Carbon Credits Government Watch

The following conversation between Channel 9"s Laurie Oakes on 20/8/2006 reveals the earliest expression of the Howard strategy to talk about markets while being sure they never eventuate. Laurie is talking to Industry Minister Ian McFarlane.

LAURIE OAKES: You and the Prime Minister dumped on the states for proposed a carbon trading system. As a result of your dumping, I think, Peter Beattie then chickened out of it, but, how else except through an emissions trading scheme can price signals be used to cut emissions?

IAN McFARLANE: Well there are ways to get companies to adopt new technologies and not only did Peter Beattie pull out of it but so did Alan Carpenter so you have Western Australia and Queensland opting out of a what is a scheme that, by their own analysis and ABARE's analysis, will see a doubling in electricity prices and petrol prices over the next 30 odd years.

LAURIE OAKES: But, how else do you give a price signal?

IAN McFARLANE: Well, you don't necessarily need to give a price signal, you can say that it is up to the companies to ensure they're employing the latest technology in terms of emission reduction. That technology at this stage is still being proven. We're combining with the companies and they will invest more than $1 billion with the Australian Government to ensure that we pilot these technologies of lower emissions, but you've got to have the technologies in place before you can lower emissions globally and that's the challenge.

LAURIE OAKES: You say you don't need a price signal, even the Australian Coal Association says we're going to need a price signal, to compliment your cleaner coal program.

IAN McFARLANE: The Australian Coal Association actually withdrew that statement on the basis that they were taken out of context and their statement on Friday said they do not support that position but can I give you an example. The aluminium industry continues to lower its own emissions both in terms of Co2 but general emissions through their striving for efficiency and also the triple bottom line to satisfy the community that they are an industry that is sustainable in the long term. They've done that in Australia without a price signal.

LAURIE OAKES: But you're one out on this, the Australian Business Round Table earlier this year said there needed to be a pricing signal built in and it needed to be done sooner rather than later. The Reserve Bank board member, Professor Warwick McGibon says a carbon price signal is needed for the uptake of all low emissions technologies, I mean, the evidence is overwhelming?

IAN McFARLANE: There's certainly views that say that but they're not overwhelming views and the reality is, you cannot lower emissions until you have the technology to do it. Once you have the technology to do then there is a question about adoption and I'm confident, based on the track record of industry to date, that they will adopt the technology once it's available. The challenge at the moment over the next 10 years is to prove up the technology that produces zero emission coal fired electricity, that allows us to expand the renewable energy base into things like rot rocks, to look at options in terms of how we produce electricity by lowering emissions in a whole range of ways and that really is where the challenge is at the moment. The carbon trading schemes that are in place at the moment, including the one under Kyoto, are absolute failures and we've seen the carbon price in Europe move all over the place while at the same time the countries participating are actually going to miss their targets by miles. In fact, some of them will exceed Australia's growth in emissions, bearing in mind that our target was a growth of 8% from 1990 and we're one of the few countries at the moment who are on target to reach that.

LAURIE OAKES: Minister, even your Environment Minister has said the Government will have to investigate price signals coming from energy to deal with emissions.

IAN McFARLANE: Well, all I can say Laurie is that at the moment what we as a Government are focusing on, is making sure that we have the technology to reduce emissions.

LAURIE OAKES: But you're one out in saying....

IAN McFARLANE: I'm not one out actually, I have a strong band of supporters and it is the Government's position that we proceed down the track to use technology and the innovation and inventiveness of Australians in co-operation with other countries like America and Japan and China et cetera through the AP6 Network.

LAURIE OAKES: And price signals are not necessary?

IAN McFARLANE: Well, at this stage they're not.

LAURIE OAKES: Treasurer, Peter Costello, has said that.

IAN McFARLANE: I'm not sure that's exactly what Peter said, but the reality is that at the moment we need to develop that technology. We're doing that the Government is spending half a billion dollars in that area alone and companies will spend far in excess of that.