Finance Finance News Climate debate heats up as Anthony Albanese backs away from carbon price
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Climate debate heats up as Anthony Albanese backs away from carbon price

Anthony Albanese has committed a Labor government to achieving net zero emissions by 2050. Photo: AAP
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Opposition Leader Anthony Albanese has drawn praise for committing a future Labor government to achieving net zero emissions by 2050.

But energy experts say the policy will cost more than it needs to if governments choose not to introduce an economy-wide carbon price.

Just days after his party formally adopted its target of net zero emissions, Mr Albanese told ABC’s Insiders on Sunday morning that “the international scientists are all telling us that [net zero emissions by 2050] is what we need to avoid dangerous climate change”.

He said the party would provide more details of how it planned to achieve its target closer to the federal election.

But Mr Albanese also appeared to back away from introducing a price on carbon.

“That’s not necessary … at the moment, what you have is the cheapest forms of energy are renewable,” he said.

Earlier in the week, Prime Minister Scott Morrison, who has not yet committed to an emissions reductions target beyond 2030, described Mr Albanese’s costless target as reckless.

Former Liberal Party leader John Hewson told The New Daily we had “drifted back into the climate wars again”.

The best policy

Most economists and energy experts argue that introducing an explicit price on carbon is the most efficient way of reallocating resources to industries that emit less greenhouse gas.

The Productivity Commission said in 2011 this is because the cost of reducing emissions is lower when firms and consumers make their own decisions, rather than government telling them exactly what to do.

Tony Wood, director of the Grattan Institute’s energy program, said the federal government could still achieve net zero emissions by 2050 without introducing an economy-wide price on carbon.

But he told The New Daily that other methods would be less efficient and cost taxpayers more as a result.

“Labor is worried that if they adopt a carbon price – and they’ve been burned for this in the past to some extent – they’ll be criticised for imposing something which costs too much. But exactly the opposite is true,” Mr Wood said.

“The idea that you can just do this through technology – it’s much harder to do, because you’ve got to cobble together a whole lot of other policies that add up to the target, whereas an economy-wide carbon price does it for you.”

‘Climate wars’

Describing an economy-wide carbon price as the “first-best policy”, Mr Wood said the nation’s irrational “climate wars” was preventing politicians from implementing “sound economic policy”.

In lieu of introducing a price on carbon, he said the federal government could introduce progressively stricter standards on motor vehicle emissions and lower the baseline levels for polluters under its Climate Solutions Fund.

Dr Hewson also said a carbon price would be the most effective way of achieving net zero emissions.

He told The New Daily the debate over climate policy must move beyond the political arena.

Debate on the topic was so vulnerable to political point-scoring, and climate action so crucial to the future of the planet, that an independent body must be established to direct policy, he said.

Dr Hewson consequently supports independent MP Zali Steggall’s plan to establish a climate change commission to advise government.

Describing the move towards zero net emissions by 2050 as “inevitable”, he said the government should focus on managing the transition.

“We’ve drifted back into the climate wars again now, scoring points on each other,” he said.

“We need to take it out of short-term politics and put it in a transition commission that can muster the best evidence globally and set out some pathways, sector by sector. Then the government and the opposition can respond to what they will do to facilitate those pathways.”

Shifting sands

Labor’s new target comes after a landmark CSIRO report last year debunked the myth that greater action on climate change would come at the expense of jobs and growth.

The report found a business-as-usual approach to climate change would see the Australian economy grow at an average rate of 2.1 per cent a year until 2060, compared to 2.75 per cent a year if the government adopted a target of net zero emissions by 2050.

In the mind of independent economist Stephen Koukoulas, the private sector is moving so rapidly towards a zero-carbon future that governments could probably get away with not introducing a price on carbon.

Australia is already expanding its renewable energy capacity 10 times faster than the world average, on a per capita basis.

“The cost of renewables is so low and so competitive and taking over so rapidly from the fossil-fuel sector that perhaps it’s not needed. I’m not quite sure. I’d like to see some more maths on it,” Mr Koukoulas said.

“Market forces might work without it.”

As for the prospect of taxpayer money going towards developing a business case for a new coal-fired power station in Queensland, Mr Koukoulas described such public assistance as an “economic crime”.

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