Thursday, April 30, 2009

E.T.S. Horsetrading Could See Delay

Don’t be at all surprised if the Federal Government agrees to postpone the introduction of the Carbon Pollution Reduction Scheme. Up until now, the Government has been adamant that the scheme should commence operation on the 1st of July 2010. While they have not backed away from that date, the plain facts are that the legislation will not pass the Senate without the agreement of either the Greens, or the Opposition. Neither of those parties will support the plan in its current form, so something has to give.

While it might be assumed that the Greens would support an Emissions Trading Scheme, the trouble is that they are thoroughly unsatisfied with the scheme that is proposed. From their point of view, the emissions reduction targets are simply inadequate to the point of being unacceptable. They do have a point when they suggest that the 5 to 15% target nominated by the government falls short of what is required to achieve a meaningful environmental outcome, and they have insisted on a target of 40% reduction by 2020. More importantly they insist that such a target should be unconditional.

This intransigent position has led the Government to declare the Greens to be irrelevant, accusing them of being completely unrealistic in terms of both the prospects for international agreement, and on the matter of industry assistance. At the same time, the Opposition also refuses to support the current scheme, but for very different reasons. They have concerns about the levels of industry assistance, as well as the effectiveness of the chosen targets, but the biggest dispute that they have with the government is the matter of timing.

The opposition is not alone in suggesting that the advent of the Great Recession means that this is perhaps not the most opportune time to introduce a scheme which will impose further financial burdens upon business. Many industry leaders recognize the need to introduce a scheme, and to do so in a way which provides a clear and certain framework for moving forward, but they also support postponing the introduction until such time as economic recovery begins.

This fits with the position which the opposition has maintained for some time now, that is to delay the introduction of the scheme until 2012. The opposition says this will allow for the scheme to be designed and implemented in a considered fashion, and also fits with the timetable for economic recovery which most observers are forecasting. It also places the commencement date well after the next election, opening up the opportunity for environmental policy to once again be put to the test with the voting public.

Despite all of the posturing, the Government and the Opposition are not really all that far apart on this issue, and interestingly both sides have indicated that there is room for negotiation. This is in stark contrast to the Greens who have left little if any room for negotiation, leaving the Government and the Opposition to deal with each other in a dance that neither one can afford to sit out.

Given that the recession is causing a reduction in industrial activity and that in turn means a reduction in emissions, there does seem to be a little more breathing space when it comes to the timetable. It is unlikely that the opposition will agree to allow the plan to start in 2010, so either the government will reach an agreement to delay the introduction, or they will take the issue to the next election to seek a clear mandate from the people.

Either way, a start date in 2012 looks a lot more realistic than the 1st of July 2010.

No comments: