Monday 7 April 2008

Free permits to pollute not a smart move

Sunday Canberra Times
Sunday 30/3/2008 Page: 25

ISSUING free permits to pollute the atmosphere with greenhouse gases is not a smart move. Which is why it is crucial that the Federal Government accepts the recommendation of its chief adviser on climate change, Ross Garnaut, that all permits to emit greenhouse gases such as carbon dioxide be auctioned.

Coal-fired power generators insist they need free emissions permits or the nation will face a drastic electricity shortage. But Garnaut says that when generators were issued with free permits in Europe they increased electricity prices and pocketed huge profits. The whole idea of the carbon cap and trade system to be introduced in 2010 is to cut emissions and encourage the use of low-emitting technologies by putting a price on gases such as CO2 (via tradeable permits that reward low emitters).

Issuing free permits to big emitters will undermine the entire scheme. Reducing emissions to 60 per cent of 1990 levels by 2050, as the Government intends, is unlikely to have a. huge economic impact. Australians will feel far more pain if the global credit crunch causes a recession. If an emissions permit rises to $30 per tonne of CO2 within a few years, this will add 7.2c to a litre of petrol, much less than normally can occur now.

Its impact will not require big compensation packages for low income earners. Governments will also be able to use some of the proceeds from permit sales for the development and deployment of low-emission technologies, and for helping make energy efficiency gains by improving public transport and subsidising home insulation.

Research into developing "clean'' coal should not be confined to capturing and storing emissions from power stations, as Garnaut seems to prefer. That technology is unlikely to prove a winner. Serious funding should also go to promising technologies such as carbon fuel-cells, among others.

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