Polluters to `profit' from carbon trade

Canberra Times
Saturday 29/11/2008 Page: 15

Australia needs a carbon permit reduction scheme to ensure big polluters don't profit from well intentioned public efforts to cut greenhouse emissions, a leading economist says. Director of the Australia Institute policy think tank Richard Denniss claims a loophole in the Rudd Government's emissions trading scheme means energy savings would free tip carbon permits that could then be re-allocated at a cheaper price to polluters. The scheme does not reward energy efficiency, making it futile for ]tome owners or businesses to invest in tackling climate change, he said. "No one wants to hear this policy home truth - it's like farting in the elevator," Dr Denniss said.

'By saving energy, people will only increase the amount of pollution others can keep on emitting. Every tonne of carbon dioxide saved just frees tip a tonne that can be used by elsewhere." Dr Denniss said Australia needed to develop a "secondary market" to assign a market value for home energy savings and make them count as part of a national effort to cut greenhouse emissions. "Otherwise, people will feel cheated when they realise the money they've spent installing solar panels or energy-efficient lights will ultimately benefit the aluminium or cement industries, not the environment.

They may as well turn on all the lights and run the air-conditioning with all the windows open." The Rudd Government announced yesterday it would issue its white paper outlining the final design of its proposed emissions reduction scheme on December 15, after Climate Change Minister Penny Wong returns from a United Nations climate change conference in Poland. Senator Wong said the global financial situation had made it crucial to provide business certainty on how the scheme would work.

"The Rudd Government has heard the calls for certainty from business leaders and that is why we are proceeding to finalise scheme design and get on with the job of putting the scheme in place," she said. Dr Denniss said that under the Rudd Government's scheme a fixed cap on emissions would also "act as a floor", below which greenhouse emissions could not fall. "It reflects the demands of the polluters rather than scientific evidence. Australian households have been disempowered. There is virtually nothing they can do to reduce Australia's total emissions below the target set by the Government.

The irony is that the less we do to cut emissions, the more the big polluters are forced to do," he said. "If demand for electricity is reduced, coal-fired power stations need to buy fewer permits, which frees tip more permits to be brought at a cheaper rate by other industries." Dr Denniss said smart meters could be used to audit and verify home or business energy savings, "but there's no point in having smart meters if you've got a dumb policy".

University of Melbourne professor of geography and environmental studies Peter Christoff said the loophole was "a major contradiction that needed to be resolved" before a national emissions trading scheme was introduced. One solution was to develop an energy-savings credit system that reduces the total volume of emissions permits in relation to community effort, he said. "If the Government does that, people can see their efforts are being acknowledged and that they are making a difference. It also puts the polluters on notice, by progressively reducing the number of permits available to trade."