Skip navigation

Tag Archives: ETS

Published 10:04 AM, 23 May 2012

Gwen Andrews

 In April the Korean Parliament passed legislation to establish a carbon emissions trading system starting on January 1, 2015.

Unlike in Australia, there was almost no public debate about the reform. Although the main business group, the Korean Federation of Industry, opposed it, lawmakers on all sides of the legislature combined to vote for it – 151 ‘yes’ votes and three abstentions.

Why is this story so different from Australia’s torturous route to a carbon price? Basically, it’s down to good political management and the integration of the carbon emissions trading concept into a much broader industrial policy. Here is how it happened.

On August 18, 2008 – the 60th anniversary of South Korea’s independence as a nation – President Lee Myung-bak declared “Low Carbon, Green Growth” as the core of the country’s new vision for the coming 60 years. South Korea’s economic development from one of the poorest nations on earth at the end of the Korean War – often referred to as the Miracle on the Han River – has been impressive.

Korea is now the 13th largest economy in the world – just behind Australia – and the only nation to have transformed from an aid recipient to a donor country in a single generation. It would be a brave commentator who predicts that they cannot reach their new economic goals. Korea’s National Strategy for Green Growth is based on integrating mitigation of climate change with improvement of energy independence (Korea has no indigenous fossil fuels), creation of new growth engines for the 21st century, improvement in the quality of life and enhancement of Korea’s international standing.

These are clearly stated goals that the Korean public can understand and accept. The country took a number of steps in pursuit of these aims in recent years.

In Copenhagen in 2009, it adopted a voluntary national emissions reduction target – the equivalent of 4 per cent reduction a 2005 baseline by 2020. Domestically, it plans to invest 2 per cent of GDP annually in green growth. In terms of exports, it has identified a goal of capturing 20 per cent of the green industry market. The vast majority of its financial stimulus during the global crisis was aimed at green investment. It hosted the G20 Seoul Summit in 2010, with a theme of green growth. Also in 2010, it launched the Global Green Growth Institute, establishing an alliance in 2011 with Denmark and the Global Green Growth Forum.

But probably the most ambitious of Korea’s green growth initiatives is the establishment of an economy wide carbon emissions trading system – the first Asian nation to take this step. With the legislation now in place, the enabling work for the system is underway.

Part of the transition plan is the Target Management System (now operating), which captures almost 500 entities representing 68 per cent of greenhouse gas emissions in Korea. These entities emit over 25,000 tpa of CO2e in 2012; in 2013 the threshold will reduce to 20,000 tpa of CO2e and in 2014 to 15,000 tpa, to bring more entities into the system. Liable entities are set targets for reductions based on the average of their last three years emissions records. They must submit an implementation plan to government and will pay a small penalty if their targets are not met. In effect, the TMS is conditioning industry for carbon emissions trading, and its real value is in establishing a solid database of emissions for monitoring, reporting and verification purposes.

In 2015, the emissions trading scheme will begin with two key aims: reducing greenhouse gas emissions cost effectively, and developing low carbon and high efficiency technologies. The first two phases of the ETS will run for three years each, and over 95 per cent of carbon permits will be allocated free. After that, phases will be five years long and allocation plans will be determined by Presidential decree. The threshold for mandatory participation in the ETS will be the same as Australia’s: installations emitting over 25,000 tpa of CO2e, or entities emitting over 125,000 tpa in total, but entities below these thresholds may participate voluntarily. If emissions targets are not reached, entities will be liable for penalties of up to three times the average market price, capped at US$113/tonne. A National Reserve of carbon permits will be used to promote market stability. Use of offset credits conforming to international standards will be permitted, though to what extent has yet to be determined. Other details such as financial support for competitive disadvantage, whether there will be any carbon price floor or cap, and establishment of an Emissions Trading Market Authority also remain to be worked out. The Presidential Decree on these matters will be finalised after consultation with stakeholders by November 2012, before the upcoming Presidential elections. However, given the extent of bipartisan support for carbon trading, it is unlikely to be revoked by any new government.

This is a very different story from Australia. Korea is implementing its emissions trading scheme as a key part of its national industrial policy, with a clear vision of transforming its economy into one of green growth and making it a role model for the world. Admittedly, this sort of industry policy is easier to construct in an export-oriented economy than in a resource-based economy.

 But our leaders could learn something from their Korean counterparts on how to steal an advantage in the new industrial revolution.

Published 9:35 AM, 18 May 2012 Updated 3:09 PM, 18 May 2012

Words are powerful things that can be loaded with emotion. The word ‘tax’ in particular is ingrained with negative feeling.

That’s why Tony Abbott, ever since he took over the leadership of the Liberal Party, has wanted people to think of a carbon price as a ‘carbon tax’ and not a ‘carbon trading’ scheme. It looks as if he has succeeded.

Back in around 2001 I remember having an argument with then shadow Labor Environment Minister, Kelvin Thomson. At the time I said that if Labor really wanted to do something meaningful to reduce emissions they needed to introduce a carbon tax. Thomson said they would do nothing of the sort.

Instead, he said, they would look to introduce an emissions trading scheme. At which point I blurted out, “Okay, sure… carbon tax, carbon trading, who cares, they’re effectively the same thing.” Thomson then coolly explained that there was no way Labor would be opening itself up to the same kind of electoral damage that accompanied the introduction of the last new tax – the GST.

Tony Abbott, having been John Hewson’s media adviser when Hewson lost the unlosable election in 1993 over the GST, would have learnt this lesson well. While Gillard did admit that the deal negotiated with the Greens to provide a fixed price period meant it was “effectively a tax”, on the whole the government studiously avoids describing it as a carbon tax.

Instead, they prefer to describe it as a carbon pricing scheme or a carbon trading scheme with a short fixed price period.

Well if you check out Google Insights, it’ll show you that Tony Abbott has clearly won the battle over how people think about and describe the carbon pricing scheme. The first chart illustrates the frequency with which people in Australia search in Google for the terms ‘carbon price’, ‘carbon trading’ and ‘emissions trading’ since 2005. Carbon trading has generally been dominant but with emissions trading not far behind, until 2011 when carbon price became more frequent. Frequency that the terms ‘carbon price’, ‘carbon trading’ and ‘emissions trading’ are entered into Google – 2005 to today

 The next chart is exactly the same as the one above except it also assesses the frequency with which ‘carbon tax’ is searched for (the green line) relative to the other terms. Carbon tax, for the most part, was barely used. Then in 2011 its frequency dwarfs that of the other terms and indeed dwarfs anything historically, showing that most people have become engaged in this debate during the period it has been considered as a carbon tax.

Frequency in use of search terms including phrase ‘carbon tax’ (illustrated in green) The person who can frame a debate in language that is most favourable to them is more than half-way to winning the argument. Abbott has done this superbly, with some support from the Greens.

May 4, 2012 – 3:04PM

Climate Change Minister Greg Combet is doing the hard sell on compensation for taxpayers under a carbon tax.Climate Change Minister Greg Combet says 250 companies will pay the carbon tax come July 1, however others have been told they are also likely to face the new tax. Photo: Alex Ellinghausen / Fairfax

Companies such as Alcoa, BHP Billiton, Boral and La Trobe University are among about 250 companies that will pay the carbon tax when it is introduced on July 1.

The Clean Energy Regulator has today published an initial list of 250 ”liable entities” that will face the $23 per tonne tax, however a further 80 companies have also notified that they are likely to face the new tax in the 2012-2013 financial year.

It says these companies and facilities will account for more than 95 per cent of emissions covered by the carbon price mechanism. The list will continually be updated.

Other entities listed by the regulator today include the Brisbane City Council, BlueScope Steel, the City of Armadale, Rio Tinto and Thales.

The government has been estimating that about 500 companies would pay the carbon tax.

“I think we’ll come in underneath 500 but it is a matter for the regulator to determine,” Climate Change Minister Greg Combet said.

Mr Combet said the initial list was based on greenhouse emissions reporting by companies over the last four to five years.

This comes as Independent MP Rob Oakeshott is threatening to block a key element of the government’s carbon scheme.

Mr Oakeshott was a member of the multi-party committee that developed the scheme but says he wants the floor price on carbon scrapped because it will harm business.

The Member for Lyne said he may vote against regulations to introduce a floor price because he wanted businesses to have the flexibility to buy cheaper carbon permits overseas when the emissions trading scheme is introduced.

“It is certainly one of the options, as is reconvening the multi-party climate change committee and trying to renegotiate some of the aspects,” he told the ABC.

The carbon tax is due to come in on July 1. It will operate at a fixed price for three years before moving to an emissions trading scheme in 2015. But even then, there will be a floor price – to limit how low it can go – until 2018.

Mr Combet said he spoke to Mr Oakeshott about his position last night and they would continue with discussions, but that the independent’s views were no surprise.

”This has been his position,” Mr Combet told reporters in Canberra.

”His view was always that the sooner we get to a fully flexible price the better.”

Prime Minister Julia Gillard said that the floor price was a question for the future.

”Making a regulation about a price floor will happen at some time in the future,” she told reporters in Melbourne today.

”We are consulting on how to do the floor price  and there’s certainly no rush in that process.”

But the Greens argue scrapping the floor price would hurt both business certainty and action on climate change.

“Speculation about disallowing the floor price regulations sends a strong signal of uncertainty to business and, because of that, I will be asking Mr Oakeshott to reaffirm his commitment to the climate package as negotiated,” Greens leader Christine Milne said in a statement this afternoon.

“Mr Oakeshott understands that the Climate Change Committee negotiated a package as a whole where each element has impacts on all others.”

The week the government had faced continued criticism of the carbon tax from both the Coalition and Labor members.

Former NSW premier Kristina Keneally – who went to the state election last year in support of the carbon tax – urged Ms Gillard to dump or “dial back” the tax in a bid to save herself at the next election.

Read more:

So, the Federal ALP is clearly committing itself to a path that history (but not today’s voters) will approve of.


Labor rejects Kristina Keneally’s call to soften carbon tax


Dump carbon tax, Keneally tells PM

Kristina Keneally says PM Julia Gillard should dump the carbon tax in an effort to fix Labor’s woes.

Sky News2 May 2012

Kristina Keneally

Former NSW Premier Kristina Keneally says Labor must soften the carbon tax if it’s to have any chance of winning the next election. Picture: Nicholas Welsh Source: Herald Sun

LABOR is adamant it won’t back away from its electorally-toxic carbon tax following calls from former NSW premier Kristina Keneally for the measure to be softened.

Finance Minister Penny Wong today rejected the former Labor leader’s push for the carbon tax to be dramatically wound back, saying Australians would realise in time it was necessary for the country’s future.

“Look the carbon price has passed the parliament,” Senator Wong told ABC Radio.

“I think in the years to come people will see how important it is to the long term health and competiveness of the Australian economy.”

Ms Keneally last night said Julia Gillard should dump the carbon tax or significantly unwind it in an effort to fix Labor’s electoral woes.

Ms Keneally tweeted today: “If you want to keep a carbon price, find a way to sell it better, or make it easier on Australians, so a re-elected Labor Govt can carry on.”


Ms Keneally, who led NSW Labor to defeat in 2010, said Ms Gillard needed a “game changer” if her government was to have any chance at the next election.

“She really has to deal with the question of what she’s going to do about this carbon tax,” Ms Keneally told Sky News.

“I think she needs to think seriously about whether she can revoke it or in fact whether she can lessen the impact … dial it back somehow.”

This would be an act of contrition to show Ms Gillard was listening to the people, Ms Keneally said.

On Monday Climate Change Minister Greg Combet brushed off suggestions the government would ease the impact of its carbon tax in next week’s budget.

Labor’s carbon tax is due to commence on July 1 with an initial starting price of $23 a tonne. It will move to a floating price emissions trading scheme from 2015.

Climate inertia shows ugly side of the Australian character

May 25, 2011Comments 179

Climate change action needed now

Its time we all started pulling together to do something about climate change according to Ross Gittins.

It’s a sore test of faith when people put power bills before their children’s future.

Like most people, I’m an instinctive optimist. In any case, I see no margin in pessimism. If you concluded the world was irredeemably wicked, or destined for certain destruction, what would be left but to curl up and die? Since we can never be certain the end is nigh, much better to keep living and keep plugging away for a better world.

I confess, however, I’ve needed all my optimistic instincts to avoid despair over the terrible hash we’re making of the need to take effective action against global warming. We’re showing everything that’s unattractive about the Australian character.

We pride ourselves that Aussies are good in a crisis, but until the walls start falling in on us we couldn’t reach agreement to shut the door against the cold.

Advertisement: Story continues below

Parched earth.

This week’s report from the Climate Commission – established to provide expert advice on the science of climate change and its effects on Australia – tells us nothing we didn’t already know, but everything we’ve lost sight of in our efforts to advance our personal interests at the expense of the nation’s.

Its 70 pages boil down to four propositions we’d rather not think about. First, there is no doubt the climate is changing. The evidence is clear. The atmosphere is warming, the ocean is warming, ice is being lost from glaciers and ice caps, and sea levels are rising. Global surface temperature is rising fast; the last decade was the hottest on record.

Second, we are already seeing the social, economic and environmental effects of a changing climate. In the past 50 years, the number of record hot days in Australia has more than doubled. This has increased the risk of heatwave-associated deaths, as well as extreme bushfires.

Sea level has risen by 20 centimetres globally since the late 1800s, affecting many coastal communities. Another 20-centimetre increase by 2050 is likely, on present projections, which would more than double the risk of coastal flooding.

Third, these changes are triggered by human activities – particularly the burning of fossil fuels and deforestation – which are increasing greenhouse gases in the atmosphere, with carbon dioxide the most important of these gases.

Fourth, this is the critical decade. Decisions we make from now to 2020 will determine the severity of climate change our children and grandchildren experience. Without strong and rapid action, there is a significant risk that climate change will undermine society’s prosperity, health, stability and way of life.

That scientists still need to repeat these long-established truths is a measure of how much we’ve allowed short-sighted and selfish concerns to distract us from the need to respond to a clear and present danger.

In this we haven’t been well served by our leaders. The Labor government’s decline dates from Kevin Rudd’s loss of nerve following the defeat of his carbon pollution reduction scheme in the Senate in late 2009, following the success of the Coalition’s climate

Read more:

Abbott mocks Labor over ties to climate ‘extremists’

Phillip Coorey

March 18, 2011THE Greens have questioned why the government is pursuing their policy on climate change if it considers the minor party to be extreme.

And the Opposition said yesterday that if Julia Gillard really meant what she said about the Greens, she should call another election rather than continue to govern with the support of ”extremists”.

”It’s like walking down the street holding your lover’s hand and yelling out ‘this relationship is a farce’,” said the Nationals’ Senate leader, Barnaby Joyce.

The Prime Minister used the Don Dunstan address in Adelaide on Wednesday to position Labor between the Coalition and the Greens which, she said, represented the opposing extremes of the climate change debate.

”Neither of the extremes in Australian politics can deliver this reform,” she said. ”The Coalition has surrendered itself to fear-mongering and denying the power of the markets. The Greens are not a party of government and have no tradition of striking the balance required to deliver major reform.”

Ms Gillard argued that Labor would protect jobs with transitional assistance for industries affected by a price on carbon. Simultaneously, Labor would create jobs in the clean energy sector by pricing carbon. She said the Coalition was capable only of the former and the Greens, only the latter.

The Greens leader, Bob Brown, said Ms Gillard’s barb was an attempt at product differentiation, sparked by sensitivity to criticisms that Labor was too close to the Greens. In reality, the government was embracing Greens policy, he said. “It brings a little smile to one’s face to see product differentiation while carrying through with a long-held Green political philosophy – that is, to have a carbon price en route to modernising Australia’s economy.

“The Greens are going to ultimately enhance Labor’s position in the polls. If Labor keeps taking our policies I think they’ll keep doing all right.”

The Opposition Leader, Tony Abbott, said if Ms Gillard regarded the Greens as extremists, ”Why has she formed government with them?”

”Why would any rational politician form a government with people whom she now thinks are extreme?”

The government and the Greens plan to strike a deal on a carbon price this year, have Parliament pass the legislation before Christmas and have the scheme begin on July 1 next year.

Ms Gillard said if there were no deal on a carbon price this year, there most likely never would be a price on carbon.

With the party haemorrhaging voter support over the issue, one minister confided that such a scenario would not be the end of the world. ”It could be a lot worse,” he said.

Climate change policy has dogged Labor for three years. After three unsuccessful attempts to pass legislation, it cost Kevin Rudd the prime ministership and nearly cost Labor government.

Ms Gillard defended the government promoting the scheme before the detail was worked out. ”Even if the government had gone out and announced every detail of this carbon pricing … Tony Abbott would be running a scare campaign,” she said.