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

The Gillard Government’s Clean Energy Bill enters legislation after today passing the Senate 36 votes to 32. Voting ‘no…

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

The following is a selection of expert opinions collected by the Australian Science Media Centre:

Professor John Quiggin, Professor of Economics, University of Queensland and currently Hinkley Professor at John Hopkins University, Baltimore, US

This is a big achievement, coming at an opportune time. With South Korea planning to follow suit, momentum towards carbon emission reductions in the Asia Pacific is starting to build. Even more significant, although it received little attention, is China’s introduction a few weeks ago of a nationwide feed-in tariff for solar PV. Although this is not the most efficient way to reduce emissions, the fact that it is being undertaken by the world’s largest emitter means that we still have a chance to reverse the growth in global emissions before it is too late.

Professor John Cole, Director of the Australian Centre for Sustainable Business and Development, University of Southern Queensland

The challenge for Australians now is to believe we can make a difference in the action we take, demonstrate that the direction we have set is worthy of adoption by other countries, and to be resolute, relentless and persuasive in making the case for global action on climate change. To that end we will be more credible because of the legislation passed in the Senate today.

Professor Patricia Vickers-Rich, Founding Director at the Monash Science Centre, Monash University

Wonderful news. It is high time that a country with folks that have so much, and pollute so much, is finally willing to be responsible for their impost on the planet. Now who is up for trying to do us one better!!??

Professor Peter Newman, John Curtin Distinguished Professor of Sustainability, Director of Curtin University Sustainable Policy Institute, Curtin University

The Clean Energy Bill passed through Parliament and the world did not collapse, the sun came up as usual – and we all look forward to putting it more to use.

Professor Snow Barlow, Professor of Horticulture and Viticulture at the Melbourne School of Land and Environment, University of Melbourne

This groundbreaking legislation is a significant achievement for the Gillard government with strong and courageous support of the independents and Greens. I am sure that Minister [Greg] Combet will demonstrate the same determination and competence that he has demonstrated in playing a leading role in the development and carriage of this policy initiative.

The passage of this legislation will provide clear direction and certainty for business and the community to plan the future of the Australian economy, contrary to much of the rhetoric that has accompanied the debate around these bills.

In the land sector this legislation will provide the essential funding mechanisms to allow land managers to implement the carbon farming measures that generate carbon credits with value and in this way finally put a price on carbon in the critical area of eco-systems services now.

Emeritus Professor Ian Lowe, Emeritus Professor of Science, Technology and Society, Griffith University, and President of the Australian Conservation Foundation

This is a very important step forward. Parliament has finally recognised what the science has been saying for decades. The other elements of the package must now be rapidly added.

Dr Roger Dargaville, Research Fellow from the School of Earth Sciences and the Melbourne Energy Institute, University of Melbourne

The passing of the Government’s carbon tax is a major step in the right direction. While the $23 a tonne initial price will have only a modest effect on both the energy generators and energy consumers, it puts the concept transition to low carbon generation and energy efficient technologies firmly in place.

The tax, combined with other levers such as feed-in tariffs and subsides, will see a shift towards wind and solar technologies, as well as towards gas from coal for traditional electricity production.

Dr Barrie Pittock, former leader of the CSIRO Climate Impacts Group, author of Climate Change: The Science, Impacts and Solutions

Passage of the Clean Energy Bill means that Australia is at last taking action that recognises the scientific fact that human emissions of greenhouse gases are causing increased global warming and that this poses serious risks to civilisation and ecosystems. Warnings of the increasing risk of human-induced climate change date back to the 19th century (Swedish chemist Svante Arrhenius, 1896), and in modern times since at least the statement of the Toronto conference in 1988 and the first IPCC reports in 1991. Some of my own work, published in 1992 and based on undeniable physics, warned of increased intensity rainfall in a warmer world, leading to more severe floods. Such warnings were ignored by investors in the Kakadu uranium mine and the huge open-cut coal mines in Queensland, many of which were flooded and closed down for months early this year due to record high rainfalls, at a cost of many millions of dollars.

Certainty is not necessary to take non-negligible risks into account. Risk management is a common place activity as instanced by insuring our houses against fire, and the engineering standards set for street drains, bridges and dams to cope with increasingly severe flood events. This is not a matter of arbitrary laws imposed by governments on people, but of taking the laws of Nature into account. So it is with climate change: investors should have and must now accept that public and private risk management is needed regarding climate change. Governments, in imposing rules, are not being arbitrary but doing their best to cope with Nature’s laws.

The Federal Government’s new laws, while not perfect, seek to do this, recognising that the market system probably provides the most economically efficient means of doing so. It is puzzling in the extreme that the Opposition seeks to “pick winners” rather than let the market decide what is most efficient. Moreover, it is inevitable that all countries will need to take measures to minimise the risks from climate change. It is advantageous for Australia to be an early adopter of low emissions technology, especially as we have huge potential resources of clean energy from the sun, wind, geothermal, waves and tides. We can help set an example and profit from experience by increasing energy efficiency and setting up large-scale renewable energy generators. Along with other early adopters such as Spain, Germany, Denmark, California and even India and China, we can encourage others to follow our example. It is a huge opportunity and will provide more jobs, not less.

Dr Peter Rayner, Australian Professorial Fellow, The University of Melbourne

An equitable share of global emissions that will stabilise CO2 concentrations is about 0.8 tonnes of carbon per person per year.

That is a cut of over 80 per cent for Australians. Today is the start of a long journey but, if past experience is any guide, starting out is the hardest part.

Professor Kevin Parton, Institute for Land, Water and Society, Charles Sturt University

Australia joins the league of carbon pricing nations. With the passage of the carbon tax legislation through the Senate, Australia has become the 33rd country to introduce a price on carbon. In addition to the 32 other fully operational schemes, Japan and Korea have an emissions trading scheme under development, as do major cities in China, and two groups of states and provinces in the United States and Canada.

With more and more countries prepared to put a price on carbon, it will enhance the general competitiveness of Australian industry to parallel our international competitors.

The tax is designed to encourage business to become more energy efficient and also look for profit potential in a clean energy world. By introducing the policy (which takes effect from July 2012), Australia can take control of its own policy agenda. Without the policy we would have been increasingly at the whim of other nations. An example of this is the planned levying of fees from Qantas from early 2012 under the EU emissions trading scheme. These are fees that Qantas could arguably avoid once the Australian scheme is operational.

It is a step forward for Australia to be able to have relatively independently its own approach to carbon pricing.

Under the Australian scheme, approximately 500 firms will face a tax of $23 per tonne of CO2 equivalent that they emit. Because some cost increases will be passed on to consumers, there will be tax cuts and pension increases to compensate individuals.

Dr Rob Roggema, Research Fellow in the Climate Change Adaptation Program of the Global Cities Research Institute, RMIT University

Glad it’s all over! With the passing of the bill through senate the carbon debate is no longer dominating the climate change debate. And this is a very important moment, but only if our minds start to focus on real, important parts of the climate debate: we need to prepare our societies for completely new environments, which will be impacted by the effects of global warming.

Rigorous carbon reductions, even if taken worldwide, will not stop global warming for the next decades and we will have to face the consequences of a warming Earth.

This warming will for Australia mean prolonged periods of drought – sometimes severe, rainfall and flooding, a rising sea level with storm surges along the coast, more severe cyclones and a higher bushfire risk. The main priority for the public and private sector needs to be to support people to be prepared for the future. Joint forces need to start making regional plans, metropolitan plans and urban designs that anticipate future change. We need robust designs that last, even if future change is not meeting current expectations.

Australia is signalling to the world that a carbon regulation is a step forward, which will stimulate innovation in the energy production sector, but we will need to start adapting to a new climate at the same time within our own boundaries.

The passing of the bill is not the end, but just the beginning.