In his desire to cling to the past, John Howard was often accused of wanting to keep Australia behind the white picket fence of the 1950s. Kevin Rudd, not to be outdone, has taken this approach to new heights, tying Australia to a 19th century industrial economy for the foreseeable future while much of the rest of the world powers ahead into the 21st century.

In the kerfuffle over the Government’s decision to open the door the tiniest crack to the potential for a 25% emissions cut (the barest minimum required by science and the global community from a high polluter like Australia), most people have completely missed the fact that the Government has no intention of meeting those cuts at home in Australia. Australia’s polluting industry is doubly shielded from having to clean up its act — firstly by a direct price shield in the form of free permits and secondly by the option of buying in cheap permits from overseas to cover all of its obligations.

This should come as no surprise, given that the Prime Minister, Penny Wong, Martin Ferguson and, more recently, Greg Combet, have been at great pains to reassure everyone that they would do nothing to jeopardise the supremacy of coal in Australia. But it is worth drawing together the threads to make it clear.

It’s an old story that needs no repeating that, following Howard’s lead, the Rudd Government’s rhetoric and funding priorities lie clearly with coal over renewable energy and energy efficiency. Funding for the pipe dream of “clean coal” outstrips that for renewable energy, even though renewables cover a far broader range of technological options, many of which are far closer to commercial reality than geosequestration. Indeed, many renewable energy technologies are ready to be rolled out now, but have to make do with the scraps from the table while the Government insists that coal will remain Australia’s major power source for the foreseeable future.

Polluting industry has been left off the hook with energy efficiency by both the Howard and Rudd Governments. The Energy Efficiency Opportunities Act, introduced by Howard and supported by the ALP, requires Australia’s largest energy users to audit their energy use. I sought several times to amend the legislation to require them to actually implement the findings of those audits, but the old parties closed ranks again and again to protect the old industry from the sin of becoming more efficient. Recent analysis has shown that companies such as BHP Billiton and Bluescope could be saving many millions by implementing their energy efficiency opportunities, but inexplicably refuse to do so.

This has recently been repeated in the decision at COAG last week to exempt the big polluters from any obligation under the Renewable Energy Target. For some reason, it was decided that we will still meet our 20% target but exclude the biggest energy users from this effort, making the community at large pay for industry’s refusal to move into the future.

The Continue Polluting Regardless Scheme, of course, is carefully designed to ensure that big industry does not have to do anything. The extraordinarily and unjustifiably weak target is the first attempt to reduce the need for change. In addition, the allocation of now up to 95% free permits for the bulk of Australia’s trade exposed polluters — far more than is economically justifiable, as Professor Garnaut has repeatedly explained — means they have little incentive to change. On this week’s changed program, no-one will need to do anything before July 1 2012, as there will be unlimited $10 permits up to that date and beyond it only marginal change out to at least 2020.

Between the Green Paper and the White Paper, the Government realised that the almost complete shielding of the bulk of Australia’s industrial emissions from the price raised the spectre of a huge price impact on the community. Thus, the decision in the White Paper to explicitly scrap any limit on the purchase of permits from overseas. Now, if at any point Australia’s polluters find themselves facing a price impost greater than they think they can simply pay, all they need to do is buy in dirt cheap permits from developing countries.

This neatly avoids any short term need to transform the economy. But it is deeply short-sighted, both environmentally and economically.

It’s no surprise that many of our competitors in Europe and Asia, who have benefited for years from Australian green technologists and entrepreneurs taking their business overseas due to lack of interest at home, are salivating over this! Australia will continue the approach of exporting our green economic future, while locking ourselves into being the dirty quarry of Asia. Once our trading partners and competitors have moved on we will be unceremoniously dumped and left behind.

But of course, the only certainty of a weak approach now is that it will have to be changed down the track. The Australian people won’t stand for seeing the old parties close ranks with the old polluters against the climate and the community. As the green economy booms around the world, the Australian community will get increase loud in its demand for action here at home.

Prime Minister Rudd might think he’s onto an election winner with this political wedge. But, like most of his colleagues, he seems unable to see more than a year or three into the future. The Greens have longer vision. We can see what’s coming and we will not shirk from advocating for it and standing by our calls for moving now on the transformation to a carbon neutral economy.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey