Friends of the Earth condemns dropping of carbon price floor

Media Release 29 August 2012

Yesterday’s announcement by the government to cut the floor price for carbon represents another significant watering down of the environmental and democratic credibility of the scheme according to Friends of the Earth Australia, a leading environmental justice organisation.

“Greg Combet’s announcement represents a major cave in to the interests of polluting industries which have been calling for drastic cuts to the carbon tax,” said Gareth Bryant from Friends of the Earth Sydney.

“The purpose of dropping the floor price is to reduce costs for polluters that have already been showered with free permits and compensation.

“The floor price was one of the few positive features of the original scheme because it was a safeguard against the notorious price volatility of carbon markets.

“We know from the experience of the European Union ETS that unregulated carbon prices create the risk of carbon price bubbles and crashes. In 2007 the price of carbon in the EU ETS nose-dived from a peak of €30 to a low of €1.

“The 12.5% cap on the number of Kyoto offsets credits that can be used by Australian polluters is an admission by the government that carbon offsets are a dangerous distraction from effective climate action.

“While these restrictions are welcome, they are watered down by substituting one form of international carbon credits for another.

“Perversely, the link with the European scheme will encourage European polluters to buy more carbon offsets and sell their European credits - many of which were also given away for free - to Australian polluters.

“Greater integration into global carbon markets puts important decisions about how we transition to a low carbon economy one step further away from the Australian people. The link to the international carbon price will effectively outsource Australian climate policy to global financial markets in a time of economic crisis.

“What these changes create is even more smoke and mirrors in an already complex scheme. Technocratic carbon market reforms will not drive the required transition away from fossil fuel dependency.

“Instead, the government should immediately halt any new coal or coal seam gas expansion, phase out coal exports and a create a just transition away from coal-fired power production by investing in publicly and community owned renewable energy”, said Gareth Bryant.

For comment: Gareth Bryant 0432 050 722