Minister says 'carbon price incentive' is key issue
Updated
Critics say the Australian government's scheme would allow Australian companies to simply outsource their carbon abatement by investing in offshore projects such as Indonesian forests.
Presenter: Fran Kelly
Speaker: Penny Wong, Australia's Climate Change minister
WONG: The problem with the proposition in your question Fran is it assumes there's no price incentive in Australia for solutions.
KELLY: I'm just asking if that's possible, price incentive or not, is it possible?
WONG: Well you can't ignore the price incentive because the key issue that we are trying to put in place. The key reform is to put a price on carbon so companies, firms, the big polluters as some people call them, have a financial incentive to reduce their emissions, whether it's through becoming more economically efficient, whether it's through investment in cleaner technologies, or whether it's through investment in for example in protecting particular rainforests that would otherwise be cut down and contribute to global emissions. So the decisions for companies will be based on what is the most economically efficient decision for them and that's a good thing because this is an enormous challenge.
KELLY: But isn't the most economically efficient system for them going to buy these cheap so-called red credits say from by buying Indonesian offsets in Indonesian rainforests which some US modellers say could be running as cheaply as three or four dollars a tonne? That's going to be a lot cheaper?
WONG: Well I mean the premise behind your question assumes what costs will be, we don't know what will be for every firm the most economically sensible decision. For example there will be many firms which until now haven't had an incentive to invest in energy efficiency, and there may well be much low cost, a lot of low cost abatement, that is reduction in emissions through investment in energy efficiency. So I think the whole point of the scheme is you create a price incentive, you put a price on carbon because that is what contributes to climate change and firms then have to make a decision about how it is they reduce their emissions for the first time in the nation's history.
KELLY: But if firms decide the way to do that, the way to meet their targets is to buy these offshore credits, can they just do that without any cap on them because Professor Garnaut in his paper thought that was a good idea to allow them to do that, but he thought it was also a good idea to put a limit on the percentage or the volume of these cheap offshore credits that companies could purchase. There's no limit in your white paper?
WONG: No we have a qualitative limit, so what we're saying is if you going to do that what we will want is to ensure that these are robust credits, that they are something that is credible, that they are permits which do reduce emissions globally, and frankly we are upfront about that. This is a global problem, the more we can encourage reduction in emissions wherever they occur, whether they are in Australia or in the forests of some of our poorer developing country neighbours, we think that is a positive outcome not just for Australia, because we have so much to lose from climate change, but for the globe.
