En Passant

‘The Liberal Party is currently led by people whose conviction on climate change is that it is ‘crap’ and you don’t need to do anything about it. Any policy that is announced will simply be a con, an environmental fig leaf to cover a determination to do nothing.’                                           

- deposed Liberal Party leader Malcolm Turnbull.

With the Liberal Party now taken over by a bunch of conspiracy theorists and global warming deniers, the terrain of the debate around emissions trading has shifted.

Tony Abbott has ridden to victory on a wave of anger from the flat-earthers among Coalition MPs and party members – those who claim the planet is actually cooling, and see climate change as a communist plot.

Nick Minchin, the key power-broker behind Abbott’s rise, claimed on the 9 November Four Corners program that “for the extreme left [climate change] provides the opportunity to do what they’ve always wanted to do, to sort of deindustrialise the Western world.”

He is backed by a string of fanatical right-wing Liberal and National MPs who openly deny that the climate is changing. One of the loudest of those is Cory Bernardi, who backs his claim that “the earth is not actually warming” with the penetrating insight that “We still have rain falling. We have crops still growing. We can go outside and we won’t cook.”

Under the new Liberal leadership the nutbags have found full voice, and they’re shouting it to the rafters, insistent that they will not co-operate with the government on its Carbon Pollution Reduction Scheme (CPRS).

This scheme – which had bipartisan support until the Liberals tore themselves up – involves setting a national greenhouse gas emissions cap and issuing “emissions units” to the level of that cap.

Companies will be able to buy and sell these units in order to pay for their pollution. If a company doesn’t hold enough units to cover its pollution it can buy some from another company that has more than it needs.

In theory the market will, through its invisible hand, ensure that emissions are reduced to whatever level the cap dictates. In reality, it is a giant fraud.

When Labor first put forward the bill it was already a giant gift to polluting industries, offering billions of dollars in subsidies to make sure that they weren’t inconvenienced or irritated by attempts to save the planet.

Big business needed assurances that investment inflows would continue to polluting industries, regardless of the state of the planet. Yet when the government took it to parliament they decided to negotiate with the Liberals to make it even better for big business and transfer even more cash to the polluters.

The amended legislation notes that “initial effective rates of assistance will be 94.5 per cent and 66 per cent respectively” for the biggest trade-exposed polluters.

What this means is that the polluters with the highest CO₂ emissions will receive 94.5 per cent compensation for what they are actually charged. The rate of assistance will reduce by a paltry 1.3 per cent a year after the initial period.

The power companies are screaming bloody murder about the whole thing. Yet there is a possibility that they will be given more in assistance than what it actually costs them in penalties.

Recognising this, the bill states that “recipients of coal-fired generation assistance must subject themselves to a review to minimise the prospect of them receiving a ‘windfall gain’”. Phew! Let’s hope James Packer conducts a similar review to make sure he pays the right amount of tax.

In fact, the power generators will receive almost 230 million emissions units for free over the first 10 years of the operation of the scheme, while any review of windfall gains is postponed until 2018.

The bill that Rudd’s Labor is trying to push through contains provisions to move around $6 billion in previously allocated compensation to households (for higher energy prices) back to compensate the polluters. Stopping global warming truly is a polluter’s paradise under this model.

No wonder the Business Council of Australia and the Australian Industry Group back the proposal down the line. The scheme that Rudd and the ex-merchant banker Turnbull came up with is nothing more than “a con, an environmental fig leaf to cover a determination to do nothing”.

Yet this still wasn’t enough for the sections of capital associated with coal mining and power generation. Like tobacco companies and lung cancer, they want the whole issue to just disappear.

The Greens have rightly slammed Labor for what they describe as the “Continue Polluting Regardless Scheme”. Labor chose to negotiate with a party that only ever looks out for the interests of big business (and is full of climate change deniers) instead of trying to work with a party genuinely committed to taking real action.

The main criticism that the Greens have thus far been levelled at the CPRS is that it rewards polluters and hasn’t yet set a cap on emissions, or that when it does, the cap will be far too low.

This fundamentally misses the point that, whatever the cap on emissions, the scheme is unlikely to deliver the needed results. This sham is not simply the result of failed negotiations but the logical outcome of the scheme’s design.

Global warming is the direct result of a system which places profit above need, exchange above use. The CPRS is another market mechanism that relies on the idea that markets are efficient – i.e. that the price of something will reflect its true value.

Yet markets are not efficient. They are constantly manipulated and distorted through speculation and the conscious intervention of states and companies.

The clearest example of this is the proposed implementation of a price cap on the emissions units over the first five years of the scheme’s operation. This cap, according to the legislation “will take the form of access to an unlimited store of additional emissions units”.

Under this system, there is a guarantee that the price of carbon emissions permits will not rise to any level that threatens to price dirty coal out of the energy equation. The market would not have this any other way.

Yet on the flip side, there is no guarantee that prices won’t collapse – as they have in Europe, which has a failed carbon trading system. There, according to Michael Meacher, Britain’s former environment minister, “Business has frankly made billions out of artificial reductions of what is called hot air with absolutely no environmental benefit at all.”

Australia is set to run down this same path – massive government subsidies to polluting industries for little or no environmental gain. Because the CPRS proposes emissions reductions through the selling and trading of permits, it perpetuates rather than eliminates heavy polluting industries.

Instead of this charade about “penalising polluters”, which is just a cover for paying polluters, there should be genuine government intervention to fund alternative energy sources.

When there was market failure in the financial system, governments everywhere showed that they can and will intervene, spending trillions of dollars to save the system. When it comes to saving the planet, however, there is far more reluctance to act.

This article, by Ben Hillier, first appeared in Socialist Alternative.