Australia Plans Carbon Fund to Cut Investor Risk, Survive Attack
The government will design a new carbon-abatement fund in Australia as a long-term vehicle, minimizing the uncertainty plaguing clean-energy projects, the environment minister said.
“The system we put in place can last a number of decades,” Greg Hunt, environment minister in Australia’s newly elected government, said today at the Climate Expo in Melbourne. Subsequent governments won’t be able to easily roll back the planned Direct Action policy or reintroduce the carbon tax that Hunt’s coalition is moving to repeal, he said.
Hunt’s opponents in the Labor and Greens parties are making it more complicated for his coalition government to repeal the two-year-old Carbon Price Mechanism along with related agencies in a single vote. Hunt said his party can remove what he calls the carbon tax when the new Senate is seated in 2014 or possibly sooner. His department is scheduled to release a paper this month explaining how Direct Action, including an A$1.5 billion ($1.4) fund to support emissions reductions over the next three years on
“We are purchasing abatement,” Hunt said. “We are not investing speculatively,” he said. His government has introduced legislation to freeze Australia’s A$10 billion Clean Energy Finance Corp., which is using “all borrowed money” to make investments that are “incredibly speculative,” he said.
The Greens teamed up with Labor this week to break up the coaltion’s bill, meaning Senators would vote separately on repealing the carbon price and halting the Clean Energy fund and the Climate Change Authority, an independent adviser on Australia’s emission targets.
“We will vigorously oppose efforts to shut down the Climate Change Authority,” said Mark Butler, the Labor leader on environment. Speaking at the same conference as Hunt, Butler accused the new government of trying to silence “strong, independent voices on climate change.”
Australia should proceed with emissions trading, Butler said. “It lets business work it out,” he said. “It is the most effective, cheapest way to bring down carbon pollution. It is the most commonly accepted response internationally.”
Labor, which introduced a fixed price last year that was among the highest in the world, now agrees that it should be abolished, Butler said. “It’s an agreed point that it’s time to move from the fixed price,” he said.
The coalition’s proposed replacement is inadequately designed, Butler said. “The lack of an overall cap on emissions is a fundamental flaw in Direct Action,” he said, calling it a “dressed up slush fund.”
Direct Action is a “sham” that can’t be scaled up, said Christine Milne, leader of the Australian Greens.
The coalition’s plans to freeze the Clean Energy Finance Corp. is purely political, Milne said. “They have done a fantastic job so far,” she said.
Milne and Hunt disagreed on whether reducing Australia’s emission is getting easier. Milne said Australia has an international responsibility to help pay rising costs for fighting global warming. Hunt said consolidations of manufacturing in Australian will make it easier to meet the nation’s target of cutting emissions by 5 percent from the level in 2000 by 2020.
While the government initially forecast it would need to reduce about 750 million metric tons of carbon over eight years, it now expects to meet the target with roughly half that amount, Hunt said. The collapse of global carbon prices means each unit of abatement is less expensive than before, he said.
While Hunt’s coalition continues to oppose an emission trading system, it wouldn’t doing anything to stop secondary trading around the proposed Emissions Reduction Fund, he said.
“What people do with their private property is not our concern,” Hunt said. “If the Clean Energy Regulator issues permits, holders could sell them to the government, keep them, or sell them to voluntary or international markets,” Hunt said.
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