Price on carbon as Clean Energy Bill passes Senate: expert reactions

The Greens' Bob Brown and the Liberals' Bill Heffernan share a moment in the Senate after the passing of the Clean Energy Bill. AAP/Alan Porritt.

The Gillard Government’s Clean Energy Bill enters legislation after today passing the Senate 36 votes to 32. Voting ‘no’ were the Coalition, independent Nick Xenophon, and the Democratic Labor Party’s John Madigan.

The Clean Energy Bill will put an initial price of $23 per tonne of carbon (or equivalent greenhouse gases) emitted into the atmosphere from July next year.

The scheme has not enjoyed popular support, and Julia Gillard went to the last election vowing not to introduce it. Yet, in her post-election coalition with the Greens and independents, things changed.

Expert reactions:

Professor John Martin, Director of the Centre for Sustainable Regional Communities, La Trobe University

We have a conference next week about community power - all about community-based renewable energy projects. I’m not interested in carbon trade; I’m just trying to get on with it with regional communities in Australia to build wind-farms, put up solar parks, biodigesters, and all that kind of stuff. I’m very much focused on how you make that happen.

My general view as an ecologist trained 30 years ago who got into political science, we have to reduce our greenhouse gases and we have to take action. I work in La Trobe’s regional campuses and I focus on regional communities and I’m totally inspired by what good Australian citizens are doing out there across the country.

They’re actually doing things, and we’re seeing from our central government, our state governments, a lack of action around renewable energy. For example in Victoria they’ve put a hold on wind farms - public policy that’s an absolute nonsense - rather than negotiate with communities as they’re doing in Western Australia and New South Wales, with communities coming together to decide whether they want to have these constructions on the skyline

In one sense I’m disappointed with our whole political-administrative system. They’re not focused on action; they’re focused on, “Who pays? Not me.”

It’s just a lack of leadership in terms of dealing with the major critical issue facing the world. I don’t get caught up in it - I’d rather do the things I want done.

People get caught up in the technology; they say, “Oh they’re going to put up a wind-farm or a solar park,” and they don’t really think about their energy use. They put the cart before the horse.

What we have to do as a community is really think about how we use our energy. The low-hanging fruit is energy efficiency; turn the lights off and stop the draft - basic things that can make a huge difference. We’ve done it in our communities around Bendigo. Then you start to think, “Well, if we were to have a renewable source, what source would we use, what scale would we work at, what business model would we use, would we sell shares, would we privatise, what would we do?” There’s a myriad different ways you can do it. You engage people in a conversation about that, and then you look at the technology.

The mechanics is fairly secondary, but the thing with politicians is they want to fund something. They want to fund assets and infrastructure. The Regional Development [Victoria] fund is all about a new hall, a new library, additions to a football ground. They just don’t understand the processes that go into making sustainable communities, whether they be urban or rural. They’re not prepared to engage in a dialogue or debate with people about that and therefore we’re not actually working as a community.

Local government and democracy aren’t working because it’s centralised and secretive.

When you look at the generation of power it’s a centralised, mechanical model, so it’s not surprising that you have a bureaucracy which reflects that centralised mechanical model. When you start to have distributed systems which are different across a grid, a network approach, it’s a completely different way of thinking and our bureaucrats just close shop.

The people who are doing it are in many ways naive and nice people. They are not malicious and they’re not being malevolent. This is just the way the system of managerialism works, and I’m not surprised young Australians want to occupy Melbourne and elsewhere when they get a glimpse of this and they start to see how the system has failed them.

The carbon tax is a similar thing. It’s a centralised, old bureaucratic model of dealing with the issue of pollution. Why aren’t they having a conversation with people, and kids in schools, about how they can deal with pollution?

Chris Riedy, Research Director, Institute for Sustainable Futures, University of Technology, Sydney

It’s great that it’s finally passed. It’s been a long time coming and a lot of people in the climate action movement have worked really hard to make it happen so there’ll be a lot of people celebrating.

It’s driving towards a 5 per cent emission reduction target, so there is a small reduction in emissions coming from it and bigger than that when you consider that Australia’s emissions have been going up since 2000, so it’s going to need to turn around the direction that emissions are going in and start to bring them back down again.

And I’m still hopeful that through the international negotiations Australia might move beyond that 5 per cent target to either 15 or 20 per cent reduction-targets that were listed in the Copenhagen Accord. I would argue that the conditions for the 15 per cent target have already been met, so Australia should be thinking about moving to that target.

We saw a big boost in Australia’s negotiating power when Kevin Rudd ratified the Kyoto Protocol, and this is not quite as big as that but there will be an effect even if it’s largely a symbolic one of Australia, who used to be one of the laggards on climate action, actually legislating a scheme and committing to a process to meet a target, so that will put some pressure on the other countries that haven’t gone down that path.

Paul Burke, Research Fellow at the Crawford School of Economics & Government, Australian National University

The passing of the Government’s carbon pricing scheme is an important milestone in the process of efficiently reducing climate change risks.

Australia has an emissions reduction commitment that is part of a global effort to reduce global greenhouse gas emissions. If our goal is to meet our commitment, we may as well do it in a manner which is likely to be least-cost. There is a near consensus among economists that the least-cost means of achieving an emissions reduction target is via putting a price on carbon. With a price on carbon in place, the private sector will choose to invest and produce in ways that are likely to involve fewer greenhouse gas emissions. There is money to be made by being more carbon-efficient. With a strong and rising carbon price, our economy can keep on growing, while our emissions growth is reined in, and eventually reversed.

The purpose of carbon pricing is to see a relatively gradual change to a low-emissions economy. The most important changes will likely come about primarily via supply-side energy source switching (e.g. coal to solar), which most consumers will barely notice.

It is important to recognise the strong opposition to the move to price carbon in Australia. Much of the current discontent is likely to dissipate subsequent to what will probably be an innocuous start to the scheme in July 2012. Building a stronger and more resilient consensus that climate change risks are worth managing, and that carbon pricing is the way to do it, is important for ensuring the ongoing stability of the scheme.

Governments have to raise revenue somehow. While the money raised via pricing carbon will never be a large share of the Government’s total revenue, carbon revenue does provide the opportunity to reduce other taxes. Next financial year, almost 40 per cent of the carbon permit revenue will be used to reduce income tax. Hopefully a larger share of the revenue from the carbon price will be used to reduce existing taxes in the future. Taxes identified by the Henry Review as being highly inefficient should ideally be the first to go, although this would require collaboration with the states. No-one likes paying tax, but given the increasingly conclusive evidence of climate change risks, pricing carbon seems to be pretty sensible.

Anna Skarbek, Executive Director, ClimateWorks Australia (a non-profit collaboration hosted by Monash Sustainability Institute)

ClimateWorks welcomes the passage of this legislation. It will finally create an emissions trading scheme for Australia, making low carbon investments more attractive relative to fossil fuel alternatives and business as usual.

The policy package also offers significant complementary measures to help boost business uptake of energy efficiency and carbon farming. Our research shows that together, these programs could reduce Australia’s emissions by 133 million tonnes and take us over three-quarters of the way towards achieving the minimum 5 per cent target by 2020 - if they are implemented well. This should provide solid evidence for strengthening Australia’s 2020 pollution cap, when reviewed by the independent Climate Change Authority in two years. We will be closely monitoring progress.

Evening rush hour traffic comes to a standstill on a hazy and polluted day in Beijing, China. Fossil fuel use is the biggest source of greenhouse gas emissions. AAP/AFP/Frederic J Brown