Why we need to keep the carbon tax

Submissions on the carbon tax repeal are due by 5pm (AEST) tomorrow, Monday 4 November 2013.

If you’re keen to make a submission but stuck on what to say, here are some compelling reasons why the carbon tax should not be repealed:

1.            It’s being replaced by a weaker, more expensive scheme

The federal government intends to replace the carbon tax with its Direct Action Policy. The policy sets aside A$2.6 billion of taxpayers’ money over the first four years to pay polluters to reduce their pollution.

The money budgeted for the policy is based on a target of reducing Australia's domestic emissions by 5% below 2000 levels by 2020. However, modelling by Sinclair Knight Merz/MMA and Reputex climate analytics has shown that the funding budgeted for direct action would fall short by billions of dollars in meeting what is already a very weak target.

2.      Direct action restricts us to an inadequate 5% emissions reduction target

Direct action’s 5% target and cap on spend is particularly concerning because a draft report released on Wednesday by our soon-to-be-abolished Climate Change Authority said that our 5% target is inadequate.

It presented two "options" for emissions trajectories: 15% below 2000 levels by 2020 matched with 35-50% by 2030, and 25% below 2000 levels by 2020 with 40%-50% cuts by 2030.

However, a report from global analysts Ecofys (commissioned by WWF and also released last week) concluded that Australia’s targets would need to be even higher. The report showed that to contribute our fair share to the kind of global emissions cuts necessary to give us a decent chance of staying below 2°C warming, we need to deliver 27-34% cuts by 2020, 82-101% by 2030 and 98-106% by 2050.

The 5% emissions target imposed by direct action also has potential implications for our international commitments. Australia has previously signed up to higher emissions targets if there is a commitment for stronger action by the international community – which is possible at the 2015 UN Conference on Climate Change in Paris.

3.      The carbon tax should only be replaced by a better alternative

The only circumstances in which the carbon tax should be repealed is to be replaced by a better alternative, namely, an emissions trading scheme (ETS).

A trading scheme places a cap on emissions and requires big emitters to buy a permit for every tonne of carbon dioxide they release. Permits can be traded, allowing businesses that cut emissions to save money.

An ETS sets a cap on pollution. It’s also flexible, so our pollution cap can be altered if our emissions targets change. It’s easy for businesses to adapt to as we've already got a price on carbon. It can also be linked to international carbon markets for the purposes of buying and selling permits. Indeed, the carbon tax was only ever a transitional arrangement in moving to an ETS.

Another benefit of an emissions trading scheme is that if the government chose to increase its emissions targets under such a scheme, our economy would still keep growing. The Climate Change Authority’s draft report on Wednesday projected that if the government set a target of 15% and allowed business to buy international carbon credits, the pace of economic growth would be only three months slower in 2020. If it adopted a 25% target and economic growth would be slowed by just five months.

Notably, the authority is chaired by former Reserve Bank chairman Bernie Fraser and includes views from across the spectrum, including serious business minds Heather Ridout, former Tomago Aluminium head John Marlay and AustralianSuper chairwoman Elana Rubin.

It's also worth noting that a recent Fairfax Media survey of 35 prominent university and business economists found only that the overwhelming majority supported a price on carbon over direct action.

If the carbon tax was being replaced by a more effective scheme, I would support its repeal. But unfortunately it’s not.

4.      The carbon tax appears to be working

In the first six months under the carbon tax, emissions from the electricity sector dived, with much greater use of renewable energy and cutbacks in consumption. 

5.      The carbon tax’s impact on household bills is imperceptible

Most people don’t realise it, but only the biggest 500 polluting companies pay the carbon tax. You and I don’t pay the tax directly, but the effects may flow through to the goods and services we buy.

Hugh Saddler, a principal consultant for energy analysts Pitt & Sherry, has in fact said it had been ''almost impossible'' to see the carbon price footprint when it was introduced, and it would be no easier if it was removed. The Australian Bureau of Statistics agreed.

In addition, new estimates by the Bureau of Statistics released on Wednesday showed that for most Australians the cost of living is scarcely rising. While Australia's official inflation rate is 2.2%, for working Australians the cost of living climbed just 0.9% in the year to September. For households headed by Australians on benefits, old age pensioners and retirees the cost of living climbed 2%.

6.      Proceeds from carbon tax are helping to keep electricity prices down

A report released by advisory firm RepuTex in August 2013 showed that scrapping the carbon tax is actually likely to increase electricity bills. The reason for this is because some of the proceeds the government had received from the carbon tax have been put towards renewable energy. Renewable energy has become far more efficient and cost effective, and now represents a very low-cost form of energy that displaces other fossil fuel generators, which have very high fuel costs.

So why have electricity prices gone up so much in recent years? There are many reasons, but network services (poles and wires) has been the single most costly component. Although the carbon price contributed to higher electricity prices in the year to June 2013 - its first full year of operation - it was a one-off increase and was lower than the effect of network costs in the last few years.

New calculations by the Bureau of Statistics in fact show that electricity prices are currently climbing at their lowest annual pace in six years: 6.1%.

7.      We're unlikely to meet our renewable energy targets if we don’t have a price on carbon

Federal renewable energy targets aim for 25% of all electricity to be renewable by 2020. Modelling in the report by RepuTex shows that with the carbon price in place, the federal renewable target is likely to be met. However, scrapping the carbon price would likely see only 14% of Australia's electricity generated from renewables by 2020.

The government and the Climate Change Authority came to the same conclusion when the Renewable Energy Target Review was conducted last year.

8.      Uncertainty for electricity, oil and gas industries

The report by RepuTex also found that not pricing carbon would deliver uncertainty to the electricity, oil and gas industries, which have already adapted to the change.

Furthermore, if Australia adopts direct action, but at some point in the future decides to increase its emissions targets, in my view it will in all probability have to revert back to carbon pricing. This will deliver even more uncertainty for these industries.

9.             Compared to other countries, Australia’s emissions targets are inadequate

The countries that Australia is often compared with – most notably the US and China – are looking to the long term and stepping up plans to cut emissions.

This week’s reports from the Climate Change Authority and Ecofys showed that a 5% target would leave Australia lagging behind others.

10.     Per person, Australia is one of the world’s biggest carbon emitters

Contrary to popular perception, Australia is one of the world’s biggest carbon emitters on a per capita basis.

In fact, a recent study by the Netherlands Environmental Assessment Agency and the European Commission's Joint Research Centre found that in 2012 Australia had the highest per capita emissions in the world.

We’ve helped create the problem. Now we need to do our fair share to get emissions down - and quickly.

11.     We need to take real, urgent action

We need to get very serious about climate change. In the recent United Nations Intergovernmental Panel on Climate Change (IPCC) report scientists gave what is considered the gold standard for certainty that climate change is real, man-made and that it needs urgent action.

For people still not convinced about climate change, a recent report by the International Programme on the State of the Ocean (IPSO) has shown that burning fossil fuels is having such an impact on our oceans that a mass extinction may already be under way.

Australia’s recently-abolished Climate Commission warned that 2011-2020 is the “Critical Decade” for tackling climate change.

In addition, Climate Change Authority chairman and former Reserve Bank governor Bernie Fraser has said: ''If Australia is to take this science – and the below 2 degrees goal – seriously, it needs to act now and continue this effort over the long term.''

The fact of the matter is we don’t have any time to waste going backwards, which is what we’ll be doing if we repeal the carbon tax to move to direct action.

12.     The long-term costs of minimal action

The less climate change action we take now, the much greater the costs will be in the future. This is especially the case for Australia, which is particularly exposed to the extreme weather events associated with climate change.

The costs to taxpayers of extreme weather events will far outweigh the money some businesses will have saved by repealing the carbon tax or implementing an emissions trading scheme.

13.     The government should be acting to protect us

Australia is already starting to see the effects of climate change. Our last summer broke 123 extreme weather records in 90 days. September was Australia’s hottest ever on record. The world’s leading scientists are telling us we need to urgently reduce our emissions.

If we ignore what science is telling us, and stick to a 5% target, we are wasting precious time and putting our children’s futures at further risk.

The government should be taking proper action to protect us, not downplaying the threat by moving to a less effective scheme.

14.     The abolition of the Climate Change Authority

The legislation that repeals the carbon tax also abolishes the Climate Change Authority. The Authority provides independent advice on Australia’s emissions reduction targets and other Australian Government climate change initiatives.

Under the proposed arrangement, the government will rely on reviews by the Department of Environment if they are commissioned by the environment minister.

The abolition of the Climate Change Authority is deeply concerning. At such a critical time for climate action, we should have an independent body continually monitoring and providing advice to government on these key issues.

So what are you waiting for? Send in a submission!

By repealing the carbon tax we are ignoring the advice of leading scientists and delaying real climate action.

Wherever you are in the world, write to the Australian government – even if it’s just one line – to tell them why they must not repeal the carbon tax.

After all, it’s not just a change that affects Australians. It affects everyone.

Useful information

Submissions on the carbon tax repeal are due by 5pm (Australian Eastern Standard Time) on Monday 4 November 2013.

The ‘Carbon tax repeal submission cover sheet’ must accompany all submissions. Please complete it, and either scan it or take a photo of it, and email it with your submission.

Further details are at the following link:

http://www.environment.gov.au/carbon-tax-repeal/consultation.html

Image attribution: mpeterke