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'Australian carbon tax is here to stay' vows Prime Minister Gillard

Australian Prime Minister Julia Gillard claims her government’s carbon-pricing scheme comes with an “Abbott-proof fence”.

The reference is to Opposition Leader Tony Abbott, who says he wants to take a wrecking ball to the legislation if he wins the next election.

The political uncertainty is impairing the long-term investment decisions needed for a sizeable renewable-energy sector to take shape, but Gillard says: “My prediction would be we are seeing the maximum drama right now, but it will abate over time. The reality is, Tony Abbott knows you can’t go back.”

John Grimes, chief executive of the Australian Solar Energy Society, says the odds are stacked against Abbott being able to wind back Labor policies.

With the Greens holding the balance of power in the Senate for at least four years after the next election, it would be impossible for Abbott to push through legislation without their appro­val. To do this, he would have to dissolve both houses of Parliament and call another election for both houses.

Tony Wood, a director of the Grattan Institute’s energy programme, thinks the Liberal Party leader is “playing a cunning political game”, adding: “Abbott’s fundamental strategy is to simply to say ‘no’ to everything the government does, and highlight its incompetence at every turn.”

However, Wood expects industry representatives to tell a potential Abbott government that the Labor scheme is “actually not so bad”, and that they prefer a market-based mechanism. “Abbott­ has been very careful. He hasn’t actually said he won’t have an emissions trading scheme, so I reckon he will take a pragmatic view that dismantling the policies Gillard has put in place is just too hard,” Wood adds.

Paul Curnow, a lawyer specialising in environmental markets at Baker & McKenzie in Sydney, agrees that Abbott may have a hard time convincing business that rescinding legislation is sensible. Despite the uncertainty, industry would have already spent a lot of money complying with Labor policies.

Some commentators claim that the wrangling over carbon pricing is just white noise. The bipartisan renewable-energy target (RET) of 20% renewables by 2020 is driving investment in wind, while subsidies and rebate programmes continue to push funds into solar.

The scheme covers the country’s 500 largest polluters. From July 2012, it will impose a cost of A$23 ($23.40) on every tonne of CO 2 emitted by power stations, steel and aluminium mills, liquefied-natural-gas producers, mines and cement plants.

The government hopes that by mid-2015, Australia will transition to a cap-and-trade scheme, which will see a floating carbon price.

These ambitions come with pledges to support emerging and established renewables technologies through the A$10bn Clean Energy Finance Corporation (CEFC) and the A$3.2bn Australian Renewable Energy Agency. Grimes expects solar to be a big winner of grants, as Australia is a world research leader.

“We might be able to mount an argument that solar should receive more funding than any other technology,” he says. “Investments that have been made in carbon capture and storage have been spectacularly unsuccessful, so proven solar-thermal that can pull its weight is a pretty attractive destination for support.”

The CEFC is about “getting projects over the line” with equity investment or loans, according to Grimes. It is hoped that money will be returned to the fund over time with a premium, so that it becomes a “rolling fund” that invests in renewables projects.

Oliver Wagg, Brisbane



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