Some sections of Australia’s business community (as well as the Abbott opposition) are concerned that we should not go ahead of the rest of the world on a carbon price. This ignores the fact that much of the rest of the world is already moving ahead of Australia on both carbon pricing in particular, and climate change mitigation more generally.

The Australian Financial Review (unfortunately paywalled) reported on Thursday September 16 that a number of CEOs have made the above argument. These include QBE Insurance CEO Frank O’Halloran who said “we ought to be patient and go with the other major developed countries around the world and not try to be the first cab off the rank”; Coca-Cola Amatil CEO Terry Davis who said “I don’t think we should lead the world”. The Australian Chamber of Commerce and Industry has claimed that “unilaterally imposing an emissions trading scheme has low business support”. Tony Abbott, who once said that climate change was “crap”, recently said that “a go-it-alone carbon tax in Australia would be an act of economic self-harm”.

One CEO who does not share this opinion is BHP CEO Marius Kloppers who has called for a carbon price to be introduced in Australia. The speech where Kloppers said this can be downloaded here (pdf). We will know whether Kloppers is serious when we find out whether Minerals Council CEO Mitch Hooke continues his scaremongering about a carbon price or not.

I will list below some of the climate action around the world that makes it impossible for Australia to “go-it-alone” on carbon pricing. The most comprehensive carbon pricing is in the EU ETS, where a carbon price partially contributed to emissions covered by the EU ETS falling by 11 percent in 2009.

Japan is presently drafting plans for an emissions trading scheme to come into effect from 2013. It will cover emissions from large emitters, include provisions for domestic and international offsets, and compensation for trade exposed industries. Japan already has a voluntary ETS in operation, and a mandatory ETS covering Tokyo.

South Korea, which does have commitments under the Kyoto Protocol, is also planning on introducing an ETS. Korea has already passed a ‘Basic Law on Low-carbon and Green Growth’, which mandates a cap on emissions. It is planning to pass further legislation to make this cap operational.

Although the United States has not yet passed national legislation, state-based approaches to carbon pricing are expanding. The Regional Greenhouse Gas Initiative is operating in ten states; eleven states in the US and Canada are developing the Western Climate Initiative and seven states in the US and Canada are developing the Midwestern Greenhouse Gas Accord. New Zealand now also has an emissions trading scheme. China has been dramatically reducing steel production in order to meet energy efficiency targets and has been driving down the costs of solar and wind power with its clean energy industries.

As was pointed out by Paul Gilding in Climate Spectator, “we are in as much danger of leading in action on climate change as we are of leading on indigenous health”. The risk for Australian Business is not that we will go ahead of the rest of the world on climate policy – it is already too late for that. The risk is that lack of climate policy and high Australian per-capita emissions will lead to our industries being frozen out of markets in the future.

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