Australia will join its carbon price scheme with Europe鈥檚 emissions trading scheme (ETS) by 2015. The decision means Australia鈥檚 future carbon price will be set by a European market notorious for .
Labor and the Greens say their decision to link the carbon price to Europe鈥檚 ETS delivers But the only certainties about Europe鈥檚 ETS are that it hasn鈥檛 cut emissions in the past and it won鈥檛 in the future.
Don鈥檛 trust anyone who tells you that Europe鈥檚 carbon price will be much higher in five or 10 years' time. Such predictions are no more believable than the pundits who pretend to know what stock market trends will be like five or 10 years from now.
Since it began in 2005, Europe鈥檚 carbon permit price has been very volatile. It crashed from a high of 鈧30 in April 2006 to just three cents by the end of 2007. It rose again in the ETS鈥檚 second phase (2008-2012) to more than 鈧35 but fell again to a low of 鈧6.04 in April this year. It now sits at 鈧9.80.
The price of Europe鈥檚 offset credits has fared no better. It fell from a starting price of 鈧20 in 2008 to 鈧3.48 in April. Analysts dubbed these UN-backed
But that鈥檚 not the worst of it. EU Climate Action Commissioner Connie Hedegaard admitted in 2010 that
The ETS鈥檚 weak price signal won鈥檛 close down polluting industries or drive big investments in clean technologies. As part of the deal to link with the ETS, Labor and the Greens agreed to do away with the Australian scheme鈥檚 $15 floor price.
Part of the reason why Europe鈥檚 ETS has had so little impact is because business received a massive over-allocation of free permits. As a result, the price stayed low in the ETS鈥檚 first phase (2005-2007) and Europe鈥檚 emissions rose by 7.5%.
Europe鈥檚 emissions dipped 12.5% from 2008 to 2011 due to the economic crisis, not the ETS. But the fall in emissions added even more excess permits to those already sloshing around the system.
Companies will be allowed to 鈥渂ank鈥 these extra permits to use in the third phase of the ETS (2013-2020). such a huge surplus that about half of Europe鈥檚 emissions cut target of 20% by 2020 could be met by 鈥渂anked鈥 permits that do not represent actual emissions cuts.
Coelho said if you add in international offsets and the dodgy permits available from eastern Europe and Russia, Europe could meet its 2020 target on paper without cutting a single tonne of carbon inside its borders.
Europe鈥檚 consumers have paid a heavy price for this carbon sleight-of-hand. Big polluting firms have passed on the 鈥渃ost鈥 of their free permits to customers, reaping extraordinary windfall profits. In a 2008 report, WWF and Point Carbon said power companies in just five European countries would
Swiss bank UBS said last year that the ETS had . It said action to directly phase out the biggest emitters would be a better option than 鈥渢he almost zero impact on the back of emissions trading鈥.
EU officials promise they have closed the loopholes that have allowed rogue traders, polluting firms and even the government of Hungary to defraud the ETS of billions of euros.
However, adding Australia to the scheme increases the potential for fraud. Carbon Trade Watch founder Tamra Gilbertson has pointed out that: because it would involve exchanges of permits that are subjected to different financial and environmental rules.鈥
Supporters of carbon trading insist these problems are just design faults that can be put right over time. But the biggest problem with carbon trading is structural. Whatever the design, no carbon trading scheme can cut emissions fast because they favour "end-of-pipe" solutions and short-term cuts but penalise the rapid structural changes we need.
Carbon trading assumes we have to put a price tag on nature to save nature. It assumes that to stop climate change, we have to hand control of the response to the same market forces that created it. It assumes pro-market platitudes about efficiency and business confidence count for more than the lived experience of recurring failure.
There is a better climate alternative, which would focus not on market transactions but on keeping fossil fuels in the ground. on August 29: 鈥淚nstead, the government should immediately halt any new coal or coal seam gas expansion, phase out coal exports and a create a just transition away from coal-fired power production by investing in publicly and community owned renewable energy.鈥