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Some Key Points On Carbon Pricing from MEFL

Posted in Movements, Opinion, Policies, Research by Kate Archdeacon on March 10th, 2011

Source: Moreland Energy Foundation

Moreland Energy Foundation have released a bulletin on the Carbon Pricing debate (and upcoming Get Up rally) with the hope of clarifying some of the facts involved.  Thanks MEFL!

Image of 2006 fuel prices from phatman via flickr CC

Key points on carbon pricing

Both parties agree to 5%: Both parties have committed to reduce emissions by 5% by 2020.

It will cost to cut emissions: Any policy designed to reduce emissions will have a cost to the government (i.e. taxpayers) and/or the economy, at least in the short term. However, a carbon price also has potential to stimulate green industries and create new jobs.

What’s the best way to reduce emissions? If we cut through the media storm, the real question we and our Parliament should be asking is what is the best, most efficient, most effective way to reduce emissions.

Government’s position: The Government argues that its plan for a carbon price (an emissions trading scheme with a fixed price for 3-5 years, which will operate as a tax for this initial period) is the most efficient way to reduce emissions because it is a market mechanism. It says it will provide compensation out of the money it raises from the carbon price to assist householders and businesses. Note that even with compensation, there is an incentive for businesses to reduce emissions in order to avoid paying the tax.

Opposition’s position: The Opposition argues that its plan to directly fund businesses to reduce emissions will be cheaper.

It won’t kill the economy! Whatever you think about the merits of the parties’ arguments, it is clear that neither plan would destroy the economy:

  • We’ve been through worse: The impacts of either plan will be less significant than many other impacts we have experienced in recent years, including the impacts of events like the global financial crisis, currency fluctuations, oil price rises, conflict in the Middle East, and over $40 billion of big new investments in electricity infrastructure (poles and wires) over the next five years
  • Others have done it: What’s more, much stronger policies to cut emissions (via taxes, emissions trading and other mechanisms) than those proposed by either major party have been introduced around the world in economies that are still running smoothly and in many cases thriving (for example, the Regional Greenhouse Gas Initiative, an emissions trading scheme involving a number of American states)
  • There are opportunities: Reducing emissions can create job opportunities and stimulate economic growth, and has done so in countries with strong clean energy policies such as Germany and China
  • There are risks if we don’t act: Not changing to a low emissions economy is a significant risk, because high emissions activities are being phased out around the world and Australia could be left behind.

MEFL’s position

MEFL believes that the introduction of a carbon price is an important first step in reducing emissions. We accept that market mechanisms help deliver the most cost-effective solutions to complex problems such as greenhouse gas pollution. However, a carbon price will not in itself be sufficient to drive the required emissions reductions and the corresponding social and economic responses. We urge the Government to develop complementary policies and programs designed to support renewable energy and energy efficiency, and assist businesses and communities to respond to carbon pricing appropriately and with minimal disruption. In particular, we encourage the Government to promote energy efficiency as an effective and long-term way to counteract any price increases resulting from the introduction of a carbon price, both for businesses and households.


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