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Wednesday, 21 November 2012
Page: 9435


Senator MILNE (TasmaniaLeader of the Australian Greens) (18:25): I rise today's to support the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 and related legislation.

What a disgraceful performance! At some point Senator Birmingham ought to have acknowledged that the whole point of the legislation that we have before us, the whole point of the emissions trading scheme which we have—and he persists in calling it a tax; it is an emissions trading scheme—is to try to reduce greenhouse emissions, consistent with the challenge we have with global warming.

I would remind the Senate that a new report for the World Bank that has been out this week, done by leading climate scientists at the Potsdam Institute for Climate Impact Research, has concluded that the planet is on track to heat by four degrees by 2100 if governments fail to change direction. Four degrees—that is an unliveable planet. This is the challenge that we are now trying to deal with.

The coalition obviously has no interest whatsoever in addressing the fact that global warming is accelerating. We should recognise that all the efforts we are making are not enough. We have to be doing far more. There have to be far higher levels of ambition than the currently agreed five per cent that the coalition thinks is adequate. I can tell you it is not adequate. The President of the World Bank, Dr Jim Yong Kim, notes that the impact of four degrees of warming would be devastating—there would be inundation of coastal cities, unprecedented heatwaves in many regions, extreme weather events and irreversible loss of biodiversity, including coral reef systems. He said that he hopes the World Bank report will shock us into action. Well, the World Bank has got another think coming. Nothing will shock the Abbott-led coalition into action, it would seem—nothing at all.

This report by the World Bank follows on from the report by the International Energy Agency, which says we are currently on track for 3.6 and greater degrees of warming. It says that only by leaving two-thirds of the fossil fuel reserves in the ground can we have a 50 per cent chance of avoiding two degrees of warming. I am going to say that again because the government needs to hear this, with its mad dash for coal seam gas, expanded coalmining around the country and massive increases in coal exports—again supported by the coalition. The International Energy Agency, not renowned for being a rabid green body, has said that two-thirds of fossil fuel reserves have to stay in the ground if we are to have a 50 per cent chance of avoiding two degrees of warming.

This is the challenge before us. It was the basis on which the Greens negotiated with the Prime Minister to provide government to the Labor Party; it was in exchange for delivering a carbon price in this period of government. Yes, the Greens drove that as part of the negotiation. It is why Labor is in government. And I am very proud to say that we now have a clean energy package negotiated in this period of government, and it will be the single piece of legislation for which this government is remembered in the longer term.

I say again that the International Energy Agency has said just this week—and I know that Senator Birmingham will not be able to stand to hear this, but I am going to report it to the chamber—that Australia's carbon price scheme is 'an example of the standard of leadership that the International Energy Agency has been calling for so that the energy sector can be protected from sudden and vacillating climate policy that paralyses investors and disrupts energy markets'. That is from the International Energy Agency. It goes on to say that Australia's implementation of carbon pricing marks 'the first major fossil fuel energy resource rich economy to take the most cost-effective mitigation measures'. It goes on to encourage supplementary policies to the carbon price that are required to successfully make a transition to a low carbon economy. It welcomed the establishment of the Clean Energy Finance Corporation—$10 billion into renewables. Of course the coalition opposes that, but the International Energy Agency recognises that it is a necessary complementary measure. In fact, the IEA calls for a further increase in energy efficiency and fuel efficiency.

What it says is that the design of the emissions trading scheme fits well with the International Energy Agency's findings on lessons from international experience, but with the exception of the free permits and cash given to coal fired generators. Once again the IEA and the Greens are totally in line here and completely out of sync with both Labor and the coalition, because the Greens do not want free permits and cash going to the generators. I foreshadow here, Mr Deputy President, that I have an amendment, which has been circulated to the chamber and which will go into the committee stage, to refer to the Productivity Commission the generosity of those gestures, that support and those subsidies to the coal fired generators.

I want to come back to the substance of the debate, the linking to the EU. Throughout the negotiations with the government on the carbon price, the Greens were concerned that, if we went with the hybrid model and we had the fixed-price period, we did not want the price to completely collapse at the end of the fixed-price period. You had to give some certainty into the future about a price trajectory for business so that they could start making decisions based on that. Once you lost the fixed-price period the problem always was that the price would collapse to the CER price because 50 per cent of the permits would be able to be bought overseas. That is the cheap price—the CDM price. It is cheap because of the lack of verification for a lot of those particular permits. Anyway, it would have collapsed to that, and the CER price is extremely low.

The Greens wanted to make sure that we went through the fixed-price period, and we got a floor price out. We actually wanted a floor price for much longer than three years, but we settled on three years as part of the negotiations. However, our big concern was always that come 2018 we would have a situation where we would fall off the price cliff again, and we would be back to the CER price. So we would have the fixed-price period, the floor price period and then go back to the CER price, which was likely to be very low. That was always a concern for the Greens.

So, when the opportunity came to link with the EU, we embraced it because it meant that the price would be the European price into the future; it would not be the CER price. I make this point specifically here because people often have this throwaway line, saying: 'Oh, if only the Greens had supported Kevin Rudd's CPRS. We would have had emissions trading earlier.' Yes, we would have, and what we would have had is a five per cent reduction target—completely, utterly and absolutely inadequate for the task of global warming—and no mechanism to increase the target. We would have been stuck with it. Because it allowed for unlimited overseas permits, as in up to 100 per cent, do you know what the price would be today, Mr Deputy President, if we had had the scheme agreed by Kevin Rudd and Malcolm Turnbull, both members in the lower house? It would be one euro. The price today would be a five per cent target and a carbon price of one euro, which I think at the moment is about $1.25 or $1.30—something like that. That is what the price would be.

Anyone out there who deludes themselves into thinking that Mr Turnbull and Mr Rudd had negotiated some marvel need to know that it would have been a five per cent target and $1.25 for the price. What sort of transformation in the Australian economy would there have been at a price of $1.25? Zero, zilch, none, I can tell you, Mr Deputy President! What is more, you would not have had the Clean Energy Finance Corporation put $10 billion into renewables; you would not have had the Carbon Farming Initiative; and you would not have had the $1 billion over six years into the Biodiversity Fund either.

So, when the opportunity came to link with the EU, the attraction for the Greens was that the EU would not link with Australia if there were a 50 per cent capacity to buy those CER cheap permits. They insisted that that come down. Bringing the CER limit down to 12½ per cent so that it is still possible to buy 50 per cent of your permits overseas, but with only 12½ per cent being the cheap CERs, means that the effective price for the Australian scheme at the end of the fixed-price period when it goes to flexible pricing will be the European price. And the European price means that anyone in Australian business now has price certainty in the trajectory, because they know that the price is going to be the European price and they can start planning for that.

As to this argument about a loss of sovereignty, that is an utter nonsense. Under the previous scheme, which Mr Turnbull agreed to, the Australian scheme price would, as I said, be set by the CER price, and that reflects primarily the Chinese price. If you want to go down the argument of overseas sovereignty, if you go with the CER price you are dealing with the Indian and Chinese price; if you go with the European Union your global price is your European price.

The good thing about the linking is that it is a significant step towards the global carbon price. It means that we are now linked with an emissions trading scheme covering 27 countries. It encourages linkages with other emissions trading schemes. We know that one is being introduced in South Korea and we know, for example, that just this week the first round of permit auctions also took place in California. That will be the world's second-largest emissions trading scheme. It is the ninth-largest economy in the world, and, whilst at the moment California is saying that it is not linking, just this week also I think that Parliamentary Secretary Dreyfus said that the two governments were setting up a forum to share experience and that the scheme designs were similar. What that suggests is that into the future there may be a possibility of linking with subnational schemes such as the Californian scheme. Certainly, China is going down the path where its pilot schemes are larger than the whole Australian scheme—its pilot schemes! So the big opportunities are there for that kind of linking.

As I indicated, we now have the issue where, yes, we have given away the Australian floor price. But we are doing so on the basis of: what will the European price be by the time we go to flexible pricing in 2015? If the European price is higher than the floor price, then we have set ourselves on exactly the trajectory where we were, if not better. The question is: what will the European price be in 2015? Of course, I do not know that. Forecasts are highly uncertain, and it depends on the state of the European economic recovery. But what I do think that I can definitely say is that the Australian carbon price will be higher from 2018 onwards under the linkage with the EU than for the previous scheme, where the price would have been set by China and India and be the CER price in 2018.

Now, the forward price for European Union permits currently ranges from A$11 to just under A$14, and reforms can be expected to lift the price. Currently, the European Union is engaged in a reform process. The European Commission will present a draft amendment to the EU's Emissions Trading Directive to backload 900 million permits to the Climate Change Committee next month. That would push back 900 million permits from 2013-15 to 2019-20, and I know that the European Union is trying to not only backload them but actually take them out and eliminate them from the scheme, therefore permanently driving up the price by taking out a whole lot of the permits in that auction scheme.

Coal-dependent Poland is currently opposed to the measure that the European Commission is trying to take, but Poland would need the support of several other members to block the move. A three-month scrutiny period is required. The ballot could occur in April 2013, but analysts are now generally expecting that it should go through the European Parliament for ratification in the second half of 2013. In fact I understand that the European Commission is also checking on whether it actually needs to get it through the parliament. But, either way, we can expect that next year this process of taking out 900 million units will occur, therefore driving up the European price.

That is the issue that the Greens looked at carefully. We are seeing that their forecasts for the European permit price in 2015, if this backloading can occur, range from 15 to 20 euros. If the European Union gets the backloading through next year, the projected price is 15 to 20 euros, and I remind the Senate that the floor price was going to be $15, $16 or $17 from 2015, 2016 or 2017. So, if indeed this backloading occurs, the Greens had argued that the valid reason for deciding to go with the European linkage would be that the price would be greater than the floor price, but the benefit is to give Australian businesses the price trajectory of Europe on which to base their thinking, and they would know that that is what they will be working on and why they will be doing it.

The European Commission also identified six options for structural reform to complement the backloading, such as tougher targets or cancelling permits, as I mentioned. That will take longer, but nevertheless it suggests to me that there is considerable thought going on in Europe about structural reform and, if that structural reform goes ahead, then clearly it could be an even better outcome in terms of carbon pricing.

When I say 'an even better outcome', I am talking about a higher price. We need to drive this transition to a zero-carbon economy as quickly as possible, and the best way of doing that is through the price. That will bring on renewable energy, the 100 per cent renewables we need, especially in conjunction with the $10 billion Clean Energy Finance Corporation and ARENA, which also the coalition want to abolish.

So you have a situation where all the coalition want to have is a five per cent reduction target, which is nowhere in the ballpark of what is necessary, and, after that, where are they going to get the money from to be able to do this? Tony Abbott, the Leader of the Opposition, goes out saying that he is going to abolish carbon pricing. That means that there will be $70 million a year, which is currently going to Tasmania for the hydro as a result of carbon pricing, gone. That is the windfall that I have delivered and this parliament has delivered for Hydro Tasmania. Seventy million dollars a year into the Tasmanian economy will be gone. The coalition will be voting against that. Senator Abetz will be taking that out of Tasmania.

Then we have the tax-free threshold. Until now the situation has been that you pay tax once you have earned $6,000. Now you do not pay tax until you have earned $18,200, and the coalition are going to say, 'Sorry, guys, you are going to go back and pay tax when you have reached $6,000.' If they do not, where is the money going to come from to be able to finance that change to the tax system?

Then you have the billion-dollar Biodiversity Fund. Only yesterday I spoke to rural leaders—some of them youthful, some of them not so youthful—from around the country. They really appreciate the Carbon Farming Initiative and, indeed, the Biodiversity Fund, because they are enabling connectivity in the landscape and paying them for stewardship that they did not formerly have, and they want that to continue.

So we have a situation now where the coalition is refusing to acknowledge the size of the challenge on global warming. We cannot afford a world with four degrees of warming. Five per cent is nowhere near the ballpark. I think it is a disgrace that Australia is signing onto the Kyoto protocol second commitment period and putting in a five per cent target. It is nowhere near enough. I am afraid that in Doha this year the rest of the world will see Australia's five per cent as locking in such a low level of ambition that it could actually undermine the capacity of getting to a global treaty by 2015 rather than driving it. I would have liked to see the government recognising all of the science, particularly the latest science that is coming in.

The government now has before it the draft IPCC report, the Intergovernmental Panel on Climate Change report. It has got that report. It knows how bad the science is showing the world is becoming under a warming scenario. Any kind of leadership on climate change would have said that it is time for getting ourselves onto a radical shift towards the low-carbon economy and getting on with it.

Instead of that, there is a decision to stick with five per cent, which is so far away from what is needed, and so drastically bad for our children and future generations. I look at the science and think to myself: how can people sitting in this parliament, thinking about future generations and intergenerational equity, possibly be thinking that it is appropriate to allow to get in place the feedback mechanisms from which there will be no return? That is the tragedy here. We are the first generation of people who will determine what life is like for every generation after us in a way that is irreversible. That is a shocking responsibility. It is a huge load of responsibility for us to carry, and this parliament is not shouldering that load to anywhere near the extent necessary.

The Greens are the only people in this parliament saying that the climate challenge is real, is urgent and needs to be dealt with at a level of ambition beyond where we are now.

But the link with the EU improves the carbon price. That is why I negotiated with Minister Combet to get the outcome that we have. We talked about it for several months. I am pleased with this outcome, and I would hope that the Senate will now support the Greens, when we get to the committee stage of the debate on these bills, refer to the Productivity Commission the absolutely excessive money going to coal fired generators and free permits and have them cut right back, because it is not justified by one iota. (Time expired)