TONY EASTLEY: As political and business leaders confront the obstacles to putting a price on carbon, an independent report says Australia is already lagging behind its trading partners.
The report, to be released today, says there's no risk of Australia actually being left isolated if it so chooses to put a price on carbon.
Research commissioned by the Climate Institute says countries including Britain, China and the United States already have higher direct, and indirect, carbon pricing.
Dr Cameron Hepburn from Vivid Economics conducted the research for the Climate Institute. He spoke from London to our business editor, Peter Ryan.
CAMERON HEPBURN: Well I don't think there's any great danger, here. There's certainly no risk that Australia will be leading the world on climate change policy or on setting a carbon price, and what our report does is look at the implicit prices across six economies, and we find that Australia is a long way behind almost all the other economies there - including China - in the prices in its power generation sector.
PETER RYAN: So, to put it bluntly, does this report conclude that the fear about Australia being left alone in setting a carbon price is based on a myth?
CAMERON HEPBURN: Yep, that's pretty much right. The European Union has had carbon prices for at least five years in many of the nations in Europe.
In the US, there's implicit carbon prices of over $US5 and up to 10, $9 or $10 in the north-east US states, and even in China, now, there's a range of policies already in place that we looked at in the report that ends up with an implicit carbon price of over $US10 a tonne of CO2 in China.
PETER RYAN: So, according to this research, there is no risk that Australia could lead the world by setting a carbon price, even if it wanted to?
CAMERON HEPBURN: No, that's right. I mean, that's not to suggest that, because we're not going to lead that we shouldn't do it. We are the dirtiest economy per capita amongst major countries in the world, and so it's an issue we can't really afford to ignore.
PETER RYAN: So, the question appears to be changing, from whether there needs to be a price on carbon, to how extensive that carbon price should be?
CAMERON HEPBURN: Yeah, that's right. And one of the things that we also found in the report is that there are more expensive, and cheaper, ways of doing this.
And it's a very strong conclusion that the cheapest way, and the most efficient and competitive way of making this transition, is to go about it with a very broad carbon price - whether it's through trading or taxation - doesn't really matter from the transition's point of view.
You need a broad price across as much of the economy as possible and that makes it a cheaper transition.
Where things end up being more expensive is if government picks specific narrow sectors, or winners, and starts to throw taxpayers' money at those particular sectors.
TONY EASTLEY: Dr Cameron Hepburn from Vivid Economics speaking from London to our business editor, Peter Ryan.
And there'll be an extended version of that interview on the AM website later this morning.
Source http://www.abc.net.au/am/content/2010/s3041910.htm
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