Labor, the Coalition and President Obama: which two are closer on climate change?

by Tony Wood

Published at The Conversation, Wednesday 10 July 2013

Malcolm Turnbull: Obama’s climate change policies are more like the coalition’s than Labor’s.

“[US president] Barack Obama gave a great speech about climate change recently, a lot of initiatives, [and] an emissions trading scheme is not part of them. The measures he announced are more like the coalition’s policies in fact.” – Shadow communications minister Malcolm Turnbull, 8 July. (Watch his statement here).

Climate policy is back in the news, both in Australia and in the United States. The Labor leadership change, from Julia Gillard to Kevin Rudd, has sparked speculation that the government will move from the current fixed carbon price to an emissions trading scheme in 2014, a year earlier than currently planned.

(You can read an explainer on the differences between an emissions trading scheme and a carbon tax here.)

While Malcolm Turnbull has long made it clear that he personally favours emissions trading, he stressed on Monday’s show that he “will support the collective wisdom of the party room”. Rather than making businesses pay for emissions permits, under the coalition’s Direct Action plan an Abbott government would buy emission reductions from industry, provide support for rooftop solar panels and start a tree-planting program.

So is Labor or the Liberal Party closer to Obama’s current policy position?

President Obama last month announced a suite of climate change initiatives including regulating greenhouse gas emissions from coal-fired power plants and further investment in clean-energy companies.

Both Obama’s and the coalition’s approaches are based on direct government intervention. In Obama’s proposal, the government reduces emissions by regulating emitters to stop or reduce their greenhouse gas emissions. In the coalition policy, the government would pay the emitters directly to stop or reduce. Both are different from emissions trading, in which permits to pollute are bought and sold by major emitters – such as power generators and factories – who then move towards stopping or reducing their emissions to lower their costs.

But it’s easy to go too far here. The Obama policies are more like the Direct Action scheme than Labor’s current carbon price, but much of the detail of the coalition’s policy is yet to be made clear. At the moment, we know Direct Action will provide a voluntary mechanism where organisations can bid for funding to reduce emissions. Obama’s will be a mandatory system imposed by regulation.

It’s not the same, but it’s certainly not emissions trading either.

To some extent, Obama has been forced to go down the path of regulation. Since 2009, Obama has essentially faced some of the same difficulties that Labor faced while trying to introduce a carbon price in Australia.

During his election campaign, Obama, along with the Republican candidate, were both expressing a strong view that a move to address climate change was critical. In 2008/09, there was a move to introduce an emissions trading scheme, commonly known as the Waxman-Markey Bill. There was initially a lot of support for it in Congress but ultimately it failed because by the time Obama got into government the Republicans resisted it strongly.

So then it became difficult, if not impossible, for Obama to get his market-based policy through congress. In his second term, he was forced to try and find alternatives. His new regulatory approach is much more likely to succeed as it does not need congressional approval.


Turnbull is correct – the current policies of the Obama administration are closer to the coalition’s than Labor’s. But this shouldn’t be read as an assessment of the coalition’s policy against the government’s.