More Cost Effective Ways to Reduce Emissions

Julia Gillard’s cash-for-clunkers proposal for Australia would cost 15 times more than an emissions trading scheme to reduce carbon pollution. And no research has been conducted on the fallout on used car dealers from the vehicle buyback policy. Australian National University climate change academic Frank Jotzo said if the federal government was going to spend $430m of taxpayers’ money, there were far more effective ways of reducing greenhouse gas emissions.

Samantha Maiden in The Australian (14 December 2010): 

JULIA Gillard’s cash-for-clunkers proposal would cost 15 times more than an emissions trading scheme to reduce carbon pollution.

And no research has been conducted on the fallout on used car dealers from the vehicle buyback policy.

Bureaucrats charged with administering the Cleaner Car Rebate scheme have confirmed that compliance to ensure vehicles were scrapped was a “major concern” overseas.

Under the plan, owners of cars manufactured before January 1, 1995, will be eligible for a $2000 rebate when they buy a new car with a Green Vehicle Guide greenhouse rating of six or above.

The scheme is capped at 200,000 vehicles over four years.

Climate Change Minister Greg Combet has repeatedly declined to detail the carbon abatement cost per tonne of the cleaner car scheme, which has already been delayed for six months.

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But the Department of Innovation has now confirmed for the first time that the cost of abatement under the $430 million scheme is $429.70 per tonne over the decade.

That compares with a carbon price under the Rudd-Gillard government’s original ETS of about $30 a tonne.

The Gillard government has already been forced to delay the start of the cash-for-clunkers scheme for six months as a budget savings measure.

But critics of the scheme believe Wayne Swan and Penny Wong should take the opportunity to axe it when they consider savings measures as part of next year’s budget process.

It is scheduled for next July 1.

A Senate estimates committee has previously heard evidence that the Innovation Department had “not put forward a proposition for the adoption of a scheme of that nature” before the announcement of the federal election campaign.

The department has now confirmed in response to questions on notice that it was “not involved in the process of deliberations on election commitments”.

Asked on notice: “From the research that has been done by the department, what will be the likely impact of this scheme on Australian vehicle and component manufacturers?”, the department responded: “No such research has been undertaken.”

Other questions on notice lodged with the department note that concerns have been raised over the fate of similar schemes in the US, Britain, France, Germany and Austria.

“Forecasting demand for assistance from these schemes was difficult,” the departmental response states. “Capping such schemes to a certain number of claimants (as in Austria) helps overcome this. Compliance to ensure vehicles were scrapped was a major concern.”

Opposition innovation spokeswoman Sophie Mirabella said yesterday the departmental response confirmed there was no serious modelling, no serious discussion with the industry or research on likely effects.

“Kim Carr and Greg Combet have been like rabbits in the spotlight when asked about the carbon costs of this program,” she said. “It’s absurd. The government’s own (emissions trading scheme) price was under $30 and this is now $429, it’s just insane and there is no justification. It’s disastrously inefficient from an environmental perspective.

“It makes imported cars more attractive. The used car market will be seriously distorted.”

Australian National University climate change academic Frank Jotzo said if the federal government was going to spend $430m of taxpayers’ money, there were far more effective ways of reducing greenhouse gas emissions.

“This kind of scheme is a very high-cost operation if the motivation is reduce greenhouse gas emissions,” he said. “In the US and Europe, the aim of such a scheme was to essentially prop up the car industry after the global financial crisis.”

A spokeswoman for Industry Minister Kim Carr said he was travelling overseas.

Source:  www.theaustralian.com.au