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SA explores state-based emissions trading scheme

Sep 17, 2015
The Loy Yang power station in Victoria. AAP image

The Loy Yang power station in Victoria. AAP image

The South Australian Government has been exploring the concept of a state-based emissions trading scheme and three other states have indicated their interest, InDaily can reveal.

South Australian Environment Minister Ian Hunter told InDaily he had raised the idea of an interstate ETS with ministerial counterparts from Victoria, Queensland and New South Wales earlier this year, and that they had been receptive.

Hunter said that if the Federal Government was “adamant” on rejecting a market-based mechanism for reducing carbon emissions, an interstate scheme “might be a reasonable option”.

However, he said he hoped new Prime Minister Malcolm Turnbull would embrace a national ETS, so that an interstate scheme wouldn’t be necessary.

“I sincerely hope his early pledge to stick with the derided ‘direct action’ policy makes way for a proper commitment, and that state-based schemes won’t be required,” said Hunter.

“The expert advice of an overwhelming number of economists is that a price on carbon is the most efficient and cheapest means of tacking greenhouse gas emissions.”

Hunter told InDaily last week that he had raised the issue with his interstate counterparts.

“Queensland, Victoria and New South Wales have all indicated an interest to me,” he said.

“They found it very interesting.”

However: “that’s not an interest to start one up, but an interest to get more information … about how it works, how it might work in an Australian environment (and) what sort of market penetration we would need – how many states, for example, would need to opt-in, to make it economically viable.”

Bureaucrats been tasked with gathering information about emissions trading schemes operating in the US state of California and in Canada’s French-speaking province, Quebec.

“At a state based level, we’re asking various agencies to do some work on that project, get the information together from California and Quebec, analyse how they do it, and see whether there is any meaningful way that it could be used … here,” said Hunter.

“(That) body of work is being done right now.

“I personally favour a national emissions trading scheme – I think that’s the only rational way forward.

“But if the Federal Government is adamant that it won’t proceed down that track, then having a look at what California’s doing might be a reasonable option for us.

“That is something we’re considering, but we need to gather the information about that before we can make a judgement about that.”

Environment Minister Ian Hunter. AAP/Newzulu image

Environment Minister Ian Hunter. AAP/Newzulu image

Professor Mike Young of the University of Adelaide argues that South Australia would gain “massive advantages” if it developed its own emissions trading scheme.

“If you go slow and wait for the other states to put something together, then we have a big problem,” said Young.

“The state that goes first will gain massive advantages because you’ll attract businesses that specialise in low carbon emissions.

“And once they’re established here, they will stay here.

“It would give very, very strong incentives for innovation.

“By doing that it will become recognised as the source of expertise in a low carbon economy.

“The challenge is to design a scheme that works as a strong incentive for people who want to innovate but doesn’t tax people who don’t want to.”

READ MORE: State Govt appoints Hewson as climate change advisor

Under such a scheme, the government would give shares and permits to pollute to polluting industries at a small cost.

Those industries could then trade those shares and permits to make money, incentivising emissions-lowering innovations.

“Then you sit back and watch the market mechanism to take over,” said Young.

“For Australia, it’s better if an Australian one is set up.

“Ultimately, you want a national scheme.

“(However) if South Australia moves first, we get massive advantages by being the leader.”

He said a scheme linked with other states could be more economically viable than a single South Australian scheme, but it would depend on how it is designed.

Turnbull stands by ‘direct action’

Turnbull stood by the Coalition’s ‘direct action’ policy in parliamentary Question Time yesterday.

“The government’s policy on climate is right and it is being proved right,” he said.

“There are many means of cutting emissions, some more complex than others, some more expensive than others.

“There is no inherent virtue in any particular method of cutting emissions. There is no ideology there.

“The only thing that matters is the outcome.”

Turnbull described the ‘direct action’ climate change policy as “bullshit” following his loss of the Liberal leadership to Tony Abbott 2009.

But by 2014, the then Communications Minister in the Abbott Government had changed his tune.

“I do have to say, in fairness, that emissions trading schemes have worked better in theory than in practice”, he told the ABC’s Q&A program.

“If there is a global agreement that it requires larger cuts in emissions – and I think that would be good if there were, but it’s got to be a global agreement – then obviously Australia would play its part, and the Government would consider what changes or extensions or whatever to ‘direct action’ would need to be made to achieve that.”

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