With the Senate unable to pass the CPRS, Rudd could be taking his amended scheme to the next election. The deal negotiated by Penny Wong to secure Malcolm Turnbull’s support massively increases the handouts to business. Power generators and mining giants were the biggest winners, sharing billions in extra handouts. Natural gas and food processing have also been awarded millions, and agriculture has been guaranteed permanent exclusion from the scheme.
The total compensation for polluters in the CPRS now runs at over $20 billion.
How will these colossal sums be paid for? Rudd’s compensation to households for prices rises as a result of the CPRS is to be reduced by almost $6 billion by 2020.
The government justifies this by saying estimates of price rises have turned out to be less than expected. But just days after they made the claim, the Independent Price and Regulatory Tribunal in NSW estimated price rises caused by the scheme would be more than double the government estimates.
Boosting business profits
The handouts to business will result in huge windfall profits. Companies will simply pass on price rises to consumers and pocket the cash compensation.
A recent report on the European Union scheme found “energy companies simply added their theoretical costs to the price of energy. According to the German ministry of the environment, in 2005 this practice resulted in the companies raking in profits between €6 and €8 billion at the expense of their customers.”
Business admits that Rudd’s CPRS will not close a single coal-fired power station. Nathan Fabian, the chief executive of the Investor Group on Climate Change, told the Sydney Morning Herald, “what the compensation arrangements do is protect incumbents to keep doing what they were doing.”
Emissions trading schemes like Rudd’s CPRS allow the most polluting industries to delay reducing emissions as long as possible, buying their way out through purchasing permits from other industries or through dodgy overseas “offsets” schemes. Domestic offsets have also been expanded under to CPRS to include “reduced deforestation”—or forests that are not cut down. But often there will be no way of knowing whether such forests would have been cut down in the first place.
The result under Rudd’s CPRS would be that Australia’s emissions would not fall until after 2035.
The CPRS will actually allow a massive expansion in domestic emissions. A string of new coal-fired power stations now look like going ahead. WA is talking of reopening two coal power stations that had been shut down. New coal power stations are planned in Queensland and NSW. The low carbon price under the CPRS ensures that coal will remain the cheapest way to meet Australia’s growing power needs.
Once eventually passed Rudd has designed his scheme to be locked in all the way to 2020.
Legal advice commissioned by The Greens confirms that future governments would be unable to raise the pathetic 5 per cent emissions reduction target. Raising the target would require the government to pay out billions more in compensation to business.
This confirms that the option of passing the scheme now and improving it later on is impossible. The CPRS does not represent “a start” in reducing greenhouse emissions—it is designed to stop serious action ever being taken.
Business leaders Heather Ridout of the Australian Industry Group and Don Volte, CEO of Woodside Petroleum let the cat out of the bag by admitting the CPRS is part of avoiding serious action to tackle climate change. Volte commented, “The prospect of a carbon price in Australia is unlikely to diminish if the legislation if deferred or defeated but such action could result in higher costs as other policy choices fill the void.”
Ordinary people will pay the price of the government’s continued refusal to take a stand against the big polluters. While the right wing papers attempt to place the blame on the “greenies”, the need for the climate movement to come out strongly against false solutions like the CPRS is more urgent than ever.
By Amy Thomas and James Supple