Go to plan B to limit costs of climate paralysis, says The Age

Issues of climate change and sustainability have been reduced to a political contest between two bulls in a paddock. Labor took its 2007 election mandate and, with little consultation with other parties on a policy for future decades, adopted a ”take it or leave it” approach to the complexities of emissions trading, daring the Coalition to risk another election on the issue. The opposition aims to make the election about Kevin Rudd’s ”big new tax”.

The result is that Australians have seen yet more years of inaction on climate change. Former opposition leader Malcolm Turnbull briefly appeared to have secured a bipartisan position, only for his party to turn on him, elect Tony Abbott as leader and reject the legislation.

The government had seemed determined to keep resubmitting the bills. Last week, signs of a rethink emerged. Climate Change Minister Penny Wong and Greens climate spokeswoman Christine Milne are believed to have made progress on a compromise that involves a tax of $23 a tonne of greenhouse gas for two years, giving Australia time to frame a carbon market as global negotiations proceed. The International Monetary Fund has already advocated a hybrid model of emissions trading and carbon taxes.

An interim deal with the Greens would need the votes of two other senators, most likely the two Liberals who crossed the floor on emissions trading legislation or independent Nick Xenophon. That would enable action on emissions and reduce business uncertainty. The opposition can be expected to exploit the politics of a new tax, but no one committed to action on climate change or sustainable development should shy from that debate.

Economists agree that a price must be put on carbon to induce markets to move away from an unsustainable reliance on fossil fuels. For some nations, this economic ”sacrifice” has already proven a long-term winner. Sweden imposed the world’s first carbon tax, of $US100 a tonne, in 1991 and today ranks in the four most competitive economies. The ultimate costs of sticking with the status quo are huge. That is why the G20 nations agreed last year to end fossil fuel subsidies - in Australia, the tax cost is about $9 billion a year. If subsidies were eliminated globally by 2020, the OECD estimates an emissions cut of 10 per cent by 2050.

The ever-increasing price the world pays to sustain carbon economies runs to tens of trillions of dollars in health, environmental and security costs. Even as the world stumbles out of a deep recession, the oil price is rebounding towards the once-unthinkable record level of $US150 a barrel. Nations such as the US, China and Germany are moving fast to reduce fossil fuel dependency. Global investment in renewable energy rose fourfold in the past four years. In 2008, for the first time, the US and European Union added more renewable power than conventional power capacity.

For Australia, inaction carries a huge cost in missed opportunities for technological and economic development. Australian energy technology has already been exported to other nations such as Germany and China for development into industries involving hundreds of thousands of jobs. The latest example is Australian-developed fuel cells, a cheaper, smarter alternative to spending billions on generating and distribution infrastructure to keep up with peak-load demand. Coal-fired stations account for a third of our emissions. Fuel cells’ efficiency in providing power and hot water could cut emissions from the average Victorian household by a third, or 18 tonnes a year. The new fuel cell factory and new jobs are to be found in Germany.

Even if not threatened by climate change, Australia can’t afford inaction in a world of finite resources; it must pursue economic and environmental sustainability, or concede the advantage to early innovators. Instead, our politicians have been locked into an old, false and paralysing debate.

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