Carbon pricing highly likely in Australia

AUSTRALIA: After years of inaction and backsliding, the introduction of a carbon-pricing scheme in Australia over the next three years now looks a near certainty after the establishment of a minority Labour-led government backed by the Greens.

Since retaking power in a close and bitterly fought election, Prime Minister Julia Gillard has quickly moved to put climate change firmly on the government's agenda. A mechanism to put a price on carbon is at the heart of her minority government's approach.

Backsliding on a promise to introduce a modest carbon-trading scheme was key in the downfall of Gillard's predecessor Kevin Rudd. Having said that tackling climate change was his greatest moral challenge, Rudd's position was fatally undermined when he crumpled in the face of opposition to his Carbon Pollution Reduction Scheme (CPRS) and postponed its introduction.

Gillard, who took over from Rudd in a coup just weeks before calling the election, campaigned on the promise not to reintroduce the CPRS, but to establish a citizens' assembly to reach a national consensus on a carbon tax. The idea, however, was mocked in the campaign and has been ditched in government.

With the backing of the Greens, Gillard has now wiped the slate clean on climate change policy and has launched a new approach that will involve business, unions and green groups. She has established a powerful cross-party climate change committee, chaired by Gillard and with climate change minister Greg Combet (see below) and the Greens' deputy leader, Christine Milne, acting as co-deputy chairs.

Greens leader Bob Brown and treasurer Wayne Swan are also on the committee, along with former government climate change advisor Ross Garnaut, as well as climate scientists and representatives from industry and business.

Gillard had said before the election that she would not introduce a carbon tax in this parliament. However, the hung parliament and unanticipated support from business and industry - including a call for a carbon price from Australian mining giant BHP Billiton - had created a new environment, she says.

The new committee will start from the position that a carbon price is an economic reform needed to cut carbon pollution and will work to establish a mechanism to do it, which may be an emissions-trading scheme, a carbon tax or a combination of both.

Professor Ray Wills, chief executive of the Western Australian Sustainable Energy Association, Australia's largest energy body, welcomes the committee, saying it shows that acting on climate change is now a core government commitment.

A carbon-trading system paired with direct incentives for industry to reduce emissions through both energy efficiency and procurement of lower-emissions energy would be the likely outcome of the committee, he says, adding: "(That) will actually diversify the economy and create a more robust environment for business. Energy efficiency is a critical component, as it will reduce inflationary pressures that would otherwise occur through spiralling fossil fuel prices."

Matthew Warren, chief executive of renewable energy trade body the Clean Energy Council, said Australia now had the opportunity to reset the political agenda on climate change and return to the implementation of a carbon price in the next political term. "We should seize that opportunity," he says.

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