{Contribution to Overland literary journal} Carbon trading: will the market save us?

Carbon_tradingWill the market save us?By Xavier Rizos – Summer 2011

A lot has been written since the 1997 Kyoto conference – and even more since Kevin Rudd agreed to ratify the protocol in 2007, committing Australia to a reduction target. The media has, however, done very little to explain how the reduction of greenhouse gas emissions by at least 5 per cent below 1990 levels by 2012 via ‘flexible mechanisms’ would work.

Basically, the various participants in the debate – from most Green activists to the majority of Liberals – are arguing over two options to reduce CO2 emissions: ‘the stick’ and ‘the carrot’.

The first option – the stick – is about enforcing social change via law. This is a more traditionally Leftist approach: the logic being that, if high CO2 emissions are problematic, then the state should promulgate decrees to phase them out. The approach is not new: it is, for better or for worse, how countries have traditionally approached large development projects. A carbon tax on the 500 most polluting industries amounts to a mild version of the state-led approach which the Labor government, with the support of the Greens, will follow until July 2015. It employs the ‘stick’ principle, in that the state will use its power to redistribute capital so as to develop more renewable energies.

In recent times, western democracies have increasingly preferred ‘the carrot’ of financial incentives. This neoliberal approach, reliant on the invisible hand of the market, has been adopted by the Kyoto Protocol. In Australia, the ‘carrot’ is a carbon trading scheme that will kick in after July 2015 to become the most important aspect of the carbon package, with the declared objective of reducing greenhouse gas emissions by 80 per cent by 2050.

Counterintuitively, the Liberal Party, on paper committed to the free market, advocates ‘direct action’ mandated by the state (that is, the stick) while a Labor government proposes a hybrid, beginning with the traditional Left approach of a tax before transitioning to a neoliberal trading mechanism.

Act I: The tax (2011–15)

The announcement of a carbon tax spurred considerable media hype, from the staged anger from the opposition, to the populist protest encapsulated by the ‘Convoy of No Confidence’ that converged on Canberra in August to demand the government stand down.

All the major accounting firms, however, have crunched the numbers and concluded the tax will neither send anyone broke nor derail the Australian economy…

Read the full piece at http://overland.org.au/previous-issues/issue-205/feature-xavier-rizos/

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