As widely expected the Australian federal government has confirmed its intentions to scrap the carbon tax (along with the mining rent tax) and instead implement its widely criticised program of Direct Action. Under this policy, companies responsible for large scale Greenhouse Gas emissions will be paid by taxpayers to reduce their emissions. The slightly reassuring news is that these carbon pollution reduction subsidies will only be paid on evidence that emissions have in fact been reduced, ensuring a level of accountability but putting the onus on emitters to fund mitigation projects they believe will be cost effective once the subsidy is applied.
The re-indexation of the petrol excise levy is a more positive step in terms of sending pricing signals that may incentivise fuel users to reduce their consumption and emissions, though from a budgetary perspective the measure is mainly pitched on terms of helping to get the budget back into surplus.
On the other hand the government has not chosen to adjust the Fuel Tax Credits scheme, which subsidises the fuel used by companies by exempting them from the fuel excise, providing considerable benefit to the mining sector amongst others.
Even before the Warburton report into the Renewable EnergyTarget has been completed, the axe has fallen on the Australian Renewable Energy Agency (ARENA), with all but priority, in progress initiatives to be cut. Funding for he Carbon Capture and Storage Program has also been reduced significantly.
Mitigation to one side, the government has honoured its pre-election promise to commit $9m in funding to prolong the work of the National Climate Change Adaptation Research Forum (NCCARF), an academic research body. Its role will be that much more critical if Direct Action leads to less emissions reductions than the Carbon Tax / ETS was expected to deliver.
Talk to Adaptive Capability today for strategic advice relating to environmental and climate change risks.
David.McEwen@AdaptCap.com
