Clyde Russell is a Reuters market analyst. The views expressed are his own.
LAUNCESTON, Australia, July 17 (Reuters) – Any government thinking of introducing policies to limit carbon emissions should look at Australia for an example of how not to do it.
Australia’s efforts to combat climate change have been poison to politicians from all sides of the debate, contributing so far to the demise of two prime ministers and an opposition leader, and there may be more to come. The latest twist has seen Prime Minister Kevin Rudd decide to switch from a straight tax on carbon emissions to a floating emissions trading scheme (ETS) a year earlier than planned.
This has nothing to do with improving the workings of the scheme or limiting carbon emissions and everything to do with trying to win back voters angered by rising electricity prices and industries that have seen their international competitiveness eroded by the tax.
The theory is that power and other prices will decline as the cost of carbon permits is expected to be around A$6 per tonne – the level at which European permits are currently priced – compared to the tax of A$25.40 ($23.09) per tonne that had been planned from July 2014.