Australia's carbon price plan: 'The greatest corporate windfall of our time’

Friends of the Earth Australia says the newly announced carbon price mechanism will give generous handouts to polluters while having limited impact on greenhouse gas emissions

Statement issued by Friends of Earth Australia
July 11, 2011

Friends of the Earth Australia has today criticised the carbon price mechanism for its generous handouts to polluters and for its limited impact on greenhouse gas emissions. Spokesperson James Goodman said:

“Under the Carbon Price Mechanism $5 billion flows to polluting industries every year. Of this, $1.5 billion goes to power stations to help reduce emissions, the rest is industry compensation for lost competitiveness. Only $1 billion will go to renewables.

“In addition, under the price mechanism, the big corporate polluters will get free ‘permits to pollute’ for up to 95 per cent of their emissions. If they reduce their emissions they will be able to cash-in these permits – at $23 each.

“The Government is making it easy for corporates to carry on polluting.

“Polluters that don’t get the compensation and can’t get the free permits don’t have to reduce their emissions – they can simply buy permits. They can even ‘grow’ their own permits, through domestic ‘carbon farming’ offset schemes. And from 2015 they will be able to go offshore, to get cut-price offsets in the international market for carbon credits.

‘Treasury predicts at least 50 per cent of Australia’s emissions will be offset overseas by 2050 –flouting the UN requirement that international offsets can only ‘supplement’ national emissions reduction efforts.

“The Rudd Government described climate change as the greatest moral challenge of our time. The Gillard Government has delivered the greatest corporate windfall of our time.”

While questioning corporate welfare, Friends of the Earth welcomed the commitment to compensate low-income groups, and to create a new infrastructure to deliver renewables. Mr Goodman said:

“There is hope for renewables. The creation of statutory agencies to deliver support for renewables will help reduce the bias to fossil fuels. The creation of a funding flow for renewables, however inadequate, will certainly help this industry. It is also important that some of the compensation for polluters is conditional upon reduced emissions. We welcome the possible buy out of capacity at Hazelwood power station.”

Despite some benefits, Friends of the Earth believes the package will not deliver the emissions reductions that are needed. Friends of the Earth states that the goal of a 5% reduction in emissions by 2020, as compared with 2000, is totally inadequate.

Mr Goodman added:

“The scheme will not deliver the emissions reductions that we need to restore a safe climate. It is not clear that ‘pricing pollution’ will even deliver the targeted 5% emissions cut by 2020. Internationally there is little evidence that emissions trading reduces emissions. In their national reports to the UN, none of the 27 European countries that have emissions trading schemes, nor even the European Union itself, could claim that emissions trading had reduced emissions.

“The EU’s ‘Europe 2020’ program for green growth now focuses on mandated renewables targets and industry policy for efficiency, not carbon pricing. Australia’s approach is therefore a decade out of date. Worse, the emissions trading scheme announced today is designed to replace any existing regulatory measures. We already know the Renewable Energy Target – the Government’s most effective renewables policy – is under threat.

‘Last month the UN confirmed that Australia is the world leader in emissions per person. Yet our emissions are still rising faster than most of the industrialised world. Drought, fires and storms are set to transform the country. Right now, people across Asia, Africa and the Pacific are losing their livelihood, and are being displaced, due to global warming.

“We urgently need measures which will actually drive down emissions here in Australia, beyond the 5% target, without offsetting our climate obligations to developing countries. Australia must follow the lead of countries like England and Scotland, which have now legislated for deep emissions reductions targets.

“Australian-based legislation must target at least the 50 polluters that produce half of Australia’s emissions, and regulate to reduce their emissions, with targets set by science rather than politics. The Carbon Price Mechanism in its current form prevents this from happening. If countries that have been hard hit by the Global Financial Crisis can legislate to limit and cut emissions while investing in green energy, Australia can certainly do the same.”