By Callen Sorensen Karklis

During the 2007 federal election, both the ALP and Coalition led by Rudd and Howard fought a key election on industrial relations reform – then known as Work Choices – which motivated the labour movement to win.

But a key election issue which followed suit was the issue of climate change. Both major parties supported an emissions trading scheme during 2007 – 2010, but after the election of Tony Abbott and the Coalition in 2013, Abbott-inspired climate wars caused dysfunction on most progress for Australia on climate action. The Rudd/Gillard Labor government eventually put a price on carbon ($23 per ton) with support of Independent(s) and the Greens during the hung parliament of (2010 – 2013) which was in place from (2012 – 2014); seeing a decrease in emissions. In its place the climate safeguard mechanism was introduced by the Coalition under its environment minister, Greg Hunt after Abbott repealed the original price on carbon.

This replacement scheme introduced in 2015/16 was the form of the Emissions Reduction Fund and Direct-Action policies to plant more trees via offsets and carbon credits where businesses could purchase credits by offsetting their pollution output.

The only problem with this was that not all businesses were doing the right thing, and many weren’t penalized for increasing emissions.

Other initiatives saw trees being planted in inhospitable locations. The Coalition failed to decrease emissions in its original 26 – 28% emissions reduction targets and was slow to move towards the global 2050 net zero targets via the Paris Agreement due to political infighting.

Since the election of the Albanese Labor Government in mid-2022, Energy and Climate Minister Chris Bowen has been setting out to reform carbon credits scheme by making it rort-proof and targeting coal and gas polluters by rewarding them via the baselines. Companies will be rewarded for reducing emissions and the credits they earn could be used to be sold to companies that are failing to do so. All in line with the 43% legislated climate emissions reduction targets laws with support of both the Greens and Teals.

The climate wars were now confined as a thing of the past, much like the old universal healthcare debate of the 1970s – 80s. All of this lines up well with funding significantly in renewables and the energy market reforms as the globe grapples with the energy and inflation crisis sparked by the war in the Ukraine and the Covid pandemic recovery. This is a significant step as Australia is the world’s 2^nd largest exporter of coal.

The US and Global climate policies in the 21^st century

The US has a methane fee coming into effect in 2024, $738 billion will be raised and $391 billion in spending on energy and climate change as part of the Inflation Reduction Act (2022). The US lacks a national carbon price, but the states of California, Oregon, Washington, Hawaii, Pennsylvania, and Massachusetts have introduced carbon pricing schemes. The states of Connecticut, Delaware, Maine, Maryland, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia are all part of the RGGI (regional greenhouse gas initiative) with its own carbon pricing scheme. The Inflation Reduction Act investments are on track to decrease greenhouse gas emissions by 40% by 2005 levels in 2030 and reaching net zero by 2050. In 2021 explicit carbon prices in the US consist of emissions trading systems (ETS) permit prices which cover 6.4% of greenhouse gas (GHG) emissions in CO2e. In total, 32.4% of GHG emissions in the US are subject to a positive net effective carbon rate (ECR) in 2021.

The Biden Democratic Administration (2020 – present) has introduced the most significant climate legislation laws on a national level. The laws will raise $738 billion and have a price tag of $391 billion in investments in energy and climate change action. Experts predict the US will achieve 40% below 2005 levels in greenhouse gas emissions by 2030. It also includes the first cap on greenhouse gas emissions, the methane fee coming into effect in mid-2024.

Methane Fee of the Inflation Reduction Act 2022 =

• 2024 – $900 per ton
• 2025 – $ 1,200 per ton
• 2026 – $ 1,500 per ton

Northeast states are covered by the RGGI scheme

Western states: California, Oregon, Washington, and Pacific Island state Hawaii have their own cap – and – trade system pricing scheme(s).

Global Carbon Price(s) and Credit Scheme(s)

Green = carbon price or credit scheme overall Yellow = considering carbon price White = no price overall

Major Economies pricing CO2:

• China: makes up 29% of global emissions has an ETS is based on a cap – and – trade model. 2030 target for peak emissions and net – zero by 2060
• USA: makes up 15% of global emissions has 16 states with carbon price(s) and a national methane fee which targets leak(s) from oil and gas wells, pipeline(s)
• India: makes up 7% of the worlds CO2 emissions, no carbon price but has a tax on imported and domestic produced coal since 2010. Excise duty is levied on coal currently at an average rate of 6.8% after abatement. India only has a net zero by 2070 and must improve its targets.
• Russia: makes up 4% of emissions, only the Sakhalin (region) has an ETS, and has a net zero by 2060 target and much like India must improve its targets.
• Other existing price(s): EU, Colombia, Argentina, Chile, Uruguay, South Africa, Kazakhstan, Japan, Indonesia, Australia, NZ. Other nations in the developed world and Middle – East lack prices thus far as of 2022.
• Nations considering: Brazil, Botswana, Gabon, Nigeria, Senegal, Morocco, Turkey, Pakistan, Taiwan, Thailand, Malaysia, and Vietnam.

Only thing is for certain India and Russia will have to do more to limit their share of carbon emissions. Together the output of 11% of emissions contribution could end altogether.

References

Australian Conservation Foundation. 2022. What is the safeguard mechanism?

Congressional Research Service. Inflation Reduction Act Methane Emissions Charge: In Brief 2022.

Fact Check. ABC. 2015. Was the cost of cutting emissions 100 times greater under Labor?

Fernyhough, J. 2022. Australia emissions trading scheme ends ’10 years of policy dysfunction’. Financial Times.

Greber, J. 2022. International carbon credit trading ‘several years away’, says Bowen. Australian Financial Review.

Hepburn, S. 2022. No, Mr. Morrison – the safeguard mechanism is not a ‘sneaky carbon price’. The Conversation.

Plumer, B. Popovich, N. 2019. These Countries Have Prices on Carbon. Are They Working? The New York Times.

Potter, B. 2016. How Greg Hunt smuggled emissions trading into Direct Action. Australian Financial Review.

Roser, M. Ritchie, H. 2022. CO2 emissions.

Ross, I. 2022. Anthony Albanese has marked 100 days as PM. Here’s everything his government has (and hasn’t) achieved. Mamamia.

Staszewska, E. 2022. Newspoll reveals Labor’s approval rating continues to increase under PM Anthony Albanese, as support for minor parties falls. Sky News.

World Bank. 2022. Carbon Pricing Dashboard.

Webb, R. 2022. The New Methane Emissions Charge: One (Limited But Important) Stick In The Inflation Reduction Act. Climate Law Blog.