The Commonwealth Government’s recent decision to shelve the introduction of a Carbon Pollution Reduction Scheme (CPRS) should be applauded, not lamented, says JOHN POWER. What do you think?
HAVE YOUR SAY IN THE ‘POST A COMMENT’ SECTION BELOW.
Recently, the Green Building Council of Australia issued a press release lamenting the postponement of the CPRS: “‘The Green Building Council of Australia (GBCA) continues to be supportive of the proposed CPRS and is extremely disappointed by its delay,’ says GBCA chief executive Romilly Madew.”
While the intention behind such a scheme may be laudable, the fact remains that the entire policy could be seen as economically backward, unsophisticated and socially bankrupt – the result of an unenlightened, simplistic approach based on higher prices as a supposed disincentive to pollute.
The alarm bells associated with a CPRS should have sounded as soon as the practicalities of the scheme were announced. Not only was there provision for the issue of free permits to some of Australia’s largest polluters, effectively laying an uneven commercial polluting field, but there was also a lack of planning associated with the eventual adoption of the free market trading of permits. Two examples: not all polluters are equally profitable businesses, which means that a free market approach to carbon permit trading might well favour certain types of polluting industries (including some deemed to be essential) and not others; second, not all polluters are geographically dispersed – a permit-based scheme could very well result in a small band of heavy polluters (from the most profitable sectors) creating a huge amount of pollution in a small geographical area of the country, potentially damaging sensitive environments.
Furthermore, a cynic might look at a ‘cap and trade’ scheme as a no-cost imposition on major polluters, given that the increased costs of purchasing carbon permits and monitoring compliance would inevitably pass on to consumers. Perhaps that’s why the business community has been so supportive of the CPRS – it allows pollution to continue while creating a cost burden that consumers must ultimately bear.
‘ENVIRONMENTAL’ TO ‘MONETARY’ VALUE
This is the most insidious aspect of the entire scheme: it converts an ‘environmental value’ into a ‘monetary value’, imposing greater financial costs on the community as a simplistic solution to some industries’ extravagant pollution practices. Surely a more commonsense scheme could be devised to reward industries that cut emissions instead of penalising those that fail to adopt progressive practices. We as a society have not expressed a desire to make emissions more expensive; we want to reduce them! This could be achieved by encouraging the adoption of alternative energy sources for selected highly polluting industries (such as placing aluminium smelters at sites where wave or geothermal energy is available); mandating the use (over a realistic transition period) of specific low-energy products – from hybrid cars to low-energy building products; or offering rewards to progressive companies (such as reduced payroll tax for employees who ride a bike to work).
LONG-TERM WIND-UP COSTS
How would a CPRS be wound up in the event that it was no longer necessary? Permits issued at, say, $10 each initially might well become highly expensive commodities under free market trading. Would the poor taxpayer be stuck with a massive debt if all permits had to be bought back? This is a subject that has received scant attention in the popular media, and yet if offers another clue as to why big business thinks a CPRS is a great idea.
The above comments are designed to stimulate debate on this topic – have your say in the ‘Post a Comment’ box below. Do you have a different take on the scheme? All opinions are welcome!