Isra-Mart srl: The cost of carbon consensus

Isra-Mart srl news:
If Julia Gillard wants community consensus on a carbon price, as she said at the weekend, she needs to start by telling Australians some hard truths.

The first is that achieving the Rudd government’s goal of national greenhouse gas emissions falling 5 per cent below 2000 levels by 2020, a goal shared by the Coalition, will require a carbon price of at least $30 per tonne.

This will result in an increase in the wholesale price of electricity on the eastern seaboard of between 40 and 50 per cent, flowing through to end-user costs (because energy is half the retail price of power) as a 20 to 25 per cent price hike.

This will be on top of the estimated 40 per cent increase in power bills facing most Australians over the next three years because of regulated rises in network charges, not to mention the cost of the amended renewable energy target, approved by federal parliament last week, which is forecast to add 6 percent to retail bills by 2020.

The required major impact on greenhouse gas emissions from a carbon charge can only come about if older, less efficient coal-burning power stations in South Australia, Victoria, New South Wales and Queensland are closed down and replaced by gas-fuelled operations.

Pursuing large-scale renewable alternatives, as proposed by Zero Carbon Australia last week, will cost a great deal more.

The cumulative impact of higher power prices will be felt by energy-intensive manufacturers, who directly employ more than a million Australians.

More than half the impact – from network charges and from the RET – was not included in the energy cost compensation the Rudd government proposed for householders under the defunct emissions trading scheme, and the level of handouts modelled by the Treasury in the ETS process was not based on a $30 per tonne carbon price.

The ACTU, in its submission to the (former) Prime Minister’s task group on energy efficiency last month, said: “The transition to a low carbon economy is important for regional employment (and) Australia needs to maintain its status as a best practice producer of iron and steel, aluminium, cement, plastics, glass and paper. This will require assistance for emissions-intensive, trade-exposed industries or risk losing them overseas.”

The peak trade union organisation says a sensible transition to a lower-carbon economy will see these “traditional industries” – conventionally lumped together as “the big polluters” by media reporters and environmental activists in the 941 days of the Rudd interregnum – becoming sustainable and growing stronger.

In September last year, Gillard said in a speech that the approach to abatement should not lead to slower economic growth, reduced living standards or job losses. Now she needs to tell us what the cost of carbon must be to meet the abatement target. She must provide believable modelling of the impacts and she must persuade the community she can deliver adequate compensation for those most affected, sustain jobs and protect the federal budget.