Change has economic dimension
CLEAN energy is vitally important to Australia in the changing political world surrounding climate change. With 85 per cent of the nation’s electricity generation capacity fuelled by coal and with generation being the largest single contributor to greenhouse gas emissions, policy decisions on how to handle change will have dramatic impact.
That’s why the federal Government’s commitment to having an emissions trading scheme up and running by 2012 will affect everyone.
Not only will energy prices rise for industrial, commercial and residential consumers, the choices we make about future energy supplies will be vastly different from the ones that shaped our existing economy.
For some time it has been evident that business generally was running ahead of politicians and bureaucrats on climate change.
For instance, AGL Energy in March was the first Australian company to sign up to an emissions trading scheme, joining the Chicago Climate Exchange.
The Darwin Declaration of energy ministers from the Asia Pacific Economic Co- operation forum in late May paid little regard to climate change, reflecting the the vast differences between the 21 economies represented. Alongside APEC is an energy business advisory group of substantial Australian companies interested in energy which held a gas forum before the APEC meeting.
It recommended APEC countries should institute an immediate review of national energy and greenhouse gas reduction policies ‘‘ with emphasis on establishment of an equitable and co- operative mechanism to place a value on carbon emissions across the region.’’
The gas forum report urged the energy ministers to recommend to the September summit in Sydney they commit to a new resolve on effective regional action and reform of institutional arrangements to address the dual challenge of energy security and climate change.
Gas Forum co- ordinator, Bob Pritchard, said Prime Minister John Howard was ‘‘ spot on’’ in characterising climate change as an issue with major economic implications. He had also correctly recognised that a price must be set for carbon emissions. Pritchard says the Darwin Declaration had encouraged energy ministers to address the APEC Gas forum recommendations. ‘‘ They might never decide on a regional emissions trading scheme but, so far as I am concerned, their declaration is a significant indicator of the possible future direction of environmental policies.’’
APEC is an important regional forum that Australia will need to have backing emissions trading because unilateral policies will not work, despite the view of the George W Bush Administration in the US that it is up to individual countries to work out the climate change strategies which best suit them.
Howard’s task group on emissions trading has urged a degree of caution — a proposition that is endorsed by industry.
‘‘ Australia should not pay higher energy costs than necessary to achieve emissions reductions, in other words, governments need to let the market sort out the most efficient means of lowering emissions with all low emissions technologies on the table and that of necessity must include nuclear power,’’ Howard said in his recent announcement.
Howard has promised a world- class emissions trading system, more comprehensive, more rigorously grounded in economics and with better governance than anything in Europe, which is just as well because the European scheme introduced two years ago is widely regarded as a failure.
But there is no doubt Howard is right when he says implementing an emissions trading scheme and setting a long- term goal for reducing emissions will be the most momentous economic decisions Australia will take in the next decade.