Malcolm Turnbull is facing a backlash over his energy policy as conservative MPs including Tony Abbott condemn a proposal to allow power companies to meet emissions targets by buying permits from overseas as a “carbon tax” by stealth.
Mr Abbott has slammed the government’s in-principle support for including international carbon credits in Australia’s energy policy, arguing that the move will see Australian businesses and consumers shovelling money to foreign carbon traders, with huge potential for rorts.
Energy and Environment Minister Josh Frydenberg announced the new stance on carbon credits when releasing the final report of his 2017 review of climate change policies on December 19.
“As flagged in 2015, the review considered the role of international units and as a result the government has now given in-principle support for their use,” he said. “The final decision on the timing and appropriate quantity and quality limits will be taken by 2020 following further consultation and detailed analysis.”
Carbon credit schemes reward carbon abatement projects, such as tree planting in developing countries, potentially allowing Australian energy companies to buy the credits from the tree-planters to offset their own emissions. Business groups have strongly backed the move, arguing that there is no reason to waste efforts on higher-cost domestic abatement options when credible, less expensive alternatives are available abroad.
Liberal backbencher Craig Kelly has joined Mr Abbott in voicing strong opposition to the government’s move, while the Nationals’ George Christensen has previously expressed concerns about the international trading of carbon credits.
Mr Abbott said his position on international carbon credits remained the same as it had been when he was prime minister and party leader.
“I don’t support carbon trading, which is a carbon tax under a different name, and I certainly don’t support overseas carbon credits being available to Australian businesses,” he told The Australian. “That just means that Aussie consumers end up shovelling our money to foreign carbon traders, and we all know the potential for rorts there.”
Mr Frydenberg hit back last night, saying the role of international carbon credits had been on the table since Mr Abbott’s government announced in 2015 Australia’s Paris commitment.
‘’Since then we have conducted a major climate review in which industry groups representing energy intensive businesses across the economy including the BCA, AiG and the Minerals Council have made it very clear they strongly support the use of international permits,’’ he said. “It is worth noting that Mr Abbott’s position on international permits is closer to the Greens than that of Australia’s big employers.”
In recent days, the Prime Minister has hailed his government’s national energy guarantee as a “real breakthrough” and key achievement in 2017.
Although the government won support for the guarantee in the Coalition partyroom, the latest development in the policy has inflamed the internal divisions that in 2009 saw Mr Abbott overthrow Mr Turnbull as opposition leader.
Mr Kelly said international carbon credits would put an extra cost burden on Australian businesses that would not be borne by competitors in countries such as China, the US and India.
“We’d be doing this at a time when every Australian business that uses energy is under enormous international competitive pressure through the higher cost of energy and with the company tax cuts in the US,” Mr Kelly said.
“Businesses in Australia are going to be struggling to compete internationally without us effectively putting on a further new green tax, forcing them to buy pieces of paper from overseas.”
Mr Kelly said the Abbott opposition’s criticisms of the Gillard government’s policy in 2011 remained relevant. “All those arguments are just as relevant today as they were back then,” he said, likening international carbon offset schemes to someone saying they were going to go on a diet over Christmas, but continuing to eat and paying a “diet offset”.
“You keep eating and someone from the Third World gets paid to starve,” he said.
Sky News commentator and former Abbott chief of staff Peta Credlin dubbed the timing of the announcement last month as a “getting out the trash” move, given it was released the day after the mid-year economic and fiscal update and the day of Mr Turnbull’s cabinet reshuffle.
In December 2010, Europol revealed it had arrested more than 100 people connected with carbon offset fraud, with links to organised crime networks in Europe and the Middle East. Consequently, trading volumes on Europe’s carbon market fell by 90 per cent, with a loss to European taxpayers of $6.6 billion.
In 2011, now Foreign Minister Julie Bishop wrote an opinion article attacking the then Gillard government’s policy of support for international carbon credits.
“It is naive at best for the prime minister to assume that such a scheme will emerge, given the clear signals internationally that major emitting nations are moving away from trading in carbon credits,” Ms Bishop wrote.
“Of more concern is that Julia Gillard appears blithely or wilfully unconcerned about the fraud and criminal activity that has beset trading in carbon credits.”
Asked whether her views had changed, and whether she supported the Turnbull government’s policy of in-principle support, Ms Bishop said in 2011 there had been widespread allegations of fraud in relation to international carbon credits.
“Since then, an international framework has been established through the Paris Agreement which provides unprecedented transparency, accountability and global co-operation on governance issues,” she said.
“The government is working to reduce emissions and meet our international obligations under the Paris Agreement through a broad range of emissions reduction policies and initiatives.
“We support, in principle, the use of international permits as part of our comprehensive suite of policies.”