This opinion article by Business Council President Grant King was published in the Financial Review on Monday 1 April 2019.
The Business Council of Australia has a longstanding and consistent position supporting action on climate change, as well as solutions to lower power bills and ensuring a reliable energy supply.
We continue to be at the forefront of urging a bipartisan, pragmatic and enduring solution to move past Australia's decade-long policy paralysis on climate and energy policy.
The Business Council continues to call for a comprehensive energy and climate change plan. We support Australia's commitment to the Paris Agreement.
Our preferred option for reducing emissions and managing the transition to one of the most carbon efficient economies in the world is a national, bipartisan, economy-wide, and technology neutral approach.
This will require a technological response, utilising market mechanisms to achieve abatement at least-cost. The simplest, most efficient method of achieving this transition is a price signal that places a value on lower-emissions, more efficient technology and encourages innovation to drive this technological shift.
It is impossible to secure bipartisan support on measures to address climate change and reduce emissions without locking in community support. This comes from understanding what is at stake and what the policy prescription will achieve.
We must be upfront and honest about the cost of transitioning to a lower-carbon economy.
Australian policy makers cannot continue the mistakes of the past where the impacts of adjustment have only been discovered after scheme has been implemented, or a situation where ad hoc and expensive compensation measures fall short.
Is it any wonder the community pushes back and consensus crumbles?
Action on climate change must strike a delicate balance between reducing emissions while protecting jobs and living standards, especially in regional Australia, and garner broad support across all sections of the community.
To achieve this, any scheme and the impact on people, jobs and industries must be clearly explained to Australians from the outset. The community is best placed to pass judgment on policies but they must be informed.
- Will the target be economy-wide or sector specific?
- Will carry-over of Kyoto over-achievement be included?
- Will international trading be allowed? If so, to what extent?
- How will emissions-intensive trade-exposed industries be treated? How will this impact other industries and sectors?
- How will the national target interact with state-based targets and schemes?
- How will the target operate with renewable energy targets?
The Business Council has a long and proud record of wanting to tackle climate change and working with governments of all persuasions to implement an enduring solution.
As far back as 2006, it was one of my predecessors, Michael Chaney, who called on then prime minister John Howard at the Business Council's annual dinner to tackle the issue of climate change.
Chaney said: "The basis for a valid long-term solution to reducing carbon emissions is a market-driven global compact. It has to be global because climate does not acknowledge national boundaries - and because all nations must participate to minimise the impact on individual economies.
"It has to be market-driven because only a clear and unambiguous link between carbon emissions and market value can provide both business and the community with a consistent and long-term motivation to reduce emissions.''
We worked with the Gillard government on its carbon pricing mechanism, recommending an initial carbon price of $10 per tonne as well as measures to address emissions-intensive trade-exposed industries.
The Business Council recommended an emissions intensity scheme to the Finkel review.
The Business Council supported Dr Finkel's recommendation to implement a Clean Energy Target (CET). When the CET was abandoned, we called on the government "to suggest what the alternative is going to be - because we need something''.
Following the demise of the CET, the Business Council was a strong advocate for the adoption of the National Energy Guarantee, working closely on the design of the scheme and playing a central role in building consensus amongst industry for its implementation.
As is widely known, we continue to work with our members on a potential industry-led emissions reduction mechanism for the electricity sector.
Climate change policy objectives must achieve reduced carbon emissions while securing Australia's prosperity and deliver meaningful jobs, support business competitiveness and promote economic growth.
The Business Council has constructively engaged in the debate about, and the development of, energy and climate change policy for more than a decade.
We are always at the table and working constructively to find a solution.
Australians expect power to be delivered when they want it. They expect it to be affordable. And they want to see action on climate change.
Solving these challenges is not simple and it requires mature participants to come to the table to find a workable, pragmatic, and enduring solution that brings the community along.
Any solution cannot pit regional Australians against urban Australians. It cannot harm the economy, or hollow out Australia's industrial capacity.
Australia must remain a high-skilled and highly competitive economy. Any action to reduce emissions must be in step with similar countries with comparable economies.
We need collective leadership to move past a decade-long impasse that threatens to divide Australia. The solution must be bipartisan, durable, in the national interest, and have broad community support.