The Business Council of Australia has agreed on a policy position to tackle climate change involving sustainable emissions reduction strategies while protecting Australia’s economic base.
As foreshadowed in the BCA’s interim submission to the Prime Minister’s Task Group on Emissions Trading last month, the BCA’s emissions reduction policy is multifaceted, based around a cap and trade emissions trading scheme, together with immediate and long-term emissions reduction targets, and both the development and deployment of low-emissions technologies.
The BCA’s position was agreed at the council’s annual forum this week following six months of consultation with member companies, which represent a third of Australia’s economic activity and employ nearly one million Australians.
“The business community has developed a broad consensus on a way forward that recognises the complexity of moving from a high to low global emissions economy,” BCA President Michael Chaney said.
“Now it is up to our political leaders and policy makers to use this consensus to deliver a framework for action, including realistic targets and transition arrangements to make sure the Australian economy is not adversely affected,” he said.
A key part of the policy is the development of a national emissions trading scheme which can be linked into emerging emissions trading markets operating in other economies.
“But given the scope and scale of the transition required to reduce emissions, other strategies must also form an integral part of the task,” Mr Chaney said.
“That is why the BCA strongly endorses a multifaceted approach involving a range of emissions reduction strategies, including research and development to identify and implement low-emission technology solutions, as well as ensuring greater energy efficiency,” he said.
The essential features of a ‘linkable’ emissions trading scheme for Australia include:
- Make the scheme long-term (at least 30 years) to increase greenhouse gas emissions reduction and investor certainty.
- Set both annual and long-term emissions reduction targets.
- Include a first phase which involves the establishment of information collection and measurement and verification mechanisms for businesses and the secondary market.
- Include as many greenhouse gases as possible.
- Maximise the number of sectors that are included in the scheme. If it is not possible to include a particular sector, introduce policies which ensure commensurate emissions reductions in that sector.
- Allow maximum offsets (national and international) to meet abatement targets.
- Establish a ‘Reserve Bank-like’ permit issue authority.
- Issue free permits to compensate enterprises for the economic loss from the change in the ‘rules of the game’.
- Offset the competitiveness impact of the scheme on ‘trade-exposed’ industries for as long as necessary, providing transitional arrangements through the permit issue process.
- Cap the price of permits and consider other relevant ‘safety valve’ mechanisms.
- Ensure the scheme facilitates an active secondary market to provide a rising but reasonably stable forward permit price curve.
- Ensure effective governance structures that enable confidence in the market.
While Australia is developing a national response, the BCA believes Australia can and should, through its international relationships and networks, push for the development of a far-reaching global market response.
“Sensible risk management requires a long-term and regularly reviewed policy framework aimed at achieving the necessary reduction in greenhouse gas emissions” Mr Chaney said.
“The BCA’s policy provides scope for Australia’s greenhouse response to be adapted as information and scientific knowledge improves and technology develops,” he said.
Mr Chaney thanked all BCA members for their focus and constructive contributions toward developing a workable policy framework.