The carbon pollution reduction scheme

What are the implications of the CPRS for households?
 
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  • Updated:15 Jan 2009
 

03.Our concerns with the CPRS

CHOICE has been campaigning for change on behalf of consumers since the government announced the development of an emissions trading scheme in 2007. These are our demands following the launch of the CPRS White Paper in December 2008.

We have four primary concerns with the scheme:

  • the weak target
  • consumer’s voluntary actions are rendered meaningless
  • insufficient support on energy efficiency measures for households
  • poor design of the scheme weakens its effectiveness

The Target

The 5% - 15% emissions reduction target by 2020 does not demonstrate international or domestic leadership on climate change. A clear majority of Australian consumers want a stronger role in delivering on climate action, and actively support the country’s bid to become an international leader on this issue. A stronger upper target will increase the chance of an effective international agreement that stands some chance of protecting consumers’ long term interests in avoiding harmful climate change.

What we want

  • Lift the upper target for 2020 to a 25% reduction on 2000 emissions levels, securing a low carbon future and demonstrating leadership on an international stage.
  • Advance Australia as the world’s first truly green economy, and commit to the development of green jobs.

Results (as at May 09)

Following immense pressure from a range of stakeholders, the Government has announced a new target of 25% on 2020 levels, conditional on many factors including an international agreement to stabilise emissions to 450ppm.

Voluntary action

The CPRS renders most voluntary consumer action meaningless. It thus denies consumers the opportunity to act to further reduce Australia’s emissions, and in doing so also threatens the viability of a number of emerging industries.

What we want

  • define what is meant by voluntary action;
  • Ensure all GreenPower is accounted for, not simply new sales of GreenPower from 2010
  • identify a system by which voluntary action can be accounted for;
  • set a realistic timeframe for measuring emissions saved through voluntary action. An annual reporting timeframe is proposed as it would to inspire consumers and business to take even more voluntary action;
  • commit to retiring CPRS permits and AAUs for the voluntary action taken by consumers and business; and
  • commit to ensuring that the retirement of permits results in savings over and above the 2020 end point target, rather than simply shifting the trajectories.

Results (as at May 09)

Following pressure from CHOICE and other groups, the government announced that new sales of GreenPower from 2010 will be counted as additional to the mandatory targets. This will not account for existing sales to one in ten Australian households.

Have your say here.

Energy Efficiency Measures

Neither the White Paper nor other Commonwealth policy decisions announced to date include adequate measures or funding to promote household energy efficiency. Effective energy efficiency policies provide direct benefits to consumers through lower energy bills and increased energy security as well as reducing greenhouse gas emissions.

What we want

  • Divert revenue raised from the sale of permits to make comprehensive and strategic investments in energy efficiency for both households and industry.
  • Introduce and fund a set of comprehensive policies to encourage and assist households (and industry) to become significantly more energy efficient as per the recommendations of the report Energy and Equity, a copy of which is enclosed. The program should aim to retrofit five per cent (5%) of existing homes a year and should include:
    • Effective and regularly evaluated education campaigns on the most effective means to achieving, and subsequent benefits of, energy and water efficiency.
    • Home audits of energy and water use that result in recommendations for behaviour change and physical improvements and referral to sources of assistance.
    • Financial and other assistance for low income households to implement measures that improve water and energy efficiency.
    • Improved labelling on products and appliances so that initial and second hand purchasers can make informed decisions about energy efficiency at the point of purchase.
    • Financial and taxation incentives to encourage landlords to retrofit properties to improve energy and water efficiency.
    • Improving energy and water efficiency in public housing.
    • Mandatory energy efficiency standards in all new buildings.

Results (as at May 09)

In December 2008, the government have introduced a $3.9 billion package for household energy efficiency, but it doesn’t go nearly far enough.

In May 2009, they announced an additional web-based tool to assist households understand and measure their energy use and identify energy savings.

But this still doesn’t go far enough, we want to see a strategy that is comprehensive and extensive.

Strengthening the architecture of the CPRS

The current architecture of the CPRS exposes households to the unnecessary risk of additional costs being spent on supporting polluting industries. The government needs to strengthen the architecture of the CPRS. In doing so it should take into account the long term implications of an emissions trading scheme on households in a rapidly changing environment. In particular:

  • emissions-intensive trade-exposed industries (EITEI) should be provided free permits only on the condition that they commit to and implement significant emissions reductions measures; and
  • there is no sufficient policy justification to issue free permits to coal-fired electricity generators.

What we want

  •  Compensation to EITEI should be short-term and conditional on investment in energy efficiency programs and renewable energy generation so as to minimise the need for ongoing assistance and thus the impact of the CPRS on consumers. Free permits should not be permitted to be sold on for a profit, without introducing significant carbon reduction programs. This should be independently audited annually and reported publically.
  • The CPRS legislation should require an independent review of EITEI assistance as and when any new international agreement is negotiated and entered into force; or where the international market exceeds the interim price cap, with changes flowing from the review immediately.

No free permits should be provided to coal-fired electricity generators, rather funding raised should be diverted to energy efficiency and renewable energy within business and households, so as to reduce the demand for high carbon electricity generation; build household resilience against future higher energy costs; and even begin to prepare households for inevitable temperature rises. Compensation provided to coal-fired power generators should be in the form of funding grants for research to assist the generator in reducing carbon emissions.

Results (as at May 09)

The government has not acted on any of these demands. In fact, they have increased the free permits to industry and they still have no energy efficiency requirements

 

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