Five Reasons Why Labor Should Block Repeal of the Carbon Tax

Tony Abbott has won the election he billed as a referendum on the carbon tax. The Coalition argue that Labor copped a belting from the electorate from a deeply unpopular tax (what tax is popular?), so Labor should support Abbott’s repeal of the carbon tax.

There are five reasons why Labor should not support a repeal of the cabon tax.

First of all, this election was not a referendum on the carbon tax.

There were a wide array of reasons why some people switched their vote away from Labor. Exit polling indicated that the economy and jobs was far and away the biggest issue, with 31 per cent of those surveyed nominating it as their major issue. By comparison, the carbon tax was nominated by just 3 per cent of voters as the biggest issue of the election.

Secondly the public’s fear about the carbon tax has subsided.

Before the carbon price was introduced polling in May 2012 indicated that 48 per cent favoured repeal and three-quarters thought they?d be worse off. By November, a few months after the carbon price came into effect, a Fairfax poll found 56 per cent felt no worse off. Another Fairfax poll in July 2013 found 62 per cent did not favour repeal of the carbon price.

Thirdly the longer repeal of the carbon tax is delayed, the more likely it is to stay.

The carbon tax didn’t end up being an economic “wrecking ball”. If Labor and the Greens resist repeal then the carbon price is likely to stay in place until July 1, 2015. That?s because the new Senate won’t be able to vote on repeal until after June 30, 2014. This means a full three years for it to sink in to the electorate that the sky didn’t fall in.

Fourthly resisting repeal puts the scrutiny onto Abbott’s weakness – his inadequate climate change policy

Abbott was elected with the understanding that he remained committed to a 5-25 per cent emission reduction target.

Labor can argue that until the Coalition provides a credible plan for how they’ll deliver on these targets, Labor cannot, in all good conscience, vote for repeal of the carbon price. This then provides an opportunity for Labor to do what Abbott did to them – use opposition to focus critical scrutiny onto the government. So far the Coalition has managed to get away with providing scant detail on its Direct Action policy.

Finally, and most importantly, a price mechanism on carbon, whether it be a tax or an emission trading scheme is the most cost effective way for this country to reduce emissions. Labor must not lose sight of that fact.
Matthew Nott

Coal Has No Future

Coal-fired electricity may have little or no economic future in Australia, a new analysis has found. A team from the University of NSW has shown that even without a carbon price, and even with the assumption that carbon capture and storage will eventually become commercially available, coal may not be able to compete with renewable electricity.

Carbon capture and storage (CCS) captures CO2 emitted by fossil-fuelled power stations, compressing and transporting it by pipeline, and burying it in repositories deep underground. In practice CCS technology has turned out to be more complicated and expensive than initially appreciated. Large-scale CCS systems for electricity generation haven?t been built. They appear to be years ? likely decades ? from possible commercial deployment.

The University of NSW team used government estimates of the prices for different generation technologies and fuels in 2030. They also looked at a wide range of possible future carbon prices and carbon capture and storage prices.

The results show that coal with carbon capture and storage scenarios are likely to struggle to compete economically with 100 per cent renewable electricity in a climate-constrained world, even if CCS is commercialised by 2030.

Even in the unlikely event that the carbon price were to be zero in 2030, electricity generated from coal with CCS would at best be equal in cost to the 100 per cent renewable energy scenario. However, if there were no carbon price, there would be no incentive for bringing CCS to commercial maturity in the first place.

In summary, the UNSW modelling suggests that, in a future climate-constrained Australia, there would be little role for a domestic coal-fired electricity industry, with or without CCS.

The research confirms that policies to pursue very high penetrations of renewable electricity, based on commercially available technologies, offer a reliable, affordable and low risk way to dramatically cut emissions in the electricity sector. There is no need to invest in new, expensive, unproven, high-risk, fossil fuel technologies.
Matthew Nott

How To Vote?

Climate policy has been missing in action in all the leaders debates, with focus falling on balancing the budget and dealing with asylum seekers. But neither of these issues are likely to be resolved without considering climate change.

Most people know where the major parties stand on climate change and renewable energy. But what about the candidates in Eden-Monaro? The Solar Scorecard website (http://www.solarscorecard.org.au) rates each depending on their responses to several key questions. The questions cover their support for the carbon price, for the current Renewable Energy Target – or for an increase – and whether they support government investment in renewable energy development and projects. Where candidates haven?t completed the survey, their party positions are shown.

Remember that you must vote for every candidate in the House of Representatives, in your order of preference. You don?t have to follow the order in any ?How to Vote? leaflet. Voting ?1? for a party that might not win is not a wasted vote, nor does it weaken or split the vote in any way. If your chosen candidate doesn?t get enough votes to be elected, those votes will be redistributed to their next preference, until one candidate has an outright majority.

In the Senate, you must either vote for every single candidate in order from 1 to 110 (for NSW), or simply place a ?1? above the line for the party of your choice. This saves the trouble of making your own selections byhanding over your right to choose preferences to that party. Above-the line voting locks you into the preferences shown on that party’s ticket.

The system of voting in the Senate election gives the best chance for the smaller parties to get at least one representative elected. If they don’t get enough, your vote will still be transferred to your next preference: so it’s safe to follow your heart first, and then your head!
Matthew Nott

Direct Action needs numbers.

The Coalition’s Direct Action policy states:

“Businesses that undertake activity with an emissions level above their ‘business as usual’ levels will incur a financial penalty.”

It seems reasonable to assume that a fair proportion of firms are likely to exceed their baselines.

‘Business as usual’ emissions for many companies has been relatively low over the last 5 years, for three reasons.

The last five years includes the period of the Global Financial Crisis, which led to a major drop in industrial production for many firms.

Also, a number of mining firms have expanded capacity during the five-year period, and their steady state production going forward is likely to be noticeably higher than the average over the past five years.

Lastly, since 2008 demand for electricity has gone against past trends and declined. If electricity demand returns to growth as expected, then generators will find themselves exceeding their baselines.

Penalties are therefore likely to come into play.

A large number of companies are likely to be paying penalties under the Coalition’s Direct Action scheme. These companies include Origin Energy, Rio Tinto, BHP, OneSteel, Qantas, Virgin, Alcoa, Xstrata, Woodside Petroleum and Santos.

The Coalition’s climate spokesman Greg Hunt hasn’t indicated the level of penalty the Coalition might impose for companies exceeding their baselines.

That is important information and should be released before the election.
Matthew Nott