27
Aug
2013

Checking the facts: Rudd’s carbon emissions trading scheme backflip

by Tony Wood


Published at The Conversation, Tuesday 27 August 2013

Rudd did a backflip on the carbon emissions trading scheme and supported the world’s biggest carbon tax.

In his first term as Prime Minister, Kevin Rudd certainly did stop short of introducing a carbon price via an emissions trading scheme (ETS). He judged that it was going to be too difficult to get the legislation through the Senate where the Coalition and Greens stood in the way. Whether that move constitutes a “backflip” requires the intervention of the judges.

After the 2010 election, Prime Minister Gillard moved to introduce an emissions trading scheme from 1 July 2012. For the first three years, the price of emissions permits would be fixed, and the price would be set by the market after 1 July 2015.

Since a fixed price ETS has some common features with a tax on carbon, the Opposition was able to label it as such. However, we do not have a carbon tax in Australia. This may be a semantic point, but the political price associated with introducing new taxes in Australia is high, and therefore the point is important.

The second half of this claim is about “the world’s biggest carbon tax”. We do have an emissions trading scheme with a fixed price and Rudd, in his second stint as Prime Minister, wants to shift that to a floating price a year earlier.

As for Australia having the “world’s biggest carbon price”, certainly in terms of its current price at $24.15 per tonne, it is probably up there on the more expensive end (California is currently at around $14 and Europe less than $10). But if Rudd’s plan to link with Europe from 1 July 2014 was to go through, then it would definitely be back with the pack.

If you were to consider this claim in terms of the volume of emissions reduction, then both the Coalition’s and the government’s policies are aiming for the same 5% reduction target of 2000 levels by 2020. This is certainly not the world’s highest target.

Due to political circumstances, Rudd did change his policy position but he has not supported a carbon “tax” as such. The price under the current scheme is high by world standards.