A funny thing happened on the weekend: the world’s second largest greenhouse gas emitter - the US - took the first step towards establishing a carbon reduction scheme and almost nobody wanted to talk about it.
The Obama-endorsed scheme passed the US House of Representatives and only has to clear their Senate to become law.
In Australia, a few people welcomed the vote and applauded the move, but almost no-one dared to lift the carpet and comment on the design of the US scheme.
The reason why was obvious to anyone following the development of Australia’s Carbon Pollution Reduction Scheme (CPRS).
Unlike our CPRS, America’s scheme protects jobs and focuses on achievable environmental outcomes while moving towards a low emissions economy. It couldn’t be more different to the Australian scheme.
In moving to protect the US economy, President Obama’s scheme will sell only 15 to 18 per cent of permits to emit carbon for the first 10 years. Australia’s CPRS, which is preoccupied with raising revenue, will auction 70-75 per cent of its permits from day one. The US won’t be auctioning that level of permits until 2030.
On a per capita basis, that means the CPRS will be raising emissions taxes worth $A404 in its first full year. In comparison, the US scheme will raise just $A57 per person.
Those differences will have real economic consequences. Australia’s CPRS will cost the mining industry $10 billion in the first five years including $5 billion from the coal sector. The US coal mining sector will face no permit costs. None, despite the fact that emissions from coal mining in the U.S. are more than double those in Australia.
All up, Australia’s permit sales will suck $30 billion out of the business sector in the first four years. That’s $30 billion not available for investment in the new technologies, including carbon capture and storage and renewable energy, that will critical to reducing global greenhouse gases.
Instead, these massive new carbon costs will result in lost jobs, stymied investment and reduced competitiveness in Australian industry. Meanwhile in the US, their key industries will moving in a measured and manageable way towards a low emissions economy
Economic modelling shows that under Australia’s CPRS, 23,510 jobs will be lost over the first nine years of the scheme in the mining industry alone. Another independent economic study has found that 16 coal mines will close.
In the critical export sector – where producers are unable to pass on costs into the global marketplace - Australian firms will receive a declining level of income protection until 2020. Under the US scheme, the same firms will be 100 per cent protected until 2025, with the level of shielding declining slowly over time.
Over the coming weeks, there will be loads of spin about the US House of Representatives passing the emissions scheme but you’ll be lucky to find anyone here willing to go into detail or tackle these two key questions.
If the US – the world’s second biggest greenhouse-gas emitter – can propose a scheme that establishes a measured transition to a low emissions economy by selling just 15-18 of carbon-emissions permits, why can’t Australia?
And, if Australia is responsible for 1.4 per cent of global emissions and the US 20 per cent, why does our scheme pitch us so far ahead of America?
Don’t hold your breath waiting for the answers.
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