Warning on carbon price lag

Adelaide Advertiser
Tuesday 21/9/2010 Page: 41

AUSTRALIA is trailing the rest of the world on climate change policy and needs to introduce a price on carbon if it is to remain competitive, a leading climate change economist says. University of Oxford senior research fellow Dr Cameron Hepburn says the cost of renewable energy is decreasing at a rate that will make it competitive with carbon-intensive sources within 10 years. Dr Hepburn said while the UK already has the Carbon Reduction Commitment and Europe had an emissions trading scheme. G20 emerging nations were leading the way.

"There is no risk of Australia taking a leadership position, we are so far off the pace, the question is whether we are last or second last", Dr Hepburn told a mining conference in Wollongong yesterday. "There are trading schemes planned in other parts of the world, Japan and South Korea. "China has just announced it is getting on with emissions trading in eight of its provinces, and five big cities".

Dr Hepburn said the Chinese had committed to establish a scheme in the next five years and was likely to act sooner. "India has, as of July, imposed what they are calling a carbon tax on coal, domestic coal, and it also applies to imported coal", he said. "For the past few years we have seen this rhetoric from Europe and the US that if you don't sort out your emissions we are going to slap tariffs on you. Well, India has done it before anyone else".

China would spend $U5750 billion ($799.79bn) on alternative energy over the next 10 years, while India was aiming to reduce its emissions by 25% by 2020. Dr Hepburn said. "My view as an economist, and I think most economists that I talk to, is that Australia needs carbon pricing", he said. "If we don't price carbon soon, we are going to be forced to do it at some point, in a way we are not going to like very much". Dr Hepburn said the position put forward by BHP Billiton chief executive Marius Kloppers had merit. "Effectively, Kloppers' call is for 50% of Australia's emissions to be covered by trading and for the remainder to be covered by taxation. There isn't a lot to disagree with; it is economically literate and rational".