After dramatically grabbing the Liberal leadership from Malcolm Turnbull last year on the issue of climate change, Opposition leader Tony Abbott has unveiled his own plan to reduce Australia’s carbon emissions by 5% by 2020.
Reactions to the plan, which does not involve a carbon trading scheme like the Government’s proposal, have been mixed.
The Government calls it a carbon con job and says it won’t work, green groups say it doesn’t go far enough and business groups have been cautiously supportive, warning that the devil is in the detail.
Whatever the case, the policy clearly sets Abbott apart from Prime Minster Kevin Rudd and will make climate change a key issue for the Federal election later this year.
Let’s see how the Abbott plan stacks up with a SmartCompany Q&A.
Abbott is selling his plan as a simple alternative to the Government’s. How will it work?
Abbot would create what he calls the Emissions Reduction Fund with the aim of cutting carbon emissions by 5% by 2020, based on 1990 levels.
The key to the plan is incentive payments to businesses. Companies that reduce emissions below existing levels would get paid by the Government for doing so; companies that emit about existing business-as-usual levels will be fined.
How much will they be fined?
No idea yet, that’s one of the many details still not clear about this plan.
Are there other parts of the plan?
There are. Farmers will be able to tender for the Government to pay them to store carbon in their soil, households will be able to access $1,000 rebates for solar panels or solar hot water systems, and the Government will plant 20 million trees. Another very important part of the plan, as Alan Kohler has pointed out today, is a plan to help coal-fired power stations switch to cleaner energy sources, such as gas.
What will it cost?
$3.2 billion over the first four years.
And where’s the money coming from?
Abbott hasn’t said yet.
The plan does sound reasonably simple. What have business groups said about it?
The Australian Industry Group’s response is probably pretty representative. They’ve welcomed the idea of incentives for reducing carbon emissions, but have warned that the devil is in the detail. How big will the fines be? How will the industry emission benchmarks be set? How much regulation will be required to support the plan?
We know a lot more about the Rudd Government’s plan, don’t we? Remind me how it works again.
The Rudd Government’s Carbon Pollution Reduction Scheme is designed to reduce carbon emissions by between 5% and 20% by 2020.
The key to this plan is the emissions trading scheme. The Government will cap carbon emissions and force big polluters (think power generators and heavy industry) to buy permits for emissions above the cap.
The Government will then use the revenue raised to compensate basically everyone affected by the plan, including coal fired electricity companies (who get $7.3 billion between 2011 and 2021), the coal mining sector ($1.5 million in compo), heavy industry (lots of free permits in the first five years) and households, with low- and middle-income earners getting $1,000 a year to offset higher energy prices.
But is it really the big fat tax that Abbott is making out?
It will result in an increase in the cost of living, but Rudd has pointed out that 8.1 million of 8.8 million households would actually be better off, as they will get an average of $660 a year to cover a cost increase of $600 a year.
So which scheme is better?
Too hard to say without more detail about Abbott’s plan, but there are problems with both schemes. The Government’s plan is complex and will result in cost increases for consumers, which won’t be popular. But Abbott’s plan would appear to require taxpayers to fund these incentive payments to business and the fact that it does not put a cap on carbon emissions does look like a big problem.
There are also questions about whether either scheme goes far enough in reducing carbon emissions, although the fact that the Copenhagen talks failed so badly means that its difficult for either side go too far in terms of making cuts.
Could these plans really decide the election?
Whatever the carbon-reducing merit’s of Abbott’s plan, it is another tool by which he can really set himself apart from Rudd.
Abbott’s plan paints him as the leader with the simple, direct plan that won’t impose a big new tax on households. And it paints Rudd as something of a policy-focused bureaucratic type with a plan that is extremely complex and expensive.
As the election nears, Abbott will try to exploit these differences. It might be his best hope of winning the election.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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