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Meeting the carbon challenge


|Sourced From Theaustralian |

IT’S been a tough year in carbon politics, but 2011 looks set to become even more difficult for the Gillard government as it attempts to take action on climate change.

Japan’s decision to postpone an emissions trading scheme for a year is another blow to Australia’s efforts to put a price on carbon without damaging our global competitiveness. The delay — from 2013 to 2014 — comes after both Canada and the US have backed away from setting up national schemes for trading carbon emissions, all but destroying the chances of a global market as the chief mechanism for reducing pollution.

That makes life harder for Canberra, but the opposition has also signalled its political strategy, with spokesman on climate action Greg Hunt this week labelling the ETS an “electricity tax”. The direct linking of carbon politics to the cost of domestic electricity is a political challenge for the government. The price of power is already escalating, thanks in large part to a severe lack of capital investment in generators over several years. Blaming Julia Gillard’s carbon legislation will come easily to consumers — even if putting a price on carbon is inevitable and logical. A price mechanism is the cheapest way to end uncertainty and reduce pollution without the hidden costs of schemes such as Green Loans (now dumped) and the Expanded National Renewable Energy Target. Under these flawed policies, household schemes to produce power from solar panels are costing about 25 times as much to cut greenhouse gases as would a nationwide ETS. Wind power electricity at $55 to $80 per megawatt hour costs twice as much as power from the nation’s coal reserves.

Japan’s rethink should encourage Labor to keep calm but carry on with its assessment of a carbon price. Climate Change Minister Greg Combet has already moved in this direction with his sensible request to the Productivity Commission to compare the effective carbon price across several countries. Australia needs a benchmark against which to determine how far it is prepared to go and how to make sure it is not out of step with other nations. The government has bought itself some time: the commission will report in May and the issue is being debated by the Labor/Greens climate change committee. But the Prime Minister has committed to setting a price next year. She and her Climate Change Minister will soon face some tough choices.

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