Full steam ahead on ETS

Senator Penny Wong delivered a major speech on Australia's proposed emissions trading scheme last week – but she did it in London while the domestic media were focussed on the Rudd Government's economic stimulus package and accordingly it slipped under the radar.

Speaking to the London School of Economics, the Climate Change Minister sent a reminder to Australian business lobbyists that have continuously pitched their support for an emissions trading scheme on their members' need for certainty.

"Acting now will provide certainty to business in an otherwise uncertain climate," Wong said.

"Further delays will only result in adding to business uncertainty with negative consequences for investment and business planning."

The speech was a strong rebuff of the idea circulating in Australia that the global financial crisis might cause the government to delay introducing emissions trading, a move promoted by Malcolm Turnbull. Interviewed in Washington three days earlier, Treasurer Wayne Swan had declined to comment on a delay, leading to domestic media speculation that it was in the pipeline.

Wong's tough stance was expressed as the Italian, Polish and German governments all voiced concern over their ability to meet EU emissions targets in the face of economic recession. Canadian voters – the first to go to the polls since the full extent of the global crisis was revealed – have rebuffed their country's version of the ALP which had campaigned strongly on the introduction of a carbon tax.

Wong said the Australian Government was committed to having the carbon scheme "up and running" in 2010 and would not accept the global financial crisis "and other present-day challenges" as an excuse to give up on efforts to take action.

She also told the LSE that the Rudd Government intended to deliver "best practice" in emissions trading, establishing an efficient and cost-effective scheme that delivers the lowest cost transition to a smaller carbon footprint for the economy.

She added that the government had learned from the European Union's mistakes with emissions trading in shaping its approach to offering free permits. The EU scheme had allowed windfall gains while sending mixed price signals on behavioural change, she argued.

"We propose to allocate permits to activities where the risks (of carbon leakage) are greatest; that is, the most emissions intensive of trade-exposed industries."

At its core, she said, the government's approach is about reducing Australia's carbon intensity while maintaining strong economic growth.

Much of the speech was devoted to Wong expressing the government's moral perspective on the need to show a lead in global greenhouse gas abatement, salted with claims that moving early will provide advantages to Australia in capturing a role as a regional hub for carbon trading, once a global scheme is in place. Wong also claimed benefits for the domestic agriculture sector and Australia's potential as a world leader in clean energy technology development.

"The government takes the view that we stand to benefit from significant economic opportunities as the world acts to address climate change," she said.

The 14-page speech did not contain a single reference to the ferment back home among trade-exposed, energy-intensive industries, highlighted earlier this month by the Australian Industry Group. AIG has expressed concern that, in the worst case, introducing carbon costs under the formula for alleviation proposed in the Government green paper – while overseas rivals did not – could pose a risk to a million jobs.

Meanwhile the key business lobby groups continue to send mixed messages to Canberra. In latest comments, both the Business Council and the Minerals Council have warned against a delay in implementing emissions trading, while saying that the economic situation makes it even more important to get the design right. The Ai Group says it wants the scheme to "start gently and sensibly."

Keith Orchison, director of consultancy Coolibah Pty Ltd and editor of Powering Australia yearbook, was chief executive of two national energy associations from 1980 to 2003. He was made a Member of the Order of Australia for services to the energy industry in 2004.