Australian Government Considers Pro-Business Carbon Trading Plan

Report commissioned by Labor Party proposes “solutions” that won’t work

By Kamala Emanuel

From Green Left Weekly, July 12, 2008

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Arctic sea ice reached a record minimum in the Northern summer of 2007, prompting the revision of scientists’ predictions of how quickly it will melt away altogether in response to global warming — perhaps as early as 2010-13, rather than the hundred years later estimated in the latest Intergovernmental Panel on Climate Change reports.

The danger this represents to humanity and other species is hard to overstate. Once the sea ice disappears, the giant white surface reflector will turn into a watery absorber of heat from the sun, accelerating the warming of the land-locked Greenland ice sheet and potentially triggering its demise, with consequent sea level rises of several metres over the coming decades.

It is clear that not only is climate change upon us, but global warming has already reached dangerous levels. Urgent action is needed to reduce not only the emission of new greenhouse gases into the air, but also the levels of those gases that have already been released, to get back down to the safe-climate concentrations that were passed some decades ago. NASA’s leading climate scientist, James Hansen, advocates a CO2 target maximum of 350 parts per million, which he says should probably be as low as 300-325ppm.

With this in mind, the draft Garnaut report, released on July 4, reads like something prepared for an Australia on a parallel planet — one where collapsing ecosystems don’t affect human survival, or where a profitable economy kicks on in the absence of humanity or, at least, civilization.

The Garnaut report, commissioned by Labor when still in opposition, was to look at the impact of climate change and suggest policy options in response. There is some hand-wringing about the possibility that international efforts to curtail greenhouse gas emissions have to date been inadequate and may yet prove insufficient. However, when it comes to policy, recognition of the paramount importance of rapidly making major changes evaporates. In its place are a defence of the Australian economy from the impact of reducing emissions and defence of the market as the driver of the necessary changes.

To really guide government decision-making, the report needs to answer the question: how can the economy be overhauled as quickly as possible to minimize greenhouse emissions while safeguarding the wellbeing and needs of society? But by failing to contemplate a move away from neoliberal business as usual, economist Professor Ross Garnaut comes up with guidelines for a national emissions trading system and an approach to international negotiations that lack the necessary resolve to ensure that — in the words of Gene Kranz during the Apollo 13 crisis — “failure isn’t an option”.

There are numerous objectionable features in Garnaut’s emissions trading scheme proposal. The most important is that it won’t deliver the necessary cuts in greenhouse gas emissions. For one thing, the scheme is not due to come into effect until 2010 — a late start considering the need to cool the planet as soon as possible. This could be made even later with a transition period until 2012, something Garnaut concedes is a second-best option but recognizes as “legitimate” because of the needs of business.

The scheme proposes to cap overall carbon emissions at a fixed and declining amount by auctioning permits to pollute, allowing trade in pollution rights and punitively fining companies that emit more than their purchased share. This is supposed to introduce the missing price signal that will allow the market to find the most efficient way to bring emissions down.

Never mind that what is “efficient” to a capitalist economist is not the same as being beneficial in social and environmental terms. Then-chief economist of the World Bank, Lawrence Summers, made this clear in a 1991 memo: “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”

Success requires that there will be a low enough “cap” on emissions — something the review’s focus on global greenhouse gas targets of 450-550ppm makes impossible. It also assumes there is time for the market to respond to these price signals, and that capital will be drawn into non-polluting or low-polluting technology on the vast scale necessary, even if it will take longer than average to get a high enough return to be attractive.

But past experience shows that capital is reluctant to supply the funds and take those risks. The big infrastructure projects like power, railways and telecommunications of the 19th and 20th centuries needed public funding to get going. It is here that Garnaut’s report is completely deficient.

The report argues that Australia’s “prosperous” market-oriented economy is an asset in confronting climate change. It says this “suggests the primacy of preservation of the integrity of market institutions in designing the approach to mitigation and adaptation”, ignoring the role of “the primacy of preservation” of capitalist profits in hindering action on climate change.

What would really be effective would be a vast injection of public funding to introduce renewable energy, to wean us off our reliance on fossil fuels and provide us with expanded, free public transport, alongside conversion to (less-needed) electric cars.

This social funding would have the double advantage of enabling planners to consider social as well as environmental impacts. Job-creating, clean industries could be established in communities most affected by the economic changes (such as Latrobe and Hunter Valleys), and workers leaving environmentally damaging industries could be guaranteed that, in their new jobs, they could at least maintain their union membership and work conditions.

We’d need action in other sectors as well: agriculture, forestry, urban design, construction and others. The scale of the changes needed is so great that the only way to ensure that it happens is through public funding. Currently, Australia has a negative debt: the federal government could readily afford to borrow the billions needed to avert catastrophic climate change.

There are other objectionable and dubious elements in Garnaut’s emissions trading plan, such as earmarking 30% of the proceeds of the sale of pollution permits to “trade-exposed” polluters — something that negates the impact of the price signal within the scheme’s own logic and which contravenes the polluter pays principle.

Then there is the question of how compliance with emissions reductions is to be policed. A lot of the “monitoring” carried out by underfunded environmental protection agencies of various kinds ends up consisting of rubber-stamping of company-produced audits or plans. This question will be an issue no matter what policy is pursued.

But a decision to invest social funds in constructing and installing solar hot water systems in all appropriate housing across the country, to remove the need for new coal-fired power stations; to construct wind farms and solar thermal power stations, to allow the phasing out of others and to further develop photovoltaic, geothermal and wave energy production to wind back further the reliance on fossil fuels for power production would simplify the accounting while giving certainty that energy needs would be met and emission reductions were achieved.

These are the kind of demands we will need to raise now: to demand that the NSW power industry remain in public hands, that Newcastle’s coal export facilities not be expanded and that no new coal-fired power station be built in Victoria. Instead of propping up the fossil fuel industry with billions of taxpayers’ dollars, federal funding must be directed towards researching, developing and introducing renewables, public transport, and low-emissions agriculture.

Like the Tasmanian campaign to halt Gunns/Labor’s pulp mill project, we’ll need to unite across the community against the inaction — and worse — of the governments that commissioned Garnaut’s report to justify their pro-business climate policies.

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