It’s been a good week for carbon pricing. On Monday, a Nielsen poll suggested 54 per cent of Australians haven’t felt a negative impact since it was introduced. And yesterday afternoon came news that the government would link the Australian emissions trading scheme to the European Union scheme, which has been in operation since 2005.
This was not a surprise – the Climate Change Minister, Greg Combet, foreshadowed the link at the COP17 Climate Conference in Durban in December. However, this announcement has the potential to further swing public opinion around to the idea that carbon pricing is not so bad after all.
Most of the media response has focused on the removal of the floor price. When the carbon ”tax” ends and the emissions trading scheme kicks in on 1 July 2015, the 200 or so Australian companies with a liability under carbon pricing have two options: reduce emissions themselves, or buy from others.
The floor price was designed to guarantee a minimum payment to these sellers. Now that it is gone, reducing emissions will be cheaper, at least in the short term, for Australian companies. They will be able to source credits from Europe, which yesterday were trading at $9.80 per tonne. They should be happy. So too should other Australians, because the cost to the economy of meeting Australia’s emissions target just came down.
However, the longer-term public relations boost to the government comes from the link with the EU. The climate debate in Australia has been bedevilled since the Copenhagen climate conference in 2009 by the claim Australia is too far ahead of other countries in dealing with the issue – that we are doing more than our fair share.
Other countries do price carbon. For example, parts of China are trialling emissions trading, as are parts of the US, and India has a carbon tax on coal. In fact, 30 per cent of the global economy will be covered by emissions trading by 2013. This has been lost in the debate, not least because Australia’s floor price made it one of the more expensive schemes around. However, now that it will effectively be synchronised with emissions trading in 30 countries, it will not be possible to mount the argument that we are going it alone. From a public relations perspective, this may be the single biggest benefit of the announcement.
Other aspects of the announcement are interesting from a PR perspective too. Why did the government choose to drop this good news now? Would it not have made sense to negate some of the more furious criticism about the cost of the scheme a few weeks ago? The timing of the announcement may have been planned, or it may simply have been that the negotiations with the EU did not reach a conclusion until now. Whether it was deliberate or not, the timing could not have been better.
The carbon price is in place, as is the sky. Australians are beginning to question whether the policy will actually cost them that much at all. Power bills for the first period to include carbon pricing have mostly not yet arrived. The government is making the most of this window – while critics of the scheme are feeling under pressure – to deliver another punch: it’s going to be cheaper than you thought, and we are falling into line with the rest of the world (or at least 30 other countries).
Added to this, governments tend to avoid reneging on agreements they have reached with other countries, regardless of who was in power at the time of the agreement. Some might argue it was reckless to commit the country to an approach predicated on a policy that the Opposition Leader has made clear he would like to repeal. There are no legal impediments to walking away from this deal with the Europeans if the scheme is repealed – but it’s not a good look.
There are negative aspects to the move. It’s bad news for some hardened climate activists, who support climate action but not emissions trading. It’s also potentially bad news for those who support preserving tropical forests as a means of storing carbon, as the EU does not accept these credits into its scheme.
But there can be little doubt this announcement has been a PR win for the government. In June, the Climate Institute, a think tank, released polling showing only 44 per cent of Australians believed the Coalition would repeal carbon pricing if they won power. This number must now surely drop further. Carbon pricing just got more difficult to dislodge.
Andrew Ure is managing director of OgilvyEarth, a sustainability communications company, and a former official with the Department of Climate Change and Energy Efficiency.
By Andrew Ure.