Australian Prime Minister Julia Gillard's announcement yesterday that from 1 July next year big polluters will pay AUD$23 (NZ$29) for every tonne of carbon emitted into the atmosphere has, not surprisingly, garnered quite the reaction. Kiwi ands Aussie scientist generally love it, but when it comes to the biggest Aussie polluter of all—the coal industry—it's a different story altogether. Not surprising when you consider about 80 percent of the country's electricity is generated from coal.
In making the carbon tax announcement, Gillard acknowledged the debate around climate change has been circulating for quite some time. She says most Australians now agree the climate is changing and that this is largely caused by carbon pollution. And, because of the inevitable effects the changing environment has on the economy and environment, she says the Government should act. And the best way to act, she says, “is to make polluters pay by putting a price on carbon”.
“The decisions I announced today mean that around 500 big polluters will pay for every tonne of carbon pollution they put into our atmosphere,” said Gillard in a statement.
To put that into perspective, that's the equivalent of removing 45 million cars off the road.
Reuters reports Xstrata, one of the largest coal mining companies in Australia, is "disappointed at the government's lack of genuine consultation" before unveiling its plan.
When you consider that, when combined, black and brown coal account for over 80 percent of Australia’s electric power (black coal accounts for around 57 percent), you can understand why the industry isn’t at all happy.
Independent economic modelling carried out by the Australian Coal Association shows that carbon tax could prevent a number of new mines opening, resulting in a hit to the economy.
"Conservative estimates of employment losses from applying emissions pricing to potential new coalmining developments would be elimination of 25-37 percent of potential new jobs," the modelling report says.
In a statement days before Gillard unveiled the carbon tax plans, executive director of the Australian Coal Association, Ralph Hillman, warned that the tax would have a significant impact on Australian prosperity, highlighting that coal is “bigger than any other mineral and resource export and employs around 40,000 Australians directly, with another 100,000 in associated industries”.
“The Australian Government’s proposed carbon tax will close mines and coal miners and those who support the coal mining industry, such as small business suppliers, will close.
“This is not a scare campaign from the Australian Coal Association – this is about real coal miners, with real jobs and families in Australian regional communities.
“We should be leaping at the unique historical opportunity offered by the industrialisation of China and India to maximize the return on our resource endowment. The carbon tax will diminish that opportunity. Other countries will step into our shoes, reap the rewards and send the emissions skywards.”
But Gillard sees a wealth of green offshoots from the carbon tax, particularly in the field of clean tech. She says that some of the money collected from polluters will fund billions of dollars of investment in clean technologies such as solar, geothermal and wind.
“All up, the carbon price will support $100 billion worth of investment in renewables in the next 40 years,” says Gillard.
Gillard is also realistic about the flow-on effects the tax will have on the people of Australia, acknowledging that many of the big polluters will naturally try to absorb increased costs by passing some of it off to consumers, though she says this will only be "modest". In a permanent move to help offset price rises, Gillard says most of the money raised from the tax will be used to fund tax cuts, pension increases and higher family payments. Nine in ten households will receive a combination of tax cuts and payment increases.It all helps, but Gillard knows it's no silver bullet.
“Not everyone will be financially better off," she says. "There’s no money tree. The budget has to add up”
So, what does all this talk of carbon tax mean for New Zealand? For its part, the Green Party has welcomed the move, while at the same time offering a word of caution to New Zealand.
“If we continue with a weak carbon price, we’ll fall behind Australia economically as their businesses become more carbon efficient under the new scheme,” says Green Party co-leader Russel Norman.
“The support now being offered to clean technology in Australia, both in the carbon price and the $10 billion for clean energy announced today, means we risk losing some of our best and brightest clean technology companies to Australia. Instead, we’d be left with subsidised polluting industries.
“We’re already spending about $1 billion a year subsidising carbon pollution, and as the price of carbon goes up, that bill will go up too. We can’t afford to carry polluters while driving away our clean tech entrepreneurs.”
New Zealand’s Science Media Centre gathered a raft of opinions from scientists, most of which point favourable to the announcement.
Ralph Sims, Professor of Sustainable Energy at Massey University's Centre for Energy Research comments:
"This is an innovative and exciting approach to a complex problem - but taxing the bad and rewarding the good has been advocated for some time...it now makes good sense for both countries to move forward together on the climate issue. The argument by some New Zealand businesses and farmers that NZ should not be a leader in climate change mitigation is beginning to wear thin, based on the number of policies being introduced around the world, as in Australia. It is more a case of "Is NZ keeping up?"
And this from Professor Martin Manning of the Climate Change Research Institute at Victoria University:
"Australia has been one of many countries experiencing extreme weather conditions recently, but their government's establishment of carbon prices to deal with climate change is clearly based on much more than that. For several years, economic analyses of carbon prices in Australian Treasury reports have been based on world class economic models, and have consistently shown that there can be advantages for introducing carbon emission charges sooner rather than later.
"This Australian move may start to raise new issues for some aspects of trans-Tasman trade and the strong economic connections with New Zealand. An initial Australian carbon price of A$23 per tonne in 2012 will be effectively twice as high as has been set in the transition phase for the New Zealand Emissions Trading Scheme (ETS), which now requires surrendering one unit for every two emitted and is equivalent to an effective carbon price of NZ$12.50 per tonne. However, the New Zealand plan is to move away from fixed prices earlier than has now been set in Australia.
"There are reasons for considering more consistency between the carbon pricing schemes in the two countries. Both have a large fraction of total emissions in the form of agricultural methane, and reducing these is very important for stabilising climate change. Also data released by BP last month shows that both countries have had decreasing CO2 emissions for the last four to five years which is part of the growing evidence that GDP growth is not dependent on greenhouse gas emissions."
Meanwhile Dr Jim Salinger, climate scientist and honorary researcher at the University of Tasmania, also notes the relevance of Australia's spate of extreme weather conditions:
"Being resident at the University of Tasmania from January to April 2011 whilst Australian Carbon Tax has been developed there are a couple of big issues facing Australia:
"Australia is on the front line for climate change and is one of the first to be experiencing the extremes of global warming. Climate models show that Australia is the drying continent in the next few decades. Some global warming aspects were apparent over the past summer: For December 2010 the Bureau of Meteorology figures show that eastern Australia (the states of Queensland, New South Wales, Victoria and Tasmania) had its wettest December on record, with an average area total of 167 mm (132% above normal)....
"...The second issue is will the carbon tax announcements survive the political process and lobby from big business?? With Labor and Gillard way down in the polls and opposition leader Tony Abbott pledged to oppose the package in totality the polarisation in politics will deepen dramatically. And what of the mining industry?? They have mobilized unions with the mantra that this will lead to job losses, a line that Union boss Paul Howes has swallowed. This industry sector will continue lobbying as hard as possible, with the big polluters angrily predicting dire warnings of the effects on the Australian economy. Then the Murdoch owned media is also in opposition with today's editorial in The Australian concluding, 'The Government has not done enough to demonstrate how this carbon-tax plan is going to save the world or, indeed, encourage other countries to step up their efforts to tackle climate change.'
"Australia, which has the highest level of carbon emissions per capita in the world, about four times of that in New Zealand needs to dramatically reduce its carbon emissions and hopefully the carbon tax announcements will endure the political process, big industry lobbying and the criticism from the Murdoch owned media. If it does not, it will be assisting the drying of the continent and future business as usual growth of carbon emissions."
And as for the Australian scientific community, a very optimistic Professor Peter Newman, director of Curtin University's Sustainability Policy (CUSP) Institute, says:
"I think it's fantastic that we have a climate change package which includes a carbon price for the front end of the economy and a range of end user initiatives to assist with the transition for households and businesses. It's been a painful process but an historic day now that we have the package.
"Well done to the Government, the Greens and the Independents! They have been real leaders for a change. I hope Australians will recognise that this is a necessary step for us, that the world needs us to be responsible and demonstrate hope like this and that the Opposition's negativity is based on fear - which never makes good public policy."
Meanwhile Professor John Cole, director of the Australian Centre for Sustainable Business and Development at the University of Southern Queensland, is a little more cautious:
"It has more than a few rough edges and shows all the signs of the political trade-offs needed to secure a carbon price in one of the most carbon-intensive economies on the planet.
"In creating a politically defensible platform from which to lead and steer change as well as resurrect its standing with the Australian people, the Government has traded away some economic and environmental efficiency to placate the coal interest, at least in the short to intermediate term.
"That said, today's carbon package is a welcome and significant first step by Australia on the road to decarbonising its economy as the international community slowly but surely comes to grips with the human dimensions of climate change.