Wednesday, November 25, 2009

Little to gain, a lot to lose

The Federal Government's proposed Emissions Trading Scheme (ETS) has already crippled parliamentary proceedings and cost taxpayers millions.  And it has not even been enacted yet.

Labelling those opposed to the scheme as deniers or sceptics will not make the real problems associated with the ETS just disappear.

A well publicised concern with the ETS is that the economic impact of the scheme will far outweigh any environmental benefits realised by its implementation.

For instance, Australia emits more than 550 million tonnes of CO2 and CO2 equivalents each year and if we multiply that by the estimated cost of carbon rights during the first year of the scheme at $10 a tonne we can conclude the first year cost of the implementation of the ETS is a hefty $5.5 billion.

And this estimate does not take into account the time, resources and money spent in drafting, debating and marketing the scheme.

The government's proposal also falls short against long serving legal principles.

The Rule of Law is a democratic tradition that, simply stated, means that people should be governed by impartial laws and not by arbitrary decisions.  In order for such a tradition to exist, laws must meet certain minimal legislative requirements.  To name just a few, laws should be intelligible, consistent and practicable.

The ETS legislation fails to meet even these basic requirements.

The ETS is designed to count the output of certain greenhouse gases and convert all gases back to a carbon dioxide equivalent.  The system is not designed to count the output of oxygen produced by vegetation; neither does it fully acknowledge the ability of a land mass to sequester carbon.

So, the ETS only penalises carbon dioxide producers but fails to reward or fully acknowledge carbon dioxide eliminators.

In order for the Australian domestic carbon market to trade with international carbon markets, it is important that the accounting mechanisms incorporated in the domestic ETS scheme be consistent and uniform as with international greenhouse accounting rules.  This will be necessary to facilitate international trade.  However, there is no real international consensus on a uniform greenhouse gas accounting framework.

The ETS scheme will also operate inconsistently across the domestic market.  The ETS is not set to apply to the agricultural sector, however if the ETS is adopted nationwide there are still likely to be disastrous results for primary food producers.

The agricultural sector receives inventory from industries which are set to be included in the scheme.  Such stock will have a price tag that reflects carbon output and thus the price will increase with the introduction of the ETS.

Domestic agricultural producers cannot simply just offset increased cost to the consumers as they will purchase the same goods from other markets that come without such a high carbon price tag.

Further, because the sector is not included in the scheme it is not considered an emissions-intensive, trade-exposed (EITE) industry and as such is not entitled to assistance available to other industries.

Whilst it is important to protect the earth and ourselves for our own survival, so too is food essential for our survival.  Even if we ignore recent leaks that cast doubt on the credibility that warming is occurring and will entail catastrophe, drought and mass flooding, we should be strengthening and not weakening the very industries that we will depend upon for our survival.

Name calling is no substitute for careful scrutiny of views and data.  It is unreasonable to deny the possibility that for likely very little gain, the ETS will put a price tag on carbon emissions which may leave us all hungry.


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