New carbon price proposal is the CPRS version 2.0

Flanked by Greens Senators Bob Brown and Christine Milne, Julia Gillard announced at a press conference on February 24 that she wants to introduce a price on carbon (a carbon tax) that will become an emissions trading scheme in three to five years. The announcement has been welcomed by the some of the climate movement, most environment NGOs and also by the peak union body, the ACTU. But supporting this carbon price scheme is a mistake.

Gillard’s proposal shows that a carbon tax has never been more of a solution to climate change than an emissions trading scheme. Both can be subject to rorting by business and neither have a record of reducing emissions.

While most of the details of the scheme remain subject to more negotiations in the multi party climate committee, it’s clear that Labor wants to hand big polluting companies billions of dollars.

Media reports and statements by the Gillard government since the election indicate that compensation handed to business under this scheme would be similar to that offered by former Prime Minister Kevin Rudd under his abandoned emissions trading scheme (known as the Carbon Pollution Reduction Scheme, or CPRS)—approximately $35 billion dollars in cash and free permits to polluting companies in the first year alone. This proposal is the CPRS version 2.0.

Under the CPRS, mining company Rio Tinto was to receive $565 million dollars in the first year and would presumably receive a similar amount under Gillard’s new scheme. Rio Tinto has just announced a record profit of $14 billion dollars.

Much of the climate movement supported The Greens’ push for a carbon tax, seeing it as different to an emissions trading scheme. But they are fundamentally similar. Denmark, Sweden, Norway, The Netherlands and Finland have all introduced low carbon taxes since 1990. By 2008 Denmark had reduced its emissions by 15.5 per cent and Sweden by 11.7 per cent. But the other three countries all increased emissions—Norway 7.6 per cent, the Netherlands 9 per cent and Finland by 11 per cent. A study by sociologist Monica Prasad concluded it was actually government investment in wind power that was decisive in Denmark’s emissions reductions.

The European Union’s emissions trading scheme has become a bad joke, with the recent revelations that hackers stole carbon credits and sold them on before they could be traced. Rather than reducing emissions, the scheme has allowed them to rise—and one Czech company even made enough money trading permits on the stock market to open a coal-fired power station, according to research by Clive Spash.

In all market-based schemes to deal with climate change, big business has been able to push for exclusions, exemptions and compensation. Electricity companies have dealt with any rising costs associated with a carbon price by simply passing on the cost to consumers and other businesses—feeding into price rises throughout the whole economy.

That market mechanisms inevitably lead to rising prices while doing so little to reduce emissions gives the rightwing of politics plenty of populist ammunition to use against the climate movement. On the 7:30 Report on February 24, Gillard argued that rising electricity prices are a fact under this carbon price scheme. Tony Abbott, not exactly a champion of working class people, can combine his climate denialism with a faux concern for price rises, tapping into huge discontent in the community over skyrocketing electricity bills. Because of the right wing scare campaign, many good activists will be drawn into supporting the government’s plan. But it’s a dead end—supporting rising prices only lets Tony Abbott get away with it. To counter the right, we need a better solution that is about jobs and better living standards, not sacrifice.

Polluting companies are not truly scared of a carbon price—that is why there are proposals to build twelve new coal-fired power stations on the table across the country. A newly-released report by the Department of Climate Change revealed that Australia is not likely to meet the paltry emissions target of 5 per cent set by Kevin Rudd. They predict emissions will rise by 24 per cent by 2020.

The Greens

Labor will need the approval of The Greens and the independents to put any carbon price legislation through parliament. The Greens have made a huge mistake in falling behind Gillard. They have settled for a solution that does nothing to challenge the interests of the big polluters.
The Greens move is a product of the leadership’s focus on entirely parliamentary maneuvers to win action. While The Greens’ always talked about a carbon tax, their proposal was always to move to an emissions trading scheme eventually. Trying to tinker with Labor’s measures has now trapped Bob Brown and Christine Milne into supporting a solution that Gillard is selling as “action on climate change” but is nothing of the kind. It will be a very similar policy to the first CPRS—and the Greens were right to vote that down the first time. If the carbon price passes, many people will think that the climate question is solved and won’t see the necessity to campaign for more direct measures. It will set back the struggle for real solutions to the climate crisis.

Some of the biggest companies in Australia are producers of fossil fuels and most of the ten richest companies in the world are oil and automotive giants. Labor never gave any indication they were willing to take them on and by stooping to their level The Greens leadership has given up that idea too.

The solution

Instead of money going into the coffers of the people responsible for climate change, it could be spent on building wind and solar power stations, now, providing thousands of green jobs. We can campaign for direct government investment in renewable energy and public transport, funded by taxing the richest people in our society.

Recently released Treasury documents show the redesign of the mining tax cost the government $60 billion dollars. A restoration of the corporate tax rate back to 47 per cent would raise around $47 billion a year.

Beyond Zero Emissions estimates that $37 billion a year for ten years could fund the transition to renewable energy.

The recent floods in Queensland, followed closely by the devastation of Cyclone Yasi, should bring home the urgent need to take decisive action on climate change. We can’t afford to be timid.

Parliament was never going to deliver a solution that worked. The only thing that has the power to do so is a movement on the streets and in our workplaces, putting the call for direct government investment at the front and centre.

The uprisings in the Middle East, the determination of tens of thousands of people in Wisconsin to stare down attacks on their unions and the strikes rocking Europe—all these things show what people can do when they fight together with determination to win.

By Amy Thomas


Solidarity meetings

Latest articles

Read more

Dutton’s nuclear power plan aims to extend coal power

Coalition leader Peter Dutton has attempted to breathe new life into nuclear power as a serious energy policy option.

NSW Labor funds coal power extension in climate failure

The Minns Labor government in NSW has struck a deal with Origin Energy to extend the life of the coal-fired Eraring power station from its original closure date of 2025 until 2027.

Labor locks in gas expansion in new crime against the climate

Labor’s new gas strategy pledges its support for a massive fossil fuel expansion, going all out to back mining industry profits.