Go Beyond Carbon Price to Invest in Climate-Friendly Infrastructure

The climate change policy debate was reignited last week with Prime Minister Julia Gillard committing to introduce a carbon price from July 1, 2012. At the start of February, it seemed Prime Minister Gillard was gambling with her climate credibility by adopting a carbon price-only policy. Now, just a few weeks later, and Julia Gillard is gambling with no less than that, her political future, and the future of our planet. But it’s time, says Leigh Ewbank, Director of Public Policy at Beyond Zero Emissions, for the Australian Government to put investment in climate-friendly infrastructure at the heart of its carbon price push. It’s the key to securing a carbon price and putting Australia on the path to a safe climate future. Read More

By Leigh Ewbank on ABC’s The Drum (3 March 2011):

The climate change policy debate was reignited last week with Prime Minister Julia Gillard committing to introduce a carbon price from July 1, 2012.

At the start of February, it seemed Prime Minister Gillard was gambling with her climate credibility by adopting a carbon price-only policy. Now, just a few weeks later, and Julia Gillard is gambling with no less than that, her political future, and the future of our planet.

Gillard’s strategy draws a parallel with John Howard’s GST. While shock jock Alan Jones accuses the Prime Minister of lying (remember that cringe-worthy ‘JuLIAR’ jibe?), the argument is not as potent as critics think. Surely Alan Jones would remember that in 1995 John Howard said ‘There’s no way that GST will ever be part of our policy… never, ever. It’s dead.’ As we know, it was Howard who won the 1998 election on the pledge to introduce a GST and did just that in 2000. Gillard is betting that delivering a domestic policy achievement, like Howard, will trump flip flopping in the eyes of the public.

Countering the onslaught of the Abbott-led Coalition and the greenhouse mafia is a great challenge to Labor’s agenda. To blunt these attacks Labor must look beyond the support of the large environment groups, that some argue are ‘impotent’, and the clean-tech industry that is still in its infancy. Labor must demonstrate to the public that it’s serious about the climate change challenge and invest carbon tax revenue to projects that create jobs and help build a domestic clean technology industry. Without this transparent allocation of tax revenue, Labor’s carbon price push could go the same way as Rudd’s mining super profits tax.

Gillard’s flood levy that passed the House of Representatives last week, demonstrates the advantage of linking taxes with investments. In contrast to the ‘super profits’ tax, that failed to clearly articulate how its revenue would be used and was swiftly demolished by the major miners, the flood levy is directly linked to rebuilding Queensland’s flood-affected infrastructure. This is why I think the measure has withstood opposition attacks and gained strong public support (Exhibit A and Exhibit B).

It’s not too late for Labor to link its carbon tax with investments. Rather than focus solely on compensation for households and industry, Labor can invest carbon tax revenue in nation-building climate change initiatives.

In any case, regardless of whether Australia gets a carbon price, public investment will still be needed to fund large-scale infrastructure projects to create the foundation of a clean economy. New transmissions lines, electric vehicle recharge stations, high-speed rail and the first baseload concentrated solar thermal plants are currently beyond the capacity of the private sector. This infrastructure, which will not get built by carbon price signals, is the platform needed to deliver Gillard’s vision of a ‘sweeping technological revolution like Information Technology …in the 1980s and 90s’.

Instead of compensating the carbon-intensive industries of yesterday, Labor must invest carbon tax revenue in the industries of tomorrow. These investments can provide the Government with leverage against unreasonable demands for industry compensation. Every dollar that Gillard commits to compensating emissions intensive industry is one less for climate-secure infrastructure.

It remains to be seen whether Labor will adopt this approach. One thing is for sure: if Labor implemented these measures prior to launching its carbon price campaign then it would have the support of thousands of Australians working to decarbonise our economy. Without this support, Labor will rely on the political landscape in Canberra to price carbon.

In the House of Representatives, Rob Oakeshott has already indicated that he’d support the carbon price. The exclusion of agriculture should satisfy independent Tony Windsor, who has regularly expressed concern over the impacts of the climate crisis, and it has beenreported that Andrew Wilkie is ‘broadly supportive of carbon pricing measures’. While the Rudd’s failed CPRS and RSPT policies required a combination of Coalition, Green, independent and Family First support to pass the Senate, from July, the Government has a Greens balance of power to work with.

The Greens have previously supported an interim carbon tax of around $23 per tonne, so it’s plausible that Gillard could win the party’s support for carbon price at that level. It’s worth noting that Labor has some leverage on the Greens. After blocking Labor’s first attempt at carbon pricing and protecting Australia from a deeply flawed emissions trading scheme, the pressure is on the Greens as much as Labor. While Senator Brown and colleagues deserve credit for demanding stronger measures, blocking the carbon pricing legislation for the second time could be politically harmful, especially when the largest environmental groups have elevated a ‘price on pollution’ as the key remedy for our climate change crisis.

The Greens will push for the carbon-price plus approach Australia needs to successfully decarbonise. Senator Christine Milne already flagged the need for feed-in tariffs, among other measures. This sensible approach is consistent with international norms. Though Germany and Spain are party to the European ETS, feed-in tariffs have done the heavy lifting. It is the combination of carbon pricing and FiTs that is deploying renewable energy in Europe.

Australia has an upward carbon emissions trajectory. Recent Department of Climate Change analysis estimates that Australia’s emissions are set to grow by 24 per cent by 2020 from the year 2000. A price on carbon is one measure to arrest our nation’s ballooning emissions, but it alone is insufficient. It’s time for the Australian Government to put investment in climate-friendly infrastructure at the heart of its carbon price push. It’s the key to securing a carbon price and putting Australia on the path to a safe climate future.

Leigh Ewbank is Director of Public Policy at Beyond Zero Emissions.

Source: www.abc.net.au