There is broad recognition that the Rudd government’s emissions trading scheme is weak and badly designed. However, some still hold the view that “something is better than nothing”, that,
if the bill passes, “at least we’ll have the architecture of a scheme to build on”.

If that were the case and the CPRS were merely too weak, the Greens might have supported it as a start. But even the government acknowledged, as they negotiated with the opposition, that there comes a point when action becomes so weak that it is useless.

Beyond that simple point, we Greens recognise that, when faced with a serious and complex problem, it is the choice of the right action that is vital, not simply the decision to act. Prescribing and locking in the wrong treatment to a seriously ill patient can hasten death rather than prevent it.

The Greens oppose the CPRS as it stands not because it is too weak but because it is the wrong action – it would actually point Australia in the wrong direction. It would pay polluters to keep polluting, hiding inaction with smoke and mirrors. It would undermine global action with its weak target, a target which, once set, would be impossible to lift without paying more billions in compensation. It would demoralise and disempower the community and it would repeat the mistakes of the Murray River, over-allocating permits.

This is why we say it is not just a failure, but it locks in failure.

Paying polluters to keep polluting – sending precisely the wrong investment signal:

o Far from driving investment in renewable energy, energy efficiency and clean transport, the CPRS as it stands would unleash a wave of investment in coal. Far
from making polluters pay, Mr Rudd’s plan will pay them to keep polluting.

o A weak target and price signal will drive short-sighted investment in polluting infrastructure that will have to be closed down when appropriate targets and price signals are implemented, wasting time and money. Compensation to polluters linked to a requirement that they continue generation exacerbates this problem.

o In Western Australia, generators are considering recommissioning two old coal fired power stations to take advantage of this. In addition, experts expect to see new coal and gas fired power stations and refurbishment of old coal fired power stations that should really be closed down.

o If we set out on the right trajectory with a realistic price signal from the beginning, we will make fewer of these mistakes and waste less time and money.

o If, globally, we are to reduce emissions enough to constrain temperature increases to less than two degrees, then we need to make rapid emission cuts urgently. A slow start means that emissions have to be reduced much more rapidly later on, a requirement that is quickly becoming unrealistic.

Hiding inaction with smoke and mirrors:

o Minister Wong claims that the CPRS will transform the Australian economy, but her own figures show that Australia’s emissions, substantially from coal, will not drop at all before 2033. Almost all emissions reductions under the CPRS will be bought in from overseas – a case of smoke and mirrors, with offsets hiding the reality that Australia would be continuing with its highly polluting economy.

o The government even refuses to accept the Greens’ proposal to ensure that all offsets from offshore are accredited to make sure they are 100% reliable. There have been increasing reports of dodgy offset schemes around the world.

Undermining global action with a weak target:

o The key stumbling block to a global climate agreement is the refusal by developed nations to sign up to the kind of targets the science, the community and the developing world demand – in the order of 40% below 1990 levels by 2020.

o The Rudd government’s 4% target (below 1990), and the obnoxious conditions placed on moving to the still too weak 24% target, are part of the problem globally.

Locking out the option of > 25% cuts limits the options of later governments:

o The government repeatedly refused Greens’ requests to model the economic impact of emissions cuts beyond 25%. This is particularly bizarre given that, while the economic impact of 25% cuts is almost identical to 5%, there is evidence that steeper cuts will be cheaper, as we will learn faster and make fewer mistakes.

o The Greens have obtained legal advice that says that if a future government chooses to lift the targets to beyond the current 5-25% range even more compensation to polluters would be payable. Read this advice here. (link unworkable).

Demoralising the community with a weak target and undermined voluntary action:

o There is significant disquiet in the community about the impact of the CPRS on voluntary and additional action to cut emissions.

o We need the community to be inspired, not disempowered.

Repeating the mistake of the Murray by over-allocating free permits:

o Once rights are issued for something – for example for water rights – it is politically very difficult, and very expensive, for a government to change its mind.

o The government has been at pains to point out that scheme will provide long-term certainty by setting a 5 year rolling cap, supported by longer term gateways. In reality, this means that it will politically very difficult for any government to ramp up emissions targets after they are set.

o Just as the over-allocation of water in the Murray Darling has made a fix almost unimaginably difficult, the over-allocation of free permits in the early years would lock in a weak trajectory and make it almost impossible to strengthen the scheme without massive additional compensation to polluters or cost to taxpayers through purchasing imported permits.

What do the Greens propose?

The simplest way to fix all of these fatal flaws is to lift the target to what the science demands straight away and accrue the benefits of early action – slow starts mean higher costs later.

While the remaining design flaws would make it more expensive to reach that target, they would not prevent it from being reached.

The Greens have a suite of proposed amendments which have been presented to the government and the community. Beyond lifting the targets, the Greens’ amendments would:

Adopt Professor Garnaut’s economically credible proposals to:

o auction all permits;

o compensate trade exposed industries only to the value of their lost competitiveness, not for lost profits; and

o not compensate electricity generators at all;

• fix the problem of undermining additional and voluntary action by providing for such action to be tallied and equivalent emissions cut from the following year’s target;

• remove market distortions such as the price cap and the ban on permit export;

• ensure that transport is covered by the scheme; and

• only allow the import of the most highly credible permits and restrict total imports to ensure credibility of the scheme and drive domestic economic transformation.

The Greens understand how negotiation works – we presented these amendments as a starting point for discussion and did not expect the government to accept them all. Neither, however, did we expect the government to reject them all out of hand. Significant progress towards our position needs to be made if the CPRS is to be improved to a state where we could support it.

What others say:

The Greens are not alone in our analysis of the CPRS. Here is a selection of comments others have made about the CPRS:

Editorial of the Australian Financial Review, December 2 2009:

“The CPRS is so riddled with concessions and handouts that it will struggle to achieve the underlying goal of transforming the fossil-fuel-dependent Australian economy into a low-carbon economy while maintaining our prosperity… Even before the latest round of handouts to the coal and coal fired power industries, the government’s handpicked expert Ross Garnaut had denounced it as the worst public policy process he’d seen. Any vestigial arguments for passing the CPRS before next week’s Copenhagen summit… disappeared weeks ago”.

Highly respected Australian climate scientist, James Risbey, New Matilda, December 3 2009:

“The Australian Government’s argument is effectively that it is preferable to adapt to large climate change than to prevent it. Their argument is not usually stated in this form, but that is the inescapable consequence of their policy of postponing meaningful carbon reductions. On the one hand the Government calls for rapid action to prevent climate changes, while on the other hand it has crafted a policy that would guarantee that effective action is not taken.”

Citi Investment Research and Analysis director Elaine Prior, ABC Inside Business, November 29 2009:

“One of the things that the package has done is provided more surety for the coal-fired generators to keep generating until roughly 2020 or beyond … So one might say in that sense that it’s on the one hand created more stability in the electricity market, but perhaps reduced the urgency for people to look at change.”

Brian Toohey, Australian Financial Review, November 28 2009:

“Even when he [Rudd] announced billions of extra dollars to the biggest polluters on Tuesday, he lacked the policy nous to make this conditional on cuts to emissions. Instead, he subsidised them to keep polluting as usual.”

Environment groups like Friends of the Earth, Greenpeace, the Australian Conservation Foundation and hundreds of local climate action groups have condemned the CPRS as too flawed to be allowed to pass.

Global leaders from NASA’s James Hansen to Lord Nicholas Stern and Kofi Annan have said that a weak deal at Copenhagen would be a worse outcome than no deal at all. It would take years to unravel and replace. The Rudd Government’s CPRS is such a deal.

In addition to this, Fran Kelly told ABC Insiders program on Sunday November 15:

“There’s lots of positive changes within the Greens’ amendments that could make this bill better.”

How have the Greens been working with the Government?

The Greens first attempted to discuss emissions trading plans with Prime Minister Rudd and Minister Wong as soon as the government was elected. Early meetings set the tone for what was to come – a complete refusal by the government to accept Greens input.

Bob Brown and Christine Milne have written to Prime Minister Rudd and Minister Wong requesting negotiations, setting out proposed amendments and looking for a way forward on no fewer than ten occasions since March 2009. Responses have been less than forthcoming. A full timeline is available on request.

With the CPRS returning to the parliament on February 2 and no prospect of the opposition supporting it, the government must either work with the Greens or acknowledge that bringing the legislation back a third time is purely a political stunt.