Opposition climate change spokesman Greg Hunt said indecision and internal division were behind Thursday’s decision to dump a House of Representatives inquiry into the ETS.
The BCA, which gave guarded approval to Labor’s plans last year, now says the Government has to find a way to minimise the initial cost of the scheme if it comes into effect in July next year. Policy director Maria Tarrant said the economic crisis meant “the Government has to think of a way to minimise the scheme’s impact in the early years after its introduction on July 1 2010”.
“There are likely to be big questions as to whether companies will have the cash flow to buy the permits they need, or invest in the emission-reducing technologies they need at that time and still remain viable,” Ms Tarrant said. “It could put many companies’ ongoing operations at extreme risk.”
With green criticism intensifying, Climate Change Minister Penny Wong yesterday warned environmentalists the ETS was their best chance to see an early reduction in Australian greenhouse gas emissions. Green groups have argued the scheme’s lack of ambition and already generous industry compensation means it is fatally flawed.
Senator Wong said: “We have a chance now to reduce Australia’s emissions next year or, if we fail, to simply allow our emissions to grow. The most responsible thing to do, even in this economic environment, is to start the hard task of reducing our emissions right now.”
Australia Institute executive director Richard Denniss and others have advanced the argument that an ETS means an individual’s or state’s efforts to voluntarily reduce emissions have no impact on the country’s total level of greenhouse gas, and that a carbon tax would be a better answer.
But Senator Wong rejected those arguments as well.
“If you are serious about climate change a carbon tax is not the answer,” Senator Wong told The Weekend Australian.
But the federal Coalition appears to be hardening in its opposition to the scheme.
And the Australian Industry Group agrees the Government needs to “look at every option” to ameliorate the early costs, warning the effects of the economic crisis risk “fracturing any consensus around this issue”.
Among options being canvassed by industry groups are a plan advocated by Professor Ross Garnaut for a low fixed price on carbon in the first two years of the scheme, offering trade-exposed industries all their permits for free in first few years, starting the scheme as a “dry run” without actually charging for permits and offering industries exemptions or holidays from the cost of the renewable energy target.
Coalition emissions trading spokesman Andrew Robb told Sky news yesterday the scheme was a “total failure”.
And Australian Industry Group chief executive Heather Ridout said the global financial crisis had “amplified the negative effects of the emissions trading scheme many times over”.
Executives from Virgin Blue also told the Senate fuel and energy committee yesterday they were “deeply concerned about the planned timing of the introduction” of the emissions trading scheme.
“Even in the most benign circumstances, the (emissions trading scheme) is effectively a tax on investment and growth,” said Virgin Blue general manager Simon Thorpe.
The Government is drafting its legislation. It says it intends to try to pass it through both houses of parliament by June, but most observers believe debate will continue later in the year.
The Greens have said they are willing to negotiate with the Government over the legislation, but also believe the scheme as it stands is deeply flawed.