Aug 28, 2012

Euro vision: Australia’s new carbon regime explained

Australia has hitched itself to Europe's climate change wagon yesterday in a move which will have far-reaching -- and uncertain -- consequences for the domestic carbon scheme.

Cathy Alexander — Freelance journalist and PhD candidate in politics at the University of Melbourne

Cathy Alexander

Freelance journalist and PhD candidate in politics at the University of Melbourne

Australia has hitched itself to Europe’s climate change wagon in a move that will have far-reaching — and uncertain — consequences for the domestic carbon scheme.

Yesterday’s decision to link Australia’s carbon scheme with Europe’s (and dump the floor price on permits) is a game-changer. Until then we were the southern hemisphere’s mouse that roared on climate change. Now we’ll effectively be part of a large, entrenched and relatively stable carbon price mechanism, which covers half a billion people.

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29 thoughts on “Euro vision: Australia’s new carbon regime explained

  1. Patriot

    Uh, there will be no floor price on the ETS under the government I lead.

  2. Frank Campbell

    You’d never know from reading this confused apologia that the floor price was rock solid govt. policy only a few days ago.

    From Alexander’s disingenuous prognostications you’d never know that the carbon tax is now superfluous. It was a unilateral tax eviscerated by a comical carousel of “compensations” and carte blanche for big “polluters” (94% of emissions gratis). At $23, it was big enough to cause modest economic damage but not big enough to have any significant effect on the current global fossil fuel bonanza- of which Australia is the chief beneficiary.

    The $23 tax (later $25, $27) is now undisguised self-harm.

    Given the decline in climate millenarianism, belated realisation that most ‘climate’ policies are ineffective and/or rorts, not to mention Europe’s parlous economic condition, you can be sure that the “carbon price” (in fact a misnomer as the “market” is artificial) will sink. At the current $7 to $9 range, it is meaningless anyway.

    It’s fascinating to watch propagandists like Alexander and Jackson instantly find that Combet’s backflip is really good policy after all.
    The gymnastics will continue tomorrow.

  3. Andybob

    This is a great decision environmentally, economically and politically (exhibit A in that regard being the post above me). My daughter is in Germany for a year and amazed at the extent to which household solar is used compared to here. She tells me Germans keep talking to her about how solar must be so good in Australia; she changes the topic of the conversation.

  4. Frank Campbell

    Andybob: have you any idea how many scores of billions it cost to put PV panels on German roofs? And who paid this exorbitant amount? Who subsidised whom?

    And for what? 3% of total power production.

    It’s a moralistic gesture, signifying fossil fuel expansion.

  5. Scott

    This is a victory for common sense. Carbon floor was always bad economics and would have just created arbitrage opportunities for finance companies.
    The Europeans, with their larger scheme will always be the price setter of carbon due to the increased liquidity in their market. It was pure arrogance from the greens and labor to believe that we could determine the lowest price for emitting carbon dioxide, which is effectively what the price floor did.
    If we are going to have an emissions trading scheme, let’s have one that is the most efficient and provides the lowest costs for business.
    However it is still naive to believe that Abbott couldn’t decommission the scheme. In fact, it will be easier now that it is linked to the European scheme…business will have a market to sell their prepaid emissions rights when abbot says that it will no longer be accepted in austalia. He won’t be guilty of taking property away if the Europeans can buy them.

  6. Apollo


    Germany started solar program in early days when it was still expensive and less efficient.

    But today, on some hot summer days solar is able to provide more than 50% of the energy needed during the day. Their total of all renewable energies supply around 20%. Some though are against abandoning nuclear programs because they are afraid enegy cost will go up.

    My cousins in Munich don’t understand why Australians are so resistant to renewable energy.

  7. Suzanne Blake

    No wonder there is NO BUSINESS CONFIDENCE under Labor.

    Last week incompetent Combet and ly ing Gillard said the floor price would stay and nothing would change.

    This week, the floor is gone and the price will swing in the breeze.

    Meanwhile we pay the World’s largest carbon tax.

    Combet just admitted its a FAILURE

    what happens to the compo in 2015, that is based on a $29 price!!!

    absolute clowns.

    Their internal polling must be UGLY

  8. Patriot

    Certainty for business the Labor way:

    No carbon tax, yes carbon tax.
    Yes floor price, no floor price.
    Yes pokie reform, no pokie reform.
    Yes branding on cigarettes, no branding on cigarettes.
    Yes live export, no live export, yes live export.
    Yes insulation subsidies, no insulation subsidies.
    Super Profit Tax, iron and coal Mineral Resource Rent Tax.
    Big Australia, Small Australia.
    Fake Julia, Real Julia.

  9. Steve777

    Good evening Suzanne. I see that you have once again chosen again to grace us lefty heathens with your pearls of wisdom. To address the points that you raise:
    – No business confidence? When Australia has billions in investments in the pipeline and inflation, debt and growth are the envy of the developed world? Interest rates at 50 year lows? AAA Credit rating? In spite of the Coalition’s attempts to ‘jawbone the economy down, we’re travelling pretty well. Of course I’m sure that business would prefer a larger pool of unemployed, but hey, you can’t have everything.
    – Floor price replaced by market value. Isn’t that what business preferred? The decision was made following feedback from affected businesses. Mr Combet made a pragmatic decision to improve the workability of the system, just as, for example, John Howard adjusted the GST in the months following its implementation
    – World’s highest carbon price? No – check Google.
    – In 2015 and beyond, carbon credits can be bought and sold on the market.
    – Talking of clowns, how about Tony Abbott’s recent performances, exposing him as either ig nor ant or economical with the t r uth?

  10. Steve777

    Good evening Patriot. I see that you have changed your avatar from a warrior (Cossack?) to a so ber, suited man at a lectern, no doubt saying something important.

    To address your points:
    – Carbon pricing – the right policy, Labor erred in dropping it after the Coalition reneged on their deal in December 2009. Julia (wrongly in my view) fully intended to defer carbon pricing, but the hung parliament meant compromises were necessary. That’s how parliament works.
    – Floor price – see my previous post
    – Pokie reform – blocked by the Coalition
    – Branding on cigarettes? What’s your point? This is an excellent initiative, with bipartisan support, to further impede the marketing of addictive toxins to chil dren by Big Tobacco.
    – Live exports – OK, a bit of a dog’s breakfast. But cruelty to animals (or people) is utterly unacceptable.
    – Insulation subsidies – could have been handled better.
    – Super profits tax – a great idea to share the proceeds of the mining boom between the owners of the stuff in the ground (Australians, current and unborn) and those with the wherewithal to dig it up and sell it.
    – Big Australia – we’ll see. No one has a long term population policy. Without immigration, Australia’s population would drift up another couple of million then decline like Japan – not a good outcome.
    – Fake Julia, real Julia – I like the one who gave the press conference the other day. She’s a tough lady, she’s had to take a lot of crp and she’s maintained grace and dignity under pressure. Someone I’d want on my side.

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