Major debate now envelopes Federal Parliament on climate change and how Australia will respond to the threat. This is a complex debate with numerous implications for the Australian environment, businesses and individuals. It could also be the ‘trigger’ for new Federal elections in 2010.
A Charles Sturt University (CSU) expert on climate change policy, Professor Kevin Parton, has developed a simple comparison between the two policies, both of which aim to reduce greenhouse gases by encouraging new non-polluting technology or sequestrating, or ‘storing’, carbon dioxide.
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Issue
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Federal Government
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Federal Opposition
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Policy mechanism
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Increase the price of carbon by charging polluters
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Subsidy to those producers who volunteer to introduce non-polluting or carbon sequestering technology
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What is the encouragement for sustainable new technology?
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Disadvantages old carbon polluting technology and hence encourages all new sustainable technology
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Guesses what sustainable technology will work and encourages just a few technologies, such as soil carbon storage and tree planting.
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Carbon price
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Sets the carbon price and allows market to determine the best type of future technology
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Avoids setting carbon price and tries to induce adoption of new technology directly
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Paid for by
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Polluters (but eventually price increases for consumers. Also features compensation for less-well-off)
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Taxpayers
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Impact on Greenhouse gases (effectiveness)
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Slight at outset, but much scope to reduce greenhouse gases by decreasing the amount of carbon that can be emitted.
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Impact slight. Possible large cost to Government if the scheme is extended
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Complexity
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Complex, but most individuals do not need to know about the detail
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Simple
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Explanation given to date
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Poor (e.g. few people realise that less than 1 000 firms are involved and that they collectively produce 75 per cent of greenhouse gases)
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Good
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Economic efficiency
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In theory the most efficient policy (but it becomes less efficient the more exemptions – e.g. free permits - that are allowed)
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Less efficient
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Impact on social equity
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If compensation is paid to consumers, equity effect is close to neutral
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Neutral
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Professor Parton, who is with the University’s Institute for Land, Water and Society, has closely studied local, national and international developments in climate change policy, including the recent negotiations in Copenhagen, Denmark. See more on his views on agriculture, government policy and the Federal government’s Emissions Trading Scheme.
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