Australia’s center-left government is under pressure to water down its plans to tackle climate change as the global financial crisis threatens jobs and economic growth, experts say.
Less than a year after winning office on a strongly pro-green platform, Australian Prime Minister Kevin Rudd faces calls to amend his vision for a carbon emissions trading scheme to begin operating across Australia in 2010.
Opinion polls show wavering public support for dealing with climate change if the economic cost is too high and a number of the firms that will be hit hardest by the plan have urged the government to proceed cautiously.
“I think people have thought, ‘hey, we’re facing a serious problem with this economic crisis, let’s deal with that first and then we can start looking at climate change,’” University of Melbourne economics professor John Freebairn said. “The only problem is, you can’t put off dealing with climate change because if you do, you’ll have to take far more drastic measures five or six years down the track.”
Rudd insists his government will proceed with its plan to introduce an emissions trading scheme in 2010, despite the global market turmoil and opposition calls to delay its implementation for up to two years.
The “cap and trade” scheme would involve the government setting a limit on carbon emissions and granting permits to industries to cover the amount of greenhouse gases they are allowed to produce each year.
Companies wishing to emit more carbon dioxide than their allocated quota would have to buy permits from companies with a surplus, thereby creating an economic incentive to reduce pollution.
With Australia already suffering its worst drought in a century, the prime minister said failure to act on climate change could be disastrous.
“The problem of climate change and global warming doesn’t disappear because of the global financial crisis,” Rudd said. “Unless we deal with this the roll-on consequences for the economy over time in the rural sector, agricultural production and overall security of water supply is huge, and huge for the Australian economy.”
Climate Change Minister Penny Wong said the government had a “moral” duty to preserve the environment for future generations, regardless of prevailing economic conditions.
“There will never be an easy time to make the transition to a low-carbon economy,” she said.
Canberra’s long-term aim is to reduce greenhouse gas emissions by 60 percent by 2050.
Critics including the Business Council of Australia and major industry players such as BHP Billiton and Chevron Australia have warned that the plan could drive up costs and force investment offshore.
Woodside Petroleum chief Don Voelte said the government would be taking a major risk.
“You can’t put something like that in at this time until we get this whole fiscal chaos that’s going on in the world straightened out — no government can risk jobs and the economy until we get stabilization in the world marketplace,” he said.
A recent poll conducted by the foreign affairs think tank Lowy Institute also indicated public support for drastic action on climate change was waning, even though it was one of the major issues in last November’s election.
The poll found that the number of people who supported immediate action on climate change even if it involved significant economic cost had fallen 8 percentage points to 60 percent since 2006.
The architect of the government’s plan, economics professor Ross Garnaut, said the issue of climate change should not be downgraded in response to the economic crisis.
“Climate change is a long-term structural issue,” he said. “It is bad policy to allow the approach to important long-term structural issues to be determined by short-term cyclical considerations.”
Freebairn agreed but said the government had only itself to blame for the rumblings about the economic fallout from its carbon plan.
“The government has been reluctant to explain to the public that it will cost them, it will push up electricity prices and petrol prices,” he said. “Under the emissions trading plan, the cost was supposed to be mystically carried by business. Or course, businesses pass on their costs, people are realizing that now.”
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