Giles Parkinson of Climate Spectator writes:  Like Noah and his Ark, Julia Gillard has made an effort to have two of almost everything on the committee that will guide Australia’s near-term efforts on climate change, and prepare the economy for the carbon challenges of the future.

The Prime Minister herself is chairing the committee, which is important, and she will be joined by Treasurer Wayne Swan, which is also good, because this is an economy-wide issue and not just about coal-fired power stations. Gillard and Swan, of course, will be joined by climate change minister Greg Combet, because his department has got to do all the hard work and bring the legislation together.

There are two Green senators, party leader Bob Brown, who after all these years of advocacy finally gets brought into the inner sanctum on a key environmental and economic policy, and climate spokesperson Christine Milne, who will now have to make the crossover from saying the right thing to doing the right thing.

There would have been two independents, but only Tony Windsor has so far said yes. And there would have been two from the opposition, but Greg Hunt is toeing the party line of no carbon price and Malcolm Turnbull isn’t being allowed out to play.

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Then there are the advisors – two experts representing the science and the economy, in Will Steffen, the head of the ANU climate change institute, and Ross Garnaut, he of the Garnaut report – and two canny choices to represent those who will pay the cost of carbon: Patricia Faulkner, an expert in social policy, and Rod Sims, the head of the NSW pricing regulator and of advisory firm Port Jackson Partners who completed several studies on the CPRS for the Business Council of Australia.

The committee has been given a broad brief in terms of the policies it should consider, but it won’t really start from scratch: it doesn’t have the resources to do so, and a quick glance at the credentials of the committee members tells you that the committee will be heading very quickly towards an ETS rather than a carbon tax.

A carbon tax will be considered, but a decade of studies and reviews commissioned by both sides of parliament have come to the same conclusion – an ETS is a cheaper and more efficient mechanism than a carbon tax. And, as Julian Turecek explains in his piece published on Climate Spectator today, the veneer of simplicity that accompanies talk of a tax is misleading – it still requires negotiation on compensation and all the other tricky bits, such as monitoring, reporting and verification. And while it’s very good at setting a price, it’s seen as pretty hopeless at hitting an emissions target.

It would be surprising if Garnaut, having written a 600-page report in support of one, and now about to update it, would now decide that an ETS was no longer appropriate. Steffen, the scientist, would likely come down in favour of an ETS because, to a scientist, hitting an emissions reduction target is the most critical part of the equation. And if all other studies have concluded that an ETS is cheaper and more efficient than a tax, then it would be surprising if Faulkner and Sims should carry the argument the other way. They may settle on a hybrid model similar to that of Warwick McKibbin, but that is more of an ETS with a floor price, and variable targets for individual countries, than a combination of trading and tax.

The critical debate in this committee will be centred around compensation, and breadth and speed of action. That should make for some interesting debates: a carbon price is not that complicated until you have to decide where the revenues are invested.

Low income households need protection, but the views of Garnaut, who was critical of the high level of compensation for industry and power stations in the ETS, and Sims, who prepared a controversial analysis for the BCA suggesting some industries would be destroyed by the CPRS, may make a fascinating counterpoint.

The Greens, meanwhile, have already a shown a willingness to negotiate on key parameters such as targets. They are delighted to finally be “inside the tent”. The opportunity may not present itself again, they won’t want to muck it up. How galling it must be for Martin Ferguson, the Energy and Resources minister, to be excluded from these deliberations, while the party he so loves to bait form a key part of the deliberations. Perhaps he saw it coming, but was keen to make his point anyway.

As for speed, the critical factor here is to disabuse people of the idea that Australia is somehow out in front of the world on this. It’s not, and its economy is at risk because it is falling behind. This was the central theme of Marius Kloppers’ call to action, and it’s a call repeated by the likes of Jeffrey Immelt, the CEO of GE, who made a similar plea to Congress, and by the governments of France, Germany and the UK, who called on other European countries to agree to increase the EU reduction targets.

Legislation is unlikely to be presented before the second half of next year, when the Senate is more amenable. And while Gillard was suggesting there will be no carbon price before 2012, don’t expect it to be too much longer. Business needs to know, and will be saying so. Loudly.

This article first appeared on Climate Spectator.

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