Well the Government’s ETS ain’t a Ferrari, Penny Wong admitted yesterday. But that was no reason, she said, to reject this vehicle for transitioning to a low-carbon future.
Some hours earlier, the decidedly odd couple of Andrew Robb and Christine Milne arrived for a press conference to announce they were going to have a look under the bonnet, as it were, via a Senate Select Committee that will look both at broader approaches to addressing climate change issues and the Government’s “proposed approach”. This rather cut across Wong’s declaration that she’d be referring her bill — bills, and lots of them, in fact — to the Senate Economics Committee.
The Robb-Milne version is superior in that it will be run by a Coalition chair and Greens deputy chair. The Economics Committee is run by Labor’s Annette Hurley and can be expected to produce the usual Government endorsement and a slew of dissenting reports. The Select Committee will be split between four senators each from the major parties, a Green and Xenophon or Fielding.
Given their diametrically opposed views, it’s not clear how long the Coalition-Green alliance will last, but it’s a pointer to just how difficult the Government’s job will be to pass a scheme that, whatever car model it might be, has a two-stroke engine in it.
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The issue of voluntary action by households has shown a remarkable persistence in the media and Wong is right on this if on not much else to resist amending the bill to somehow make voluntary action by households “count”. Industry could make exactly the same complaint — that they could undertake the hard yakka of reducing emissions, only for households and motorists to take advantage of it by more profligate use of energy.
What’s missing from this is a realisation that Australian firms will be paying the international price for carbon permits, not a domestic price. Households will not be “subsidising” polluters through voluntary action. Firms will be able to purchase permits overseas, provided the relevant scheme is compliant with ours. In fact, it is highly likely Australian firms will import a lot of permits to enable them to keep operating at current levels. And that’s fine, as long as the international trade in permits is genuine, because it means the price will reflect the global target for carbon emissions, not Australia’s. Voluntary action simply means there’ll be slightly less demand for Australian-sourced permits.
And if households want to take direct action, they can. Buy a permit. Buy a hundred permits. Join a club and contribute to buying a million of the things. If enough people in enough countries buy permits and stick them on the shelf, it will push the international carbon price upwards, making it more expensive — up to the upper price limit in each country — for Australian and overseas firms to generate carbon emissions and encouraging them to curb their emissions, either by cutting back production (like, closing) or making it more efficient.
And while the draft legislation faithfully reflects the White Paper cave-in to polluters, it reveals a little bit about the “Australian Climate Change Regulatory Authority” which will run the ETS. A pliant, industry-friendly ACCRA would make a bad scheme worse in achieving emissions targets, but a bureaucratic, process-focussed entity more interested in managing the scheme than ensuring the scheme actually has some sort of effect would be just as bad for emissions and worse for industry. Based on the exposure draft, the Government wants a lean, mean body, with between three and five commissioners.
The bill also takes the unusual step of mentioning the role of consultants, opening the door to heavy reliance on external expertise rather than public servants. The appointment of the chair and other commissioners would be in the hands of the Minister, who would also have general direction powers over the new body. The authority would have a measure of independence — it will be separate from the Department of Climate Change — but there will still be a strong degree of political oversight.
Finding commissioners for the authority will be the easy part. Staffing it up and bedding down the systems required to oversee the scheme by early 2010 will be the hard part. The Government will be desperate to ensure that the start of the scheme — currently scheduled for 1 July, 2010 — goes smoothly, because there’ll be an election shortly after that. Don’t count on a gung-ho regulator making life difficult for businesses, at least not for the first few months.
Is this better than nothing? A bad ETS can always be improved later, but that assumes we ever get a government prepared to ignore the rentseekers and lobbyists. It probably is better than nothing, but the difference is so small as to make no difference.