We need a market solution to climate change
Melbourne’s The Age is running a fascinating opinion piece; We need a market solution to climate change. I’ve extracted the highlights for you.
At present, the policy debate in Australia is largely focused on whether there should be some form of emissions trading introduced. In spite of the recent softening in Canberra’s rhetoric, on this issue the majority of the states and the Commonwealth are at loggerheads. The Federal Government, meanwhile, is keen to focus debate on a potential new energy source through its nuclear inquiry.
Both positions are symptomatic of the policy contradictions and uncertainty the energy industry must deal with in anticipating the likely responses from governments on climate change. Not surprisingly, therefore, the 2006 PricewaterhouseCoopers Global Utilities Survey of industry leaders had “uncertainty about the future of environmental schemes” as the number one disincentive for investment in the Australian energy sector.
Rather than championing particular technologies such as nuclear energy or wind, all governments would be better placed introducing incentives for industry and households to reduce their greenhouse emissions and then allow those responses to determine the energy mix.
[T]he key driver of that behavioural change is a carbon price that encourages everyone to change the way they emit carbon. Certainly as far as energy retailers are concerned, such an approach would be acceptable if such a price signal was introduced across the whole economy and was technologically neutral in application.
What we have at present is anything but a national and technologically neutral approach. Instead we have many climate change schemes similar to the Victorian target, including the Federal Government’s Mandatory Renewable Energy Target, the South Australian Government’s climate change bill, Queensland’s “13 per cent gas” policy and NSW’s Greenhouse Gas Abatement Scheme. and their recently released NSW Renewable Energy Target policy. After toiling so long and hard to establish a national electricity market driven by market signals, governments are adopting a parochial approach to climate change that involves subsidies for preferred energy providers.
Carbon Planet is an enthusiastic supporter of the idea of a national emissions trading scheme, but only because we see no chance that the Australian government will get behind the Kyoto protocol, which would let us play in the international sand-pit. An ideal situation, we feel, would be Australia’s ratifying of the Kyoto protocol and the subsumption of the various State’s efforts into this single international agreement. The federal government is on crack if they think that serious investors will get behind nuclear power in this country. It just isn’t going to happen. In my opinion, the nuclear debate is a red-herring that is giving the government time to work out how to say they were wrong on climate change, without losing face. — DS
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