Carbon Pricing: What the US must learn from Australia

Carbon Pricing: What the US must learn from Australia

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America can learn a lot from Australia on climate change policy. This will be particularly useful if any party in the U.S. wishes to push forward with a carbon tax in coming years.

As of July 1, the Australian Labor Government began claiming revenue from a carbon tax that sees the largest emitters of CO2 – businesses emitting more than 25,000 metric tons per year – pay AU$23 per metric ton emitted. The tax excludes some industries such as transport, agriculture, forestry, and fishing.

Impacts on consumers will vary somewhat across Australian states, but national averages show a $3.30 increase in electricity bills per week. $9 out of every $100 spent on electricity will be directly attributable to the tax.

The Government is compensating constituents by providing them with increased family payments, pensions, allowances, and tax cuts. The average household will receive $10.10 each week through these measures, with the entire funding for these changes resulting entirely from the tax on large CO2 emitters.

Imposition of the tax in Australia has been subject to some of the most heated political discourse in decades.

In a panel discussion on political reform in Australia and the U.S. at Australia’s Washington embassy yesterday, Australian Ambassador to the United States Kim Beazley noted that the political discourse in Australia has become more divisive, with much of the polarization surrounding the carbon tax. This has created an environment in Canberra that sees very little interaction between the major parties outside of Parliament.

Government initiatives to combat climate change through a carbon tax/emissions trading scheme (E.T.S.) have been a political graveyard for both major parties in Australia. Action on climate change catalyzed the demise of former Leader of the Opposition Malcolm Turnbull and former P.M. Kevin Rudd in 2009 and 2010 respectively. Current P.M. Julia Gillard appears to be next on the list of casualties, and looks set for a crushing defeat in the next federal election largely because of the tax. Her approval rating has slumped to a dismal 27%.

Botched government communication with constituents on the carbon tax has created uncertainty amongst the Australian public on what should be an apolitical issue: the effects of anthropogenic climate change.

Two decades of unprecedented economic growth on the back of a mining boom – predominately iron ore and coal exports to satiate Chinese demands – have consolidated a powerful opposition to carbon pricing.

Both the Liberal and Labor parties went to the 2007 election proposing an E.T.S. The Liberals (the more conservative party) have since backed away from a carbon tax in favor of a “direct action” plan. The problem since then has been creating a consistent narrative that involves the public: essential in steering any country toward a sustainable energy policy. A lack of leadership has exacerbated the Australian public’s perception of politicians as being ambiguous when it comes to combatting climate change both in Australia and worldwide.

In 2007, newly elected Prime Minister Kevin Rudd noted climate change was “the greatest moral challenge of our time.” Problems with climate change’s image after Copenhagen coupled with the global financial crisis then led to the E.T.S.’s cunctation until at least 2012. The Opposition was quick to capitalize on the lack of continuity between the way Labor purported its values and the way it acted through policy.

When Kevin Rudd postponed introduction of an ETS in 2010, only 33% of Australians weren’t prepared to pay anything to combat climate change through a progressive carbon tax/E.T.S. In two years there has been a complete reversal of public opinion, with a mere 33% of Australians now support the carbon tax.

Ever since the Government shelved the ETS in 2010, debate has honed in on a perceived dishonesty of the Government. A pledge by Julia Gillard that “there will be no carbon tax under a government I lead” three days out of a federal election seems to have made an already divisive policy a political anathema. The Australian public has viewed this as yet another demonstration of the disparity between the Government’s rhetoric and its actions in Parliament.

Debate surrounding the tax in Australia has illuminated two facts of political life: words are your currency; and communication with your constituency is vital to successful public policies. Any American administration observing Australia’s action on climate change should recognize the importance of maintaining a consistent narrative on climate policy, one that interacts and informs citizens.