<a href="http://www.gmagazine.com.au/blogs/leon#">The Business of Green</a>

The Business of Green

Money matters in the green world, by Leon Gettler.

Rudd's climate change credibility gone

carbon scheme postponed

Credit: iStockphoto

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And so the Rudd Government has announced that it’s putting the emissions trading scheme on ice saying it will be delayed until the current Kyoto deal expires in 2012.

It is worth comparing this to Prime Minister Kevin Rudd’s speech just five months ago to the Lowy Institute where he said Australia could not afford to delay.

"When you strip away all the political rhetoric, all the political excuses, there are two stark choices action or inaction. The resolve of the Australian Government is clear: we choose action, and we do so because Australia's fundamental economic and environmental interests lie in action. Action now. Not action delayed … The consequences for Australia of failing to act domestically and internationally on climate change are severe. We know from formal global and national economic modelling that the costs of inaction are greater than the costs of acting. Treasury modelling from October 2008 shows that economies that defer action on climate change face long term costs around 15 per cent higher than those that take action now. The sooner we act, the better placed our companies will be to benefit from new emerging global markets, and to benefit from the economic gains from improved efficiency. Moving to a low-pollution economy will require significant investment in renewable energy, carbon capture and storage, energy efficiency and other low
emissions technologies."

What happened to the great moral issue of our time? Politics got in the way.

Rudd has been widely attacked for the back flip. The Australian says Rudd has effectively destroyed his credibility, revealing a government low on political conviction.

The Australian’s Paul Kelly puts it even more succinctly: "There will be many words written about Rudd's retreat but it is simply crystallised: he is a prime minister without the courage to champion the policy that defined him."

Lenore Taylor in the Sydney Morning Herald is even more scathing. "Who would have thought the difference between ‘the greatest moral challenge of our age’ and ‘absolute crap’ could wind up being so small?"

In the Herald Sun, Olga Galacho says Rudd is captive to the coal industry.

Malcom Farr in the Daily Telegraph says that "climate change has been sent to the attic like an embarrassing relative to stay there for two years, cut off without a cent in the May 11 Budget."

And Michelle Grattan in The Age says the scheme had in effect reached its use-by date, flummoxed by opposition in the Senate and the failure at Copenhagen.

Sadly, an emissions trading scheme might be just the thing the Australian economy needs. A report put out by the Grattan Institute (pdf here) found that a carbon price would have next to no impact on costs and competitiveness - far less than other factors such as exchange rates, labour market costs, and fuel prices.

"Compared to other economic reforms, such as reduction in tariff protection over the 1980s and 1990s, a carbon price requires relatively little structural adjustment," the report says. "Consequently, we find that concerns about industry competitiveness are misplaced, and no reason to delay introducing a carbon price. The adjustments for emissions intensive industries are manageable and inevitable if we are ultimately to constrain carbon emissions. Australia would be better to start restructuring its economy for the inevitable rather than persisting with an economy not structured for a carbon constrained future."

Australia is entering another resources boom and a carbon price would position us globally.

Rudd has shelved the ETS to neutralise the Opposition’s claims of another tax. Doing that also allows the Government to focus on health in the lead up to the election, one of the Opposition’s weaker points. It’s just that climate change was sacrificed along the way.