Under the Federal Government’s proposed Carbon Pollution Reduction Scheme (CPRS) it will be impossible for local councils, small businesses, households, individuals or even state governments to play their part in reducing Australia’s greenhouse gas emissions post 2010.

This is partly because the CPRS not only imposes a cap or a ceiling on emissions but also a floor. It is also because efforts by these individuals and groups to reduce their greenhouse gas emissions are not recognised in the CPRS design.

The Rudd Government’s CPRS does not recognise individuals’ efforts to reduce emissions such as by installing solar panels or hot water services and energy efficient light globes and appliances in their homes and businesses. Such efforts will not contribute at all to reducing Australia’s overall emissions under the CPRS, instead they will merely free up carbon permits for big polluters such as cement and steel manufacturers to pollute more.

Retire permits
Dr Richard Denniss, the Executive Director of the Australia Institute says that the only way individuals and households can reduce Australia’s overall greenhouse gas emissions will be to purchase carbon permits and simply ‘tear-them-up’ or retire them from the market¹. This way the amount of permits available for big polluters to purchase will decrease and in turn elevate the price, as well as the incentive for those companies to reduce their emissions, rather than pay for them.

However, if all the permits were to be bought up by conscientious Australians and the $40 price cap was reached, the Government simply plans to release more permits above and beyond the original cap.

Despite the 20-25% emissions reductions on 2000 levels by 2020 recommended by climate scientists, the Government’s 5-15% reduction targets are well below this. Also, the design of the CPRS means that come 2020, no matter how great the extent of energy efficiency measures taken by individuals is it will be impossible for Australia to reduce its emissions anywhere below this meagre target. Recognising the efforts of individuals and households and reducing the number of issued carbon permits in line with this would be an effective way to improve Australia’s targets and reduce our emissions further.

Alternative approach
Dr. Denniss suggests the Government take the following two steps to ensure that Australia contributes meaningfully towards reducing the effects of climate change:²

1. Set an ambitious target in line with the recommendations of the climate scientists of a 20 to 25 per cent reduction in emissions on 2000 levels by 2020. Anything less will not achieve optimal outcomes.
2.  Ensure that household activity is able to deliver additional benefits by empowering individuals to make a difference by their own efforts. The largest potential reductions in emissions result from small changes in the behaviour of large numbers of people but if there is no nexus between households and small organisations and the CPRS, these changes will make no difference.  This can be done by establishing a secondary market for household and small business reductions in emissions, a way of achieving additionality and recognising community achievements.

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