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What's wrong with the CPRS and how can it be fixed?


While the government frames climate change as a blunt choice between action and inaction, even they acknowledge as they negotiate with the Opposition that there is a point when action becomes so weak that it is useless. The Greens and many others believe it has been passed long ago.

If the CPRS were merely too weak, the Greens might have supported it as a start. But we recognise that, when faced with a serious and complex problem, it is the choice of the right action that is vital, not 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 will actually point Australia in the wrong direction with no prospect of turning it around in the 2015 timeframe within which emissions must peak. This is why we say it is not just a failure, but it locks in failure.

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  • A weak target undermines global action
  • The key stumbling block to a global 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.
  • 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.
  • A weak price signal and weak target will drive wasteful investment
  • A weak target and price signal will drive regrettable and short-sighted investment in infrastructure that will have to be uneconomically closed down when appropriate targets and price signals are implemented. This potentially includes gas fired power stations, slightly cleaner industrial plants and refurbishment of coal fired power stations that should really be closed down.
  • Over-generous compensation to polluters, and linking compensation to continued generation, exacerbates this problem. In WA, generators are considering recommissioning two old coal fired power stations to take advantage of this.
  • 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.
  • 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.
  • A weak target and undermined voluntary action demoralises the community
  • There is significant disquiet in the community about the impact of the CPRS on voluntary and additional action to cut emissions.
  • We need the community to be inspired, not disempowered.
  • Over-allocation of free permits locks in failure
  • 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. Once set it will politically very difficult for the Government to set a more ambitious target.
  • 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.

How can these problems be fixed?

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.

However, it should be noted that 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:
  • auction all permits;
  • compensate trade exposed industries only to the value of their lost competitiveness, not for lost profits; and
  • 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.

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."

The Greens have attempted to negotiate with the Government on multiple occasions, and have been rebuffed each time.

If the Government and Opposition reach agreement on the CPRS, it will be a hollow victory for both Kevin Rudd and Malcolm Turnbull.

In the face of climate crisis, it will be an agreement to fail.

Download a printable pdf of this briefing.

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