one documentary in yrs past, about boys in Brazil growing ‘breasts’ due to hormones in chickens.)

    The website is ABC Rural I believe!

  • 40
    Hogarth
    Posted Thursday, 24 February 2011 at 4:07 pm | Permalink

    @Jimmy

    Sorry about the lingo…

    Tree farmers = Non cash crops (multiple reproduction cycles). e.g grapes, fruit, nuts etc…

    Definitely not forestry. Most of them just create monolithic environments and fire material.

    low input” = Not quite organic yet. Manure as fertiliser and permiculture metholodiges such as competition based pest management. (Wasps etc…)

    Finally soils only sequester carbon if they remain untilled”
    That is not correct. Untilled soils collect “more” which does not mean that tilled soil does not sequester carbon.

    Tillaging depths have dropped dramatically in the past 20 years, leaving a substantial part of the root structure in the ground.

    but if you have some evidence I would be happy to see it.”
    Only anecdotal I am afraid….
    The Northern Rivers (NSW) has seen a huge shift towards low input farming. The demand for chook poo is enormous and the volume of herbicides has dropped as farmers realise the benefit of having constant ground cover.

  • 41
    denise allen
    Posted Thursday, 24 February 2011 at 4:20 pm | Permalink

    Hey Astro..your mate Johnny Howard ruled out a GST too….remember the never, ever, ever GST??? You guys have such short memories or is it just ok when your side do it?

  • 42
    Hogarth
    Posted Thursday, 24 February 2011 at 4:21 pm | Permalink

    @Denis

    Johnny took it to an election. Will Julia & Wayne?

  • 43
    denise allen
    Posted Thursday, 24 February 2011 at 4:23 pm | Permalink

    So Kevin Herbert - would you rather be paying a GREAT BIG NEW TAX that will be imposed on all working people in Australia for years to come just to give wealthy women a huge maternity leave pay??? That’s Abbotts idea…I think it is far better idea to save the planet…

  • 44
    Cuppa
    Posted Thursday, 24 February 2011 at 4:24 pm | Permalink

    Thanks for informative, unbiased coverage, Crikey.

    This is why people keep coming back to Crikey.

    Your balanced journalism is in contrast to the ABC’s partial, tabloid style:

    Carbon tax will inspire people’s revolt: Abbott
    http://www.abc.net.au/news/stories/2011/02/24/3147898.htm?section=justin

  • 45
    denise allen
    Posted Thursday, 24 February 2011 at 4:26 pm | Permalink

    Hogarth - he had stilled ruled it out and changed his mind…besides the voters were only concerned about rallying behind Howard’s xenophobic rhetoric to notice that the GST was going to be a definite…and when they realised it was too late…

  • 46
    denise allen
    Posted Thursday, 24 February 2011 at 4:28 pm | Permalink

    That said…both sides of Govt need to embrace a Natural Fibre Industry that will revive our ailing manufacturing industry and give farmers another alternative…thousands of jobs would be created if both sides would be game enough to stand up to Monsanto…

  • 47
    Jimmy
    Posted Thursday, 24 February 2011 at 4:30 pm | Permalink

    Hogarth & Astro - Gillard went to the last election saying she would introduce a price on carbon, yes she did say that she wouldn’t have a carbon tax but a price on carbon none the less.

    To the end consumer, ie the voter, what is the difference between a ETS generated carbon price and a carbon tax generated carbon price, bugger all.

    So as I said earlier ““Either Gillard was not telling the truth or other forces are at play.” - Not sure if you have noticed but the ALP does not have a majority in either house, so Gillard can either keep her word that there will be no carbon tax and achieve nothing or keep her word that there will be action on climate change and achieve something. I think it will only be the climate change deniers who will be upset with the current path.”

  • 48
    Astro
    Posted Thursday, 24 February 2011 at 4:32 pm | Permalink

    @denise

    I am no fan of ANY politician that lies and does not keep promises. Further, I am against all State Governments they are unnecessary and a bloody waste of money and counter productive and do not help Australia’s competitiveness.

  • 49
    Hogarth
    Posted Thursday, 24 February 2011 at 4:39 pm | Permalink

    @Jimmy

    I remember the subtle difference in her utterance. I suspect a majority of Australian’s missed it.

    Judging by a lot of comments on MSM website feedback, this appears to be the case.

    All they heard was “no carbon tax”.

  • 50
    Astro
    Posted Thursday, 24 February 2011 at 4:45 pm | Permalink

    @ Hogarth

    Windsor and Oakshott both know they if they cross the floor and back the Coalition on substantial issues, Gillard will go to the GG and call a snap election, probably before Abbott can go to GG and say he has a majority.

    Oakeshott will loose his seat (guaranteed) and Windsor may as well. Gillard may be returned or may not. Therefore most of the independants are treading a fine line and Gillard jumps to what they and Bob Brown want.

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