Brendan Nelson doesn’t want Australia to commit itself to a carbon trading scheme without knowing how other nations are planning to tackle the problem. “The very real concern that all of us have as Australians is that, with Mr Rudd proposing to implement an emissions trading scheme from 2010, that he will put Australia well ahead of the rest of the pack,” he said late last week.

But even if an Australian ETS is up and running by 2010 as Kevin Rudd is promising, Australia will not lead the pack. Far from it, in fact. Dr Ian MacGill, senior lecturer in energy systems at the University of New South Wales, says Australia couldn’t lead the world on emissions trading even if it wanted to.

“The policy leadership has been taken up by the EU. In 2010, the EU will have had a scheme in place for five years.” The EU is currently negotiating the details of how stage three (to run from 2013 to around 2020) will proceed.

Next year, a regional carbon trading scheme know as REGI which focusses on electricity generators will commence in the north eastern corner of the United States. The Chicago Climate exchange has been trading emissions since 2003. Those schemes are far from alone, even in a nation still yet to ratify the Kyoto Protocol. As The Age reported recently:

… some 28 states and provinces in the US and Canada either have or are introducing emissions trading. Significantly, both Barack Obama and John McCain have supported introducing emissions trading.

Japan is designing an emissions trading system to come into effect after Kyoto expires in 2012, but it will only be one aspect of that nation’s approach to tackling greenhouse gases. In May, Environment Minister Ichiro Kamoshita revealed that the Japanese government might adopt “additional regulatory measures, like environmental taxes” to accompany a trading scheme.

Closer to home, the New South Wales Greenhouse Gas Abatement Scheme begun on 1 January 2003 and as its website claims, it was “one of the first mandatory greenhouse gas emissions trading schemes in the world.” In September last year, New Zealand unveiled details of an emissions trading scheme which is “economy wide and includes all sectors and all greenhouse gases”.

But emissions trading also comes with traps for the unwary, according to Ian MacGill.

“Having an emissions trading scheme does not in itself demonstrate progress on climate change policy,” he told Crikey.

“One of the great dangers of emissions trading is that it allows for weak governance and an inability to make progress on the hard decisions. And if you can’t get a good emissions trading scheme into place, then a carbon tax or other approaches might come into the equation. With an ETS people might make the case that they don’t need those other policies.”

There is one final factor which should allay any fears Brendan Nelson has about Australia leading the global pack with its emissions trading scheme.

In terms of energy-related emissions, “Australia’s emissions have continued to climb and very fast under the current policies,” MacGill told Crikey.

“Our first job is to catch up. Then we can start talking about leadership.”

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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