On 17 July 2014, the Australian Senate voted 39-32 to repeal the AUS$25.40 a tonne price on carbon emissions, ending a bitter four-year political war that destroyed the previous Labor government, but which now leaves the nation now without a credible plan to tackle global warming.

The scrapping of the carbon pricing mechanism comes just 12 months before the fixed price was due to be replaced by a fully-floating, market based cap and trade system, linked to the European Union’s emissions trading scheme.

The conservative government of Tony Abbott, elected last September after campaigning relentlessly against what it called a “tax on everything”, delivered on its commitment to axe the price on carbon, despite growing evidence that it was effectively reducing emissions, and had had nowhere near the negative impact on household living costs that had been predicted.

In doing so, Australia has become the only country in the world to have reversed action on global warming by abolishing a price on carbon.

“As the world steps up its efforts, Australia finds itself with no working policy to cut pollution,” said Kelly O’Shanassy, CEO of the Australian Conservation Foundation.

“Now we have no comprehensive scheme to stop big polluters from going back to the bad old days of free-for-all polluting and treating the air we breathe like an open sewer.

“This step backwards makes Australia an international embarrassment.”

But the scrapping of the carbon price did not come without a fight, and followed more than 50 hours of tortuous debate and negotiations in parliament’s upper house, where the balance of power is held by a motley crew of independent and minor party senators.

In its place, Prime Minister Tony Abbott intends to put a “direct action” plan, which involves a AUS$2.5 billion fund to make taxpayer-funded payments to big and small polluters who pledge projects to reduce their own emissions.

But there is no guarantee that the Australian parliament will approve direct action, which has been ridiculed by climate scientists and economists as a wildly expensive waste of money which is likely to have a negligible impact on emissions at best.

Abbott hailed the axing of the carbon price, boasting that he had delivered on one of his core election promises.

“A useless, destructive tax which damaged jobs, which hurt families’ cost of living and which didn’t actually help the environment is finally gone,” he told journalists at a media conference shortly after the legislation was passed.

Intriguingly, the legislation to scrap the price on carbon comes at a time when public support for it is at its highest level.

It is also took place just weeks after the Obama administration in the United States introduced tough new regulations to force the energy sector to make rapid and deep cuts to their carbon emissions.

 

Twists and turns of the climate debate

The fixed carbon price came into effect on 1 July 2012 after a long period of consultation and public debate following the 2010 election.

Its genesis goes back even further to before the 2007 election, when both major parties took policies for an emissions trading scheme to the people.

Labor prevailed that year, but the climate debate has taken many twists and turns since then in a country that has the highest per capita carbon emissions in the developed world, and where most electricity generation is still reliant on coal.

The scheme eventually introduced by Labor was extremely modest, exempting many large fossil fuel-reliant industries, such as steelmaking and aluminium, from any cost for the first couple of years, and accompanied by a raft of increased pension and social security payments to shield low income earners from any increased living expenses.

Beginning at AUS$23 a tonne, it rose to AUS$25.40 a tonne at the start of this month.

After two years, the carbon pricing mechanism had been an unmitigated success in reducing pollution and encouraging the generation of new clean energy, and the economy had continued growing.

The cost of living increases had also turned out to be far less than expected.

Total emissions since the price on carbon was introduced from the electricity sector alone have fallen by more than 10 per cent, putting Australia on track to cut its emissions by 2020 by15 per cent from 2000 levels, said the chief executive officer of the Climate Institute think tank, John Connor.

The use of brown coal for electricity generation has fallen by nine per cent, while electricity from renewables was up by 38 per cent.

“The carbon price has not resulted in the catastrophic impacts predicted by opponents,” said Connor.

Connor said Australia had been left with no credible climate policy just as the international community was focused on deeper reduction targets.

He said there had been no independent modelling to show that the Abbott government’s alternative direct action plan – which is not guaranteed to be passed by the Senate – would be able to achieve the national emissions reduction target of five per cent below 2000 levels by 2020, and in fact emissions could again increase.

Climate change activists are concerned that climate sceptics are now so firmly in control of the government’s agenda that other important parts of the overall policy, including the renewable energy target, a government owned investment bank that finances clean energy projects, and the Australian Renewable Energy Agency are also under threat of eventually being scrapped, although they have been reprieved for now.

 

Concerns

And even though the mining sector and fossil fuel industries were among the most aggressive opponents of the price on carbon, senior business leaders who never supported a fixed price are concerned about direct action and have expressed a preference for a pure, market-based scheme to reduce emissions.

Far from accept a price on carbon is now dead, the Labor opposition has pledged to take plans to restore an emissions trading scheme to the next election, due in two years.

Accusing Abbott of “sleep-walking Australia to an environmental and economic disaster”, Opposition Leader Bill Shorten said an emissions trading scheme was the best long-term way of dealing with climate change.

“Labor fundamentally believes that climate change is real, that Australia has a role to play in tandem with the rest of the world to address this most important environmental issue,” he said.

“So we will be backing in an emissions trading scheme.”

Greg Combet, the former national union leader-turned-politician who as Climate Change Minister in the Labor government introduced the price on carbon, remains optimistic that an emissions trading scheme will eventually become a reality in Australia.

Speaking to Equal Times, Combet conceded that Labor had mismanaged the politics of climate change, but insisted the policies it had introduced were effective and were achieving the desired results of reducing emissions while driving the transformation of Australia into a clean energy economy.

“This is a temporary setback,” Combet said.

“Carbon pricing will return, and it will return because it is the lowest cost, least impact way of reducing emissions in our economy.

“[Direct action] is economic lunacy.

“I think the work that we did is far from wasted, it will come back in one form or another.”

But it won’t be until there is another change of government, which may not be for many years.

With more scientific research emerging all the time that Australia is getting hotter and drier, many believe that is too long to wait.