Unspoken truth about Australia's 'Clean Energy Future'
Updated
No wonder business confidence has collapsed. While the US and Europe apparently grind towards a new financial crisis and recession, Australia's politicians busy themselves with a fraudulent debate about climate change.
Why fraudulent? Because it is impossible for Australia to meet the proposed greenhouse gas emissions target through domestic action, and everyone knows it.
In her speech to Parliament yesterday, the Prime Minister Julia Gillard said: "Liable parties will be able to meet up to half of their obligation through the use of international carbon units."
What she didn't say is that buying permits from overseas is not simply an option, but an essential part of the plan.
At least she is half honest about it. The Coalition continues to pretend that its "direct action" plan can achieve the same proposed emissions reduction as the Government's, when it would also clearly have to rely on international carbon units to cut emissions by 5 per cent of 2000 levels by 2020.
Yet Tony Abbott and his climate change spokesman Greg Hunt remain magnificently unquestioned about their own policy while hammering away at the Government's. It is a beautiful thing to be able to successfully criticise careful and detailed Government legislation that has been 20 years in the making while not having to worry about developing a credible policy of your own.
But that's the golden place in which the Coalition finds itself, and good luck to them I guess.
Unfortunately the lack of any sort of sophisticated discussion about the issue is causing a lot of uncertainty among business people and consumers and contributing to the big drop in their confidence.
No-one, for example, is remarking on the fact that while Australia's "Clean Energy Future" relies on buying international carbon units, the only place you can get them from at the moment - the European Union - appears to be falling apart.
About 85 per cent of the world's carbon permits are generated in the EU emissions trading scheme, which remains the only deep carbon market to have come out of the 1997 Kyoto Protocols.
Despite two attempts so far - at Copenhagen and Cancun - there is no sign yet of a successor international agreement to replace Kyoto. The World Bank reports that the global carbon market has stagnated, even as the global economy recovered in 2010 and the world's temperature was the hottest on record at the same time.
There is virtually no chance of an agreement in Panama next month, or next year, wherever that meeting is held. That means Kyoto will expire in 2012 and it will be every country to themselves… no international market.
That means, realistically, the only place that Australia's 500 "big polluters" will be able to buy permits outside this country - as they must - will be Europe. But will they be able to?
The EU ETS is not falling apart with the EMU at this stage, but the future of everything about the Eurozone is extremely unclear.
The German Constitutional Court has decisively ruled out a permanent European Stability Mechanism as well as the issuing of Eurobonds. In effect, a fiscal union seems to be off the agenda now, which is why financial markets have reacted so negatively in the past week, since the German Constitutional Court ruling.
German Chancellor Angela Merkel has publicly ruled out the insolvency of Greece, but that's not carrying much weight against the combination of Germany's legal and right-wing forces standing in the way of practical solutions.
So will there actually be an EU ETS in 2015 when Australian companies have to start buying permits from it? Who knows. No-one wants to talk about that.
More importantly, nor do they want to talk about what Australia's response to a new financial crisis and recession ought to be. More cheques in the mail? Another Building Education Revolution? What should happen with the budget?
Australia's politicians are too busy struggling for power to worry about stuff like that.
Alan Kohler is the Editor in Chief of Business Spectator and Eureka Report, as well as host of Inside Business and finance presenter on ABC News.
I'm sorry but your claim that 2010 was the hottest on record is false. Satellite and weather balloon data show 1998 was the hottest and air temperatures have been in decline since then. Why are you basing your claim on land based data which has been shown quite often via varying mediums to be doctored be it readings, number of stations included, or placement of thermometers. Co2 has never been a climate driver throughout history and is not now. If you want to believe the unproven claim that greenhouse gases trap heat in the air and cause temps to rise, look at water vapor, which is 180,000 times greater in volume than Co2.
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