No compensation for electricity generators under ETS
02 Jul 2008
Electricity generators and other big polluters have known for nearly 20 years that they would have to reduce their greenhouse gas emissions, and they should not receive favourable treatment under an emissions trading scheme, WWF said today.
The conservation organisation said money proposed for compensation of electricity generators and other big polluters would be better spent on improving household, commercial and industrial energy efficiency, which would cut carbon emissions and reduce energy costs for the consumer.
As the Council of Australian Governments tomorrow considers the way forward under an ETS, WWF is calling for a fair and transparent scheme that auctions all pollution permits.
"Auctioning all permits is the only fair and transparent way to allocate carbon credits under the scheme," WWF-Australia CEO Greg Bourne said today.
"Prudent businesses will have long factored an emissions trading scheme into their business decisions. Some businesses may have exercised poor judgment or deliberately accepted risk for short term profit and not factored a carbon price into their business costs. The Australian public should not now be expected to pay for unwise business decisions."
Electricity generators and other big polluters are attempting to get favourable treatment under Australia's ETS in the form of free permits or compensation despite knowing for nearly 20 years that greenhouse gas pollution would need to be dramatically reduced.
"We're seeing a lot of scare-mongering by electricity generators about disruptions to electricity supplies if heavily polluting coal-fired power stations are made commercially unviable under a scheme to address climate change," said Mr Bourne.
"The lights are not about to go out under an emissions trading scheme. The worst that will happen is that some of the big polluters will have to sell the power stations to new owners to clear their debts and the new owners will run the power stations instead. No one is going to shut a fully functioning, fully built power station."
"But even this is not likely as all economic studies have shown that the Australian economy will continue to grow strongly as long as action is taken to address climate change."
WWF today reminded political leaders attending the COAG meeting of the costs of inaction and of the strong link between environmental impacts and economic impacts. Some of these costs (at about a 3oC temperature rise) include:
- Destruction of Great Barrier Reef (and therefore the loss of $6 billion per year tourism industry employing about 50,000 people);
- At least 40% decrease in cattle and sheep carrying capacity;
- 100% increase in number of people exposed to flooding in Australia;
- 1,200-1,400 more heat-related deaths a year;
- 7-35% decrease in Melbourne's water supply;
- Up to 25% decrease in rivers flows in Murray Darling Basin (Allens Consulting (2005) - a 15% reduction in MDB flow would translate to a loss of $750 million in 2009-2010);
- Peak electricity demand in Adelaide, Brisbane and Melbourne increases 5%-20%, leading to need for additional electricity infrastructure and higher electricity bills;
- 5%-10% increase in tropical cyclone wind speeds - leading to higher insurance costs (if cover available);
- 20%-30% increase in tropical cyclone rainfall - leading to higher insurance costs (if cover available);
- About 15% increase in 100 year storm tides along eastern Victorian coast - leading to higher insurance costs (if cover available);
- Millions of people displaced from low lying river deltas in Asia;
(all taken from CSIRO The Heat Is One (2006))
- 20% more droughts in Australia by 2030;
(Australian Climate Group Climate Change Solutions for Australia (2008))
"The introduction of an emissions trading scheme is the biggest economic reform in last 20 years since those undertaken by the Hawke-Keating Government, and the Rudd Government is to be congratulated for pressing ahead.
"The Hawke-Keating reforms involved short-term pain for a long-term healthy economy. We are going through the same process now and the Australian public deserves bipartisan support for such an important scheme," said Mr Bourne.
Time line of events providing notice of an emissions trading scheme
By 2010 when the scheme is proposed to commence, generators will have been on notice for nearly twenty years that Governments would need to implement some form of carbon pricing. There have been numerous signals.
- In 1990, the international climate change negotiations commenced, with Australia playing an active and prominent role (including ongoing consultation with industry on Australia's position).
- In 1992, Australia signed (with bipartisan support) the UN Framework Convention on Climate Change, which both committed the country to limit its emissions and foreshadowed the use of economic instruments.
- In 1994, the Commonwealth Government proposed a small levy on greenhouse emissions, which was withdrawn to give industry more time for adjustment and to trial voluntary approaches.
- In 1997, the Kyoto Protocol was agreed with Australia strongly supporting the inclusion of emissions trading as a key mechanism.
- During 1999, the Commonwealth Government released four discussion papers on the development of a national greenhouse gas emissions trading scheme.
- In 2002, the Commonwealth Government signaled that companies taking early action to reduce emissions would not be disadvantaged in a future emissions trading scheme (the so called "no disadvantage" principle).
- During 2002-03, the Commonwealth Government conducted a dialogue on climate change with generators and other major business interests that included a major focus on carbon pricing options.
- In 1996, NSW adopted greenhouse benchmarks for the electricity industry which from 2003 became the mandatory Greenhouse Gas Abatement Scheme.
- In 2004, the State and Territory leaders established the National Emissions Trading Taskforce.
- In 2006, Prime Minister Howard established a government-business Emissions Trading Task Group.
Generators that have developed or acquired carbon-intensive assets since 1990 have done so in the knowledge that governments would need to implement some form of carbon pricing within the lifetime of those assets.
For more information
Charlie Stevens, WWF-Australia Press Office
02 8202 1274, 0424 649 689
Paul Toni, Program Leader - Development & Sustainability
0410 086 986
