A step backwards for climate action: The truth about the carbon tax

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Solidarity has produced a factsheet outlining why the carbon tax package will not cut emissions, how the approach of pushing costs onto workers has given Tony Abbott an enormous free kick, and that there is an alternative approach—taxing the polluters to fund government investment in renewable energy

1. This scheme will not reduce Australia’s emissions

Labor and The Greens have told the media that as a result of the carbon tax, “Australia will start to cut carbon pollution immediately”. This is not true. Treasury modelling shows Australia’s emissions will continue to rise until 2030. By 2020 emissions will rise to 621 MT from the 2010 figure of 578.

The claimed “reduction” of emissions by 5 per cent by 2020 only occurs through buying offsets, which are to make up two-thirds of the emissions “cuts”. The only aspect of this modelling which is outdated by the final details of the package is that domestic offsets will replace overseas offsets.

2. Emissions Trading Schemes (ETS) have failed around the world

The package has an ETS at its centre—phased in after just three years of a carbon tax.

The European Union ETS has been in place for over five years and emissions are still rising. Emissions trading creates a new market for speculators to play in—the very people who brought the global economy to the brink of collapse. Allowing the market to set the carbon price has seen it crash from €30 to just €0.10 in 2007, before recovering again and recently crashing back to €11.50.

3. There is very little new, genuine investment in renewable energy

Labor and the Greens are claiming this package will deliver a “massive $13 billion investment in renewable energy”.

But the $3.2 billion in renewables funding to be overseen by new body ARENA is recycled funding from existing projects.

Of the $10 billion promised for the Clean Energy Finance Corporation (CEFC), only half is set aside for renewables—the rest can be spent on vaguely defined “clean energy measures” which could include gas.

While compensation for corporations will start in full next year, proper funding for the CEFC has been put off until well after the next election. Melbourne Uni renewables experts Patrick Hearps and Dylan McConnell noted, “The budget provided indicates that most of this money won’t be available until the latter half of the decade, with only $944 million provided to 2015.”

Any investment in renewable energy planned under this scheme will take place through the private sector and be driven by commercial imperatives. Climate Change Minister Greg Combet said, “it will be a commercially oriented body and is expected to earn returns on its investments… It’s not a grants body… It provides loans, loan guarantees or equity investments.”

This is an even worse model than Labor government’s existing Solar Flagships program, which requires the private sector to fund two-thirds of any project.

Relying on the free market to come up with most of the funds for renewables risks seeing projects collapse. Solar Systems, the Victorian company which won government funding to build a solar plant at Mildura, was forced to close in 2009 when it could not secure enough additional private sector funding.

4. This tax will be paid by ordinary people NOT the big polluters

Government climate adviser Ross Garnaut’s most recent report said, “Every dollar of revenue from carbon pricing is collected from people, in the end mostly households, ordinary Australians. Most of the costs will eventually be passed on to ordinary Australians.” He continued, “In the long run, households will pay almost the entire carbon price as businesses pass carbon costs through to the users of their products”.

5. This is not a “small step forward”

The Gillard government is gambling that the compensation for households contained in the package will ensure people are not out of pocket. But John Howard’s modelling for the GST said the same thing, and many, pensioners included were still worse off. Many people are going to blame the carbon tax for these price rises, whether it causes them all or not. By pushing the burden of the carbon tax onto ordinary people, general public support for action on climate change has been undermined. It has allowed Tony Abbott to whip up public hostility.

Greens MPs have extracted some modest concessions on renewable energy funding, but at a cost of supporting a policy that helps Abbott by entrenching the idea that ordinary people must bear the cost of action on climate change.

The Greens themselves have become apologists for market solutions that won’t work. The Greens and the climate movement must not buy into the idea that raising the carbon price further is the way to see serious action on climate change. All this will do is alienate working class support and play into Abbott’s claims that prices will go “up and up and up”.

6. There is an alternative

It would be a mistake for the climate movement to think that it has to support the Gillard/Green carbon tax, or to think that the only alternative to the carbon tax is Abbott’s climate deniers. The best way to stop Abbott is to push Gillard and the Greens into delivering the direct government investment that can build renewable power stations and more efficient and extensive public transport.

We should oppose what is a useless and counterproductive carbon tax scheme, and refocus on campaigning for real government investment and planning to drive growth in renewable energy. The NSW Greens’ state election proposal, for the NSW government to fund three small solar thermal power stations for $2 billion each is a good example of effective action. This is perfectly possible—Spain is expected to have almost enough solar thermal power installed by 2013 to match the capacity of NSW’s Bayswater coal power station, which can power two million homes.

The climate campaign must guarantee to defend jobs and launch a positive campaign to create even more green jobs – measures which would actually win popular support for climate action. But winning this will require building a strong grassroots climate movement able to force real change onto a minority government too committed to maintaining business as usual.

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