THE climate change debate is exiting its phony phase. The political debate confronts Ross Garnaut’s diabolical dilemma for a carbon-intensive growth economy such as Australia’s: that delivering big cuts in carbon emissions to insure against the costs of a warmer planet requires sacrifice from people who vote governments in and out of office.
The phony phase of the debate was most intense during last year’s election campaign, when Kevin Rudd encouraged the idea that Labor would provide working families with relief on petrol prices and also bring in a carbon trading scheme by 2010. But the phoniness extends to the Government’s green paper, which proposes to protect motorists from a carbon impost until 2013.
The embargo on lifting petrol prices is bipartisan, a political prisoner’s dilemma. Neither the Government nor the Opposition is yet prepared to ask voters to pay for some of the pollution bill from a Chinese industrialisation that has put big-screen televisions in all their lounge rooms. Crisis? What crisis? The imperative to dull the pain of price signals that are supposed to drive the move to a less carbon-hungry world mocks the cap-and-trade emissions trading scheme embraced by politicians as a least-cost solution to the problem.
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Business Council of Australia president Greg Gailey calls the petrol exception “incredibly stupid”. And the BCA has highlighted the design weakness of the standard ETS for a carbon-wired commodity exporting economy such as Australia’s. That’s the risk of carbon leakage of emissions-intensive, trade-exposed (EITE) industries offshore – with no global reduction in emissions – if Australia introduces an ETS ahead of competitor nations.
The added bind for Rudd is that he wants to quickly show that Australia is pulling its weight so he can help broker a global solution that ropes in the essential participation of the US (the most indulgent big emitter), China (the Olympic superpower that wants to be treated as a greenhouse developing nation) and India (the world trade deal spoiler).