Greens call for NSW to put a price on carbon to reach net zero emissions by 2040

The NSW Greens have today announced a policy to introduce a state-based price on carbon to reach net zero emissions by 2040, saying that in the absence of a serious federal climate change policy state based action is needed.

The plan is to use the existing Load Based Licencing Scheme to impose a $30/tonne carbon price on large industrial emitters which account for about two-thirds of the state’s annual emissions.  This will then transition to an economy wide emissions trading scheme after two years which can be linked to similar schemes in other states or countries if a national policy is not enacted.  

The carbon price is expected to raise total revenue in the first two years of $5.13 billion, which the Greens say will be used to assist households to reduce energy bills by at least $500/year through the installation of solar panels and batteries and through energy and water efficiency measures.  Funds would also be used to assist the wider economy to transition away from carbon intensive activities, build large scale renewable energy and storage and assist carbon intensive industries such as manufacturing and aluminium smelting to reduce their emissions.

Greens MP and Environment Spokesperson Cate Faehrmann said:

“We’ve had a carbon price in place before and it worked. NSW was the first place in the world to introduce a price on carbon.

“We’ve been knocked dangerously off track in meeting our climate targets as a result of the dinosaurs in the Liberal and National Parties and Labor  going weak at the knees.

“With record temperatures, extensive drought and horrific bushfires, Australians are now experiencing the impacts of climate change firsthand and they are urging governments to act.

“In the absence of a serious federal scheme to reduce emissions, state based leadership and action is urgently needed.  NSW can work with other state governments to bypass the federal impasse and establish a nation-wide emissions trading scheme.

“We hope that by signalling that NSW is ready to go it alone, we can put more pressure on the next federal government to act. However, if they don’t act quickly and put a price on carbon we’ll be developing legislation and working with stakeholders and across party lines to put one in place for NSW,” said Ms Faehrmann.

Greens Energy Spokesperson Sue Higginson said:

“Climate change is the biggest economic, health and environmental threat we face and it is unacceptable that there is no policy in place in NSW to achieve the necessary rapid reduction in carbon emissions to avoid this catastrophe.

“Carbon emissions in NSW have remained steady in recent years, with only a 0.3% drop between 2013 and 2016.  This is clearly inadequate and that is why the Greens are calling on all parties to get behind our policy and introduce a price on carbon.”

 

Greens MP and Treasury Spokesperson Justin Field said:

“Carbon pricing and emissions trading is the most efficient and effective way to reduce carbon emissions across the economy.  

“This policy will allow NSW to reach net zero emissions by 2040 and drive the jobs rich transition to a clean economy.

“When even companies like BHP and Woodside Petroleum are calling for carbon pricing, then it beggars belief that Labor and the Coalition have abandoned this policy option.”

 

Media contact

Cate Faehrmann: 0412 207 043

Sue Higginson: 0428 227 363

Justin Field: 0439 205 835

 

Greens Policy: It’s time to price carbon (again)

Background

In recognition of the serious economic, health and environmental threat posed by climate change the NSW Government has made an in-principle commitment to ensuring NSW reaches net zero emissions by 2050.  However there is no policy currently in place to achieve the necessary rapid transition to meet this target.

Total emissions for New South Wales in 2016 were 131.6 Million tonnes, meaning that NSW will need to reduce net emissions by approximately 4.4 Mt per annum or 3.3% to meet the Government’s 2050 target.  But emissions have remained relatively stable in recent years, down by only 0.3% from 132 Mt in 2013 - just 9% of the required rate to meet the government’s 2050 target.

The Greens policy is to meet net zero emissions by 2040 which will require a reduction of 6.58 Mt per annum or 5% of current emissions every year across the entire economy.

NSW was the first place in the world to put a price on carbon, under the Greenhouse Gas Reduction Scheme (GGAS) which commenced on 1 January 2003 closed on 1 July 2012 when the federal carbon pricing regime was introduced.  That scheme imposed obligations on all NSW electricity retailers, known as Benchmark Participants, to reduce a portion of the greenhouse gas emissions attributable to their sales/consumption of electricity in NSW.

Both the NSW and federal schemes were a success. In 9 ½ years the NSW scheme reduced emissions by 144 million tonnes or 15 million tonnes/year from the electricity sector. The Federal scheme resulted in a reduction of 17 million tonnes of carbon in the electricity sector in the 2 years it was in effect.

Shamefully the federal scheme was torn down by Tony Abbott, but with the direct experience of climate change in the form of drought, floods and bushfires the public is eager for a genuine climate change policy and ready to embrace a carbon price again.

This is supported by companies like BHP saying it’s time to put a price back on carbon recently.  Woodside Petroleum and Rio Tinto also called for a price on carbon in 2018.

There is also the possibility of states taking collective action to price carbon in the absence of federal leadership.  In the USA 9 states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont) jointly operate a regional CO2 cap-and-trade system known as the Regional Greenhouse Gas Initiative.  States in Australia can work collectively to set up a carbon market regardless of the intransigence at a federal level and the Greens will be pushing for this.

Policy

Use the Load Based Licensing Scheme to set a state-based price on carbon

The Load based Licensing Scheme under the Protection of the Environment Operations Act 1997 is used by the Environment Protection Authority to set “limits on the pollutant loads emitted by holders of environment protection licences and links licence fees to pollutant emissions.”

The scheme is already used to impose prices on emissions of other pollutants such as nitrous oxide and particle pollution and is described by the EPA as “a powerful tool for controlling, reducing and preventing air and water pollution in NSW”.

The EPA also says the scheme “provides the administrative infrastructure for wider use of emission trading schemes in NSW, through its robust calculation and annual reporting procedures, under conditions of high public accountability”.

The EPA describes emissions trading as “the most cost-effective way” for established emission goals to be met “by letting the market determine the lowest-cost pollution abatement opportunities.”

Set a two year fixed price of $30/tonne for large industrial emitters

The proposed carbon price would be a two year fixed price of $30/tonne.  This is based on the Garnaut Climate Change Review recommendation in 2008 of a price between $20 and $30 per tonne of carbon dioxide (CO2) equivalent.

The carbon price would apply to large industrial emitters including power stations, mines, concrete, fertiliser and chemical manufacturers, steel mills and aluminium smelters. According to the 2016 National Greenhouse Gas Inventory, together these industries account for approximately 87.8 Mt or two-thirds of CO2 emissions in NSW per annum. The scheme would not initially apply to road transport and agriculture

The carbon price is expected to raise total revenue in the first two years of $5.13 billion.

 

Transition to an economy wide emissions trading scheme after two years

In line with Garnaut’s recommendations, the scheme would then transition after the initial two years to an emissions trading scheme which can be linked to schemes in other states or countries if a national policy was not enacted.  

This would be in the form of a NSW economy wide emissions reduction target of 5% per year to reach net zero emissions by 2040.  

Under the Load Based Licencing Scheme, be able to buy and sell permits for emissions or credits for reductions in emissions to meet the overall state cap.

Farmers and other land managers would be able to make money by storing carbon in the landscape through carbon credits under this scheme.

No additional revenue would be raised once it becomes an emissions trading scheme.

 

Money raised helps households reduce electricity bills, industries transition

The money raised from the price on carbon imposed in the first two years of the scheme would be used to assist households to reduce energy bills through installation of solar panels and batteries (see Greens Household Solar announcement) and through energy and water efficiency measures.

It would also be used to assist the wider economy to transition away from carbon intensive activities, build large scale renewable energy and storage and assist carbon intensive industries such as manufacturing and aluminium smelting to reduce their emissions.

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