by Peter Castellas, Chief Executive Officer of the Carbon Market Institute.
Carbon Pricing. Emissions Trading. International Linkage of Markets.
When discussing climate policy in Australia these words have almost become taboo. I feel like I’ve been holding my breath – but it’s time we bring them front and centre and get them back into the national public policy discourse.
It should be OK to say that putting a price on carbon is growing in momentum worldwide, and that it is one of the most effective and efficient strategies being used by over 60 governments and 1000 global businesses alike to reduce greenhouse gas emissions and combat climate change.
It should be OK to talk about how a market-based approach that involves trading in carbon permits and offsets can lower the cost of emission reductions throughout the economy and provide a financial incentive to cut greenhouse gas emissions.
It should be OK to proactively engage with our key trading partners in establishing frameworks for how Australia can link trade, aid, diplomatic and economic policies to drive emissions reductions through bilateral and multilateral relationships.
It should be OK, but in Australia the fact is there is a backlash from a small number of uninformed elected politicians and the Murdoch press, when these policy design options are mentioned. That vehement, vocal opposition to good climate policy doesn’t help give business the market signal that it needs to invest in low carbon solutions. It doesn’t help provide the market with options to hedge against future carbon liability. And it doesn’t help to enable Australia to optimise our position in international markets as the economic low-carbon transition kicks in.
I would argue that at the Federal level we have the basis of a policy framework that can evolve to meet our Paris Agreement targets, still maintain competitiveness and grow Australia’s future prosperity. However, we need to know:
- How the Safeguard mechanism baselines will decline in line with the emissions reduction trajectory and drive below business as usual emissions from covered entities;
- How the ERF will be enhanced and grow to meet increased demand for domestic offsets and be driven by private market signal;
- How the National Energy Guarantee’s emissions guarantee will effectively drive decarbonisation of energy supply; and
- How a long-term emissions reduction trajectory will be set where a hard cap is placed to ensure absolute emissions reductions, leading to a zero-net carbon emissions economy by 2050.
In my interactions with the business and finance/investment sector, these policy measures would receive wide support and are critical to ensuring effective management of climate risk and opportunities.
So at CMI we want to have that conversation. We want to elevate the dialogue. We want progressive business voices to be heard across the community as well as deep inside the tent in Canberra. It’s time.