Jennie George (Throsby, Australian Labor Party) Share this | Hansard source

The Carbon Pollution Reduction Scheme is the central plank of our government’s efforts to confront the impact of climate change on the Australian economy and on our environment, The scheme, as outlined in our green paper, aims to reform and transform our economy as we move to a more carbon constrained future, bearing in mind Labor’s long-term target of reducing greenhouse emissions by 60 per cent of 2000 levels by 2050. In the words of Sir Nicholas Stern, ‘the greatest market failure the world has seen’ has come about because there has been, up until now, no cost attached to producing carbon pollution and no limit as to how much we produce. It is true that economic growth has been fuelled by a huge reliance on carbon-producing fossil fuels, but the cost of that is now being realised across the globe.

If we are going to effectively tackle climate change we need to harness the power of the market. In essence, our proposed scheme will set limits on how much carbon pollution industry can produce, with the government selling permits up to that limit, thus creating the incentive for business to look for cleaner energy options. Under our scheme, companies can buy and sell permits between themselves and in so doing provide the market mechanism to find the most efficient ways of reducing carbon pollution. We recognise of course that there is no cost-free way to tackle climate change. The effect of putting a price on carbon will be profound and cannot be ignored. That is why it is proposed that moneys raised from the selling of permits will be used to help business and households in moving to a carbon constrained future. Assistance will also be provided to the most heavily emissions intensive trade exposed activities. This is of particular importance to my region, which is heavily reliant for its economic output on coalmining and steelmaking.

The green paper recognises that trade exposed industries may not be able to pass on costs, as they face prices set in international markets and currently compete against companies that will not have comparable carbon constraints. The government are very conscious of the risk of industries choosing to relocate elsewhere. Certainly, carbon leakage is counter to our objectives. Our current preferred position is to allocate up to 30 per cent of permits to emissions intensive trade exposed activities.

It is proposed to provide transitional assistance in the form of a share of free permits to the most emissions intensive trade exposed activities. BlueScope Steel, located in my electorate of Throsby, will fall within this category. There is, however, a continuing concern of that company about the availability of transitional assistance to cover future expansion and growth in production. Similarly, there are some outstanding issues of concern to the local coal industry. They have raised with me the issue of fugitive emissions and whether they can be objectively accounted for, particularly in our local underground mines which provide coal for our steelmaking. They argue that no current emissions trading scheme incorporates fugitive emissions in the mining sector. They have also raised with me that the formula in the green paper, which uses tonnes of emissions per million dollars of revenue, may not be the best measure, as their recent high revenues are largely the result of the huge hike we have seen in commodity prices. I am confident that these concerns will be further explored in the ongoing discussions between industry and a range of our ministers. In a recent speech, the Minister for Climate Change and Water emphasised:

… the precise thresholds, proposed rates of assistance, the structure of assistance and the preliminary list of activities that would be covered are indicative only.

Ultimately, we need global action to tackle global climate change. However, developed economies should be showing the way. We need to move to a low-pollution economy in an economically responsible manner and in a way which protects our national interest, our industries and our jobs. However, we all need to accept that the longer we delay action the harder it will be and ultimately the more it will cost.

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