The carbon tax blind spot

Illustration: Robin Cowcher.The carbon tax kicks in today, and while its effect on electricity bills will be run over hot coals, another of its impacts has been overlooked.
Nanjing Night Net

As it stands, the policy – especially once it turns into a cap-and-trade system in 2015 – has a curious and counter-intuitive outcome: householders who want to go green won’t necessarily make any difference to Australia’s carbon dioxide emissions.

“In its current form, the emissions trading scheme not only sets a cap above which emissions can’t rise, but simultaneously sets a floor below which they can’t fall,” says Richard Denniss, executive director of the Australia Institute.

“So if an individual reduces their emissions – or the residents of a high-rise building, a street, or even a local council area get together to reduce their emissions – it will simply free up spare permits for a polluter somewhere else.”

The government has taken a small step towards addressing the issue. A spokesperson for the Department of Climate Change and Energy Efficiency said that purchases of GreenPower “will be taken into account” when the caps are set five years in advance.

Also, the Climate Change Authority – the independent body that begins operation tomorrow – will also consider “whether a robust methodology can be developed to recognise additional voluntary action by households”.

Alan Pears, energy efficiency expert and adjunct professor at RMIT, says the same problem exists in the European carbon trading system.

In Britain, an organisation called Sandbag helps individuals buy and cancel pollution permits, so there are fewer permits in the system and the cap is smaller.

Here, the federal government suggests that householders who want to meaningfully reduce their carbon footprint could choose to do the same.

But Professor Pears argues that those people would end up paying double – to cover both the carbon tax and the extra permits – and have no idea which companies they’re supporting.

“If you buy carbon permits and take them out of the market, you don’t know who surrendered them or what they’re linked to,” he says.

As Dr Denniss argues, it’s not only householders that are affected. Measures taken by businesses, local councils and regional governments are in the same boat. Earlier this year, the Victorian government scrapped its target to reduce carbon dioxide emissions by 20 per cent by 2020 (from 2000 levels), citing its ineffectiveness given the national cap.

The ACT government has legislated an even more ambitious target – a 40 per cent reduction by 2020 (from 1990 levels) – and so far, it’s sticking to its goal. But Dr Denniss warns that the carbon trading scheme must be tweaked “to ensure that the efforts of the ACT and other communities are not in vain”.

Professor Pears says unless there is a change, organisations that want to become carbon neutral will end up purchasing offsets from overseas.

But he says there’s still cause for governments and householders to invest in energy efficiency and renewable energy, especially with the price of solar power fast matching standard retail electricity rates.

“There are lots of reasons why it still makes sense, whether that’s reducing peak demand costs, holding down energy prices, creating employment, or just improving comfort at home and saving money on your energy bills,” he says.

“The frustrating thing is that in terms of the physics, it does reduce emissions. But because of an accounting flaw, it isn’t counted towards cutting Australia’s or the world’s greenhouse gas emissions.”


This story Administrator ready to work first appeared on Nanjing Night Net.

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