Further climate policy detail welcomed

Australians want action on climate change, and they want a policy that delivers affordable and reliable energy, supporting industry, investment and jobs, Business Council chief executive Jennifer Westacott said.

“We welcome the further detail provided by the Labor Party today, which clarifies some but not all of the unanswered questions about their climate and energy policy.”

These include:

  • What mechanism will drive and manage the transition to lower-emissions generation in the electricity sector?
  • Will a disproportionate share of the national emissions reduction task fall on certain sectors of the economy given that some industries will be excluded under the Safeguard Mechanism?
  • What is the reasoning behind excluding our Kyoto carry-over and not incentivising early action on climate change?

“We are pleased to see confirmation that the Labor Party will allow access to limited international permits to help achieve its ambitious emissions reduction target and ensure businesses acquit their emissions liability at least-cost. We look forward to working with the Labor Party over the coming months to clarify the eligibility and amount of international offsets.

“The linking of Labor’s ambitious emissions reduction target to the Safeguard Mechanism will require significant and challenging reductions for industry. In the context of uneven global commitments to reduce emissions, the Business Council emphasises the need to maintain the international competitiveness of Australia’s trade exposed sectors.

“We welcome Labor’s acknowledgement of emissions-intensive trade-exposed (EITE) sectors in their plan and recognition that ‘tailored treatment’ will be required. The Labor Party must work closely with industry on determining facility baselines and trajectories, as well as providing greater detail on their ‘comparative impact’ principle and how this will ensure Australian businesses remain globally competitive.

“It remains unclear how abatement will be delivered in the electricity sector and how the various announcements made today will contribute to an economy-wide emissions reduction target.

“The Business Council has strongly supported the National Energy Guarantee and calls on the Labor Party, if elected, to commit to working with the states and territories to implement the scheme as a credible, market-based mechanism to drive abatement and investment in the electricity sector. It is essential that the electricity sector has the ability to generate domestic offsets that can be accessed under the Safeguard Mechanism to offset liabilities and assist with equalising marginal abatement across sectors.

“The decision not to utilise Kyoto carry-over credits is concerning. Recent modelling has demonstrated that this will have a significant impact on the rate of economic growth and ultimately the size of our economy. We strongly encourage the Labor Party to re-examine this decision in the coming weeks and call on them to undertake and release Treasury or Productivity Commission modelling of their emissions reduction target if they form government at the next election to further inform the debate.

“The Business Council supports a greater focus on abatement in the transport sector. It is important that all sectors of the economy contribute to reducing our emissions and that no sector carries the burden alone. We encourage the Labor Party to consult closely with industry on the introduction, coverage and timeframe for any new standards.

“Climate and energy policies will have significant impacts on our regions, on jobs and future economic growth. It is vital that political leaders are transparent with the public about the likely cost and impact of their policies. Maintaining investment confidence, a predictable policy landscape and least-cost abatement must remain key objectives for the all sides of politics when designing energy and climate change policies.

“Getting the delicate balance right between reducing emissions and promoting economic growth is best served by an economy-wide, bipartisan price signal to drive technological change. In the long-term, this should be linked to the global carbon price, rather than a sector-by-sector approach.”