Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Hansard source

I move:

That this bill be now read a second time.

The Australian government accepts the advice of climate scientists that greenhouse gas emissions are contributing to climate change and that this poses great risks to our environment, our economy and our society.

Climate change is a diabolical international problem with an achievable international solution.

In this matter, Australia has a choice.

We can be part of growing international action to reduce greenhouse gas emissions and use the market to reduce emissions at least cost to our economy.

Or we as a country can reject the advice of scientists, reject the advice of economists, ignore our international responsibility, and in so doing put our future prosperity at risk.

The Australian government has a responsibility to act in our national interest to be part of the international solution. Australia will not ignore that responsibility. This government will not ignore it.

Australia is in fact one of the top 20 greenhouse gas emitters internationally, and the highest per capita emitter amongst the advanced economies.

And anyone who suggests to the Australian community that we can have a free ride and that other nations with lower per capita emissions and less-developed economies must take all the responsibility while Australia does nothing is engaged in nothing less than an act of deceit.

That pathway will lead to retaliation in our trading relationships.

Australia has the 14th-highest GDP per capita in the world. Does anyone seriously think that our Asian trading partners, which are so vital to our economic future, which have much lower per capita income, which are dragging hundreds of millions of people out of poverty, will give us a free ride in tackling climate change? They will not.

Australia must do its fair share—and it is in our economic self-interest to do so, because the economies that will be competitive in the 21st century will be those that innovate, those that move to clean energy, those that reduce the emissions intensity of their economies.

If we are the innovators, if we reduce the emissions intensity of our economy, if we utilise our renewable energy resources, Australia will have that competitive edge.

Now, the Gillard government began this process through the enactment of the clean energy legislation last year, and the commencement of the carbon price mechanism.

And let's be clear about it—we have introduced an emissions trading scheme that commences with a three-year fixed price period where the carbon price is fixed just for those three years. After that transitional period, we will have a fully flexible emissions trading scheme where the carbon price will be set by the market—a market that will be international in its nature.

The carbon price began 80 days ago and the world has not ended, as those opposite had forecast. We have simply begun a sensible economic transformation and started the process of cutting our greenhouse gas emissions in an economically responsible way.

From 1 July 2015, when emissions trading commences, national greenhouse gas emissions will in fact be capped, enabling Australia to meet targeted cuts in emissions each year.

These targeted cuts in emissions reflect the commitments that have been made by this country to the international community—commitments that reflect our fair share of the task in tackling climate change, commitments that both sides of politics have signed up to.

But the baseless fear campaign by those opposite against action on climate change has demonstrated that they have no commitment to anything at all. The only thing that matters over there is the shallow political opportunism that they have engaged in. Any deceit will do. But it will not do for the good of this country.

As our Prime Minister made clear just over a year ago, this government is on the right side of history.

This bill that I am introducing today and the associated bills make amendments to the Clean Energy Act 2011 and related acts which will extend the international dimension of our contribution to the challenge of climate change.

They give legislative effect to an interim link between Australia's emissions trading scheme and the European Union Emissions Trading System, along with a number of changes to Australia's scheme to facilitate this linkage.

This bill also makes minor changes designed to improve the flexibility of Australian auctions of carbon units and to recognise specific circumstances around the treatment of natural gas under the Australian scheme.

International linking

If I could turn to the issue of international linking, which is at the heart of the bill that I am presenting. The bill means that from 1 July 2015, we will be linking the Australian carbon price mechanism to the European Union's emissions trading scheme. It is an important international agreement that has been reached between the Australian government and the European Commission. This confirms that the fixed carbon price will end on 30 June 2015 and that we will move to a fully flexible emissions trading scheme where the Australian carbon price reflects the price in the largest carbon market in the world.

In other words, the Australian carbon price will reflect the price in our second largest trading bloc and be the same as in at least 30 other countries, including the United Kingdom, France and Germany. Our carbon price will be consistent with that which obtains in countries inhabited by no fewer than 530 million people—making a mockery of the fallacious argument that Australia is acting alone, or somehow has a carbon price ahead of the pack. Our carbon price will in fact be consistent with that which obtains in 30 other countries, including, in aggregate, our second largest trading bloc.

The European Union Emissions Trading System was the first international carbon market and now makes up more than three-quarters of the world’s carbon market. It has operated since 2005 and has delivered cost-effective emissions reductions across the European Union.

Overall, linking the Australian emissions trading scheme with the European ETS is good for Australian industry, good for our economy and good for our environment.

Linking means that an Australian business with a carbon price liability under our scheme will be able to purchase a carbon emissions unit—which is effectively a permit to emit a tonne of greenhouse gas—in either the Australian or the European carbon markets.

Those permits in fact can be bought now, for compliance in the period following 1 July 2015 in the Australian scheme.

Businesses know that the most cost-effective way to cut pollution is through an open market mechanism and that is exactly what this legislation ensures. Providing Australian businesses access to the world’s largest carbon market allows emissions to be reduced in the most cost-efficient way, by broadening the pool of carbon units that can be used by businesses.

As well as benefiting businesses, linking also has wider economic benefits. Linking will reduce the cost of the emissions reduction effort to the Australian economy.

As Treasury modelling clearly demonstrates, without the ability to access international carbon markets, without the ability for Australian businesses to purchase international permits, the cost of reducing emissions in our economy would double in order to meet Australia’s bipartisan unconditional emissions reduction target. This is something those opposite need to carefully consider. They say they have committed to the same emissions reduction target. They oppose international linkage, which means that their policy will cost at least double if they were to genuinely pursue the emissions reduction effort they say they are committed to, and that is the importance of this bill to the Australian economy. It will achieve our emissions reduction targets at the lowest possible cost.

We have always, as a government, recognised the benefits of linking in this way, and that is why it has been the Labor government’s policy to link with international carbon markets. In fact, linking with international carbon markets has been Australian government policy since 2007 under Prime Minister John Howard's government. The Australian government’s 2007 Shergold report, the report commissioned by Prime Minister John Howard, had this to say:

As a supporter of the development of a global system, Australia has a direct interest in promoting links between comparable schemes. Any Australian domestic trading scheme should be designed to enhance the scope for links, both formal and informal, with as many different systems as possible.

It is common sense to support international linking because it assists in providing emissions reduction at least cost and it contributes to knitting together different national and regional schemes.

Mr Hunt interjecting—

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