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Climate Change is about more than the mechanism

After a year of rushing headlong into an ill-thought out emissions trading scheme, the global financial meltdown has given Australia pause for thought in how we deal with the climate meltdown.

Thus far, however, we are still having the wrong debate. With crunch time on the emissions trading legislation fast approaching, we are bickering over the right mechanism to use when, fundamentally, our entire attitude must change.

Think of it on a personal level. The contestants on Australia's Biggest Loser aren't going to win the competition and get healthy lives back by setting themselves a meagre weight loss target and then arguing between Atkins and Weight Watchers to achieve it. They will only succeed if they make a determined commitment to themselves to rebuild a healthy body, changing their whole attitude and lifestyle to achieve that vital and realistic goal.

Instead of fighting over how little we can get away with cutting our emissions, we need to commit to doing whatever it takes to deliver a safe climate to our children. Instead of asking whether taxing or trading carbon is better for achieving incremental emissions cuts, we need to get moving fast on total decarbonisation of the economy. Until we accept that challenge, the policy debate is largely a distraction. Once we change our attitude, either mechanism can succeed.

The carbon tax versus emissions trading argument is a hoary old chestnut that divides experts and non-experts the world over. Both sides have strong arguments in their favour and both have their
drawbacks. The Australian Greens tend to support emissions trading because trading guarantees a particular environmental outcome and lets the market decide the price, whereas a tax sets the price and lets the market decide the environmental outcome. Given that Lord Stern warned us three years ago that climate change is the world's biggest market failure, we would rather be guided by a definite climate outcome than by the whims of the market.

Critics of emissions trading point to the mess the Rudd Government has made of its proposed Carbon Pollution Reduction Scheme and argue that a carbon tax would be simpler and therefore preferable, even if it does not guarantee a specific carbon reduction and therefore climate outcome.

But the view that a tax is inherently simple can only be held by those who have not been paying attention to what the Rudd Government has been doing. At the urging of the big polluters, Ministers Wong and Ferguson have bravely created complexities where no-one could have imagined it possible, with the latest example being the ridiculously complicated arrangements now being discussed for trade exposed polluters to qualify for compensation.

If the Government has made such a mess of emissions trading, what guarantee is there that they would not do the same with a carbon tax? The moment the choice of a carbon tax is taken, you can bet that the big polluters would be walking corridors and knocking on doors making sure it is as weak and full of loopholes as possible. There is every chance that the inherent simplicity of a tax would be muddied beyond recognition by convoluted and intricate arrangements for compensation, offsets and rebates, muting the price signal and undermining the purpose of the exercise just as has happened with the CPRS. If the level of the tax is geared towards the CPRS's pitifully weak 5% emission cuts, very little will be achieved even if voluntary action is counted.

There are signs that the Government is beginning to recognise what the Greens have long said - that there is an abundance of cheap and easy emissions reductions out there for the taking in an economy as energy inefficient as our own. The first steps being taken towards home energy efficiency in the recent stimulus package, and the rumours that a big commercial efficiency push is coming, are positive signs. But, with the current scheme design, they will only make it cheaper for polluters to meet their weak obligations instead of being a reason to aim for a stronger target.

The Government will convince no-one with their claims that the CPRS is about transforming the economy when it is clear as day that its design is geared to protecting existing industries at all costs. The policy needs very significant work to make it both environmentally and economically effective.

The Greens have been thinking about and working on these issues for many years. We have a wealth of experience and expertise on how best to design effective policies, garnered from best practice from around the world, in successful economies such as Germany and California.

Our door is always open. The Government must recognise now that while quick arrangements could be made in order to pass the stimulus package, rushing through a deeply flawed CPRS will not be acceptable.

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