Amidst changing climate change legislation, Professor Ross Garnaut, the Federal Government’s chief climate change advisor, has doubts whether the $1 billion in compensation demanded by power producers, would be used to reduce the financial burden felt by households. He suggests that support should instead be given to struggling coal communities like those in the Latrobe Valley.

Garnaut believes that Government revenue resulting from an emissions trading scheme (ETS) should be used to aid research into the potential use of carbon capture and storage (CCS) techniques. Such technology may be the only answer to reduce the stress felt by regions like the Latrobe Valley, however if CCS does not prove to be a viable option, Professor Garnaut says, “we can’t just continue investing in coal-based power stations and deal with the environmental problems. There is a real adjustment that has to be made”.

Submitting his suggestions for an Australian ETS, to be operating by 2010, Professor Garnaut’s scheme is designed to cap emissions and allow trading of pollution permits through auction. He has made the following recommendations to the Federal Government

1. To set three emissions trajectories for after the Kyoto Protocol, that allow adjustment depending on global commitments – Australian commitment would strengthen in line with the rest of the world
2. The establishment of an independent carbon bank to sell and monitor the use of permits
3. To hold a portion of the new revenue and buy international permits, offsetting Australia’s emissions overseas

In response to Professor Garnaut’s suggestions, Australian electricity generators have said that the auctioning of carbon credits will prevent them investing in low carbon technology, “some businesses would become prematurely non-viable and be unable to make the transition to low carbon generation” said John Boshier, the Executive Director of the National Generators Forum. Garnaut highlights, that the allocation of free permits in the European ETS lead to higher electricity prices and windfall profits for generators.

References

• Colebatch, T. ‘Garnaut's back, and it's not just a carbon copy’ The Age, March 21 2008
• Morton, A. ‘Carbon windfall for coal towns: Garnaut’, The Age, March 21 2008
• Hammer, C. ‘Auctioning permits to ‘cut value’ of generators’, The Age, March 21 2008