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Carbon pricing or a Green New Deal?

by Gareth Bryant on May 24, 2019
Blog

The shock Australian election result may have just triggered the conversation we need to have about climate change.

During the campaign, the ‘climate election’ was being framed by Labor, independents and the Greens as a referendum on whether or not Australia should take strong action on climate change.

Predictably, the Coalition government has claimed their win, and particularly their strong showing in Queensland, as representing a green light from the Australian people for the Adani mine.

While Annastacia Palaszczuk was giving ground to this view, by speeding up the Queensland government approval process for a coal mine that would export Australian inaction on climate change to the world, her federal colleague Tony Burke was opening up a different conversation. 

Speaking with The Guardian and The ABC yesterday, the Shadow Minister for the Environment argued that the central question for Australia is not whether to follow the science and reduce greenhouse gas emissions, but instead how to act on climate change.

Through his intervention, Tony Burke broke apart more than ten years of Labor consensus on the superiority of market-based climate policy, instead favouring a Green New Deal-esque program of regulation and spending to drive the decarbonisation of the Australian economy.  

Since Kevin Rudd’s formulated his ill-fated Carbon Pollution Reduction Scheme in 2009, market solutions centred on pricing carbon emissions have been a pillar of Labor’s approach to climate policy.

In the most recent election, memories of the repeal of Julia Gillard’s carbon tax weren’t enough for Labor to abandon its market fetish when it comes to climate change.

While denying he planned to re-introduce a carbon tax, Bill Shorten’s climate election pitch relied on market forces in two key ways.

The first was strengthening the existing Safeguard Mechanism, which operates as a ‘baseline-and-credit’ carbon market.

(That Australia has a functioning, though weak, carbon price is the dirty secret of the Coalition government’s Direct Action approach.)

The second was a commitment to allow big polluters in Australia to purchase carbon credits from international offset markets as an alternative to reducing their own emissions.

(Also unremarked during the campaign was that no such market has yet been developed under the Paris Agreement.)

Reflecting on this approach, Tony Burke outlined to the ABC that:

“The political problem that we have had with these market mechanisms is that because you are doing what business has asked for — which is to say OK here’s the most efficient method, you make a whole series of decisions as to how you implement it — you can’t have a neat answer to the question of what’s the total cost to the economy, because you have given all of those variables across to business.” 

This homes in on the key disadvantage with market solutions: they suppress essential political conversations about how exactly we should tackle climate change.

As I explain in my recent book, the logic of carbon pricing is that it doesn’t matter how or where emissions are reduced, provided the cap is clear and the price is right.  

Questions such as whether investment in renewables should target formerly coal-dependent regions are left to the magic of the market, to be decided on a ‘least cost’ (read: most profitable) basis. 

Answers to questions like this are needed to mobilise sufficient support for action on climate change, but they are hard to come by within the constraints imposed by the market paradigm.

The economic rationale of carbon pricing was thus emblematic of Labor’s political failure to connect its detailed policy suite with a broader vision for a better country.

Enter the Green New Deal, which opens up much needed political space for debate over the climate questions that market-based policy can’t answer. 

Spearheaded by Alexandria Ocasio-Cortez in the United States, the Green New Deal is inspired by the ‘New Deal’ program of labour rights, welfare measures and infrastructure spending implemented by President Franklin D. Roosevelt in the context of the Great Depression.

Where carbon pricing offers incremental change via the market, the Green New Deal promises to transform the economy through public investment in people and places.

Vibrant conversations are beginning to sprout over what the Green New Deal could look like in Australia.

Important considerations include what lessons to take from the original New Deal (including the important role played by radical union demands and the need to confront its gendered and racial hierarchies) and how to best translate it to the Australian context (from finding a name that resonates to foregrounding the sovereignty of First Nations people).

What these debates show is that the Green New Deal, in contrast with carbon pricing, provides fertile ground for envisioning the contours of a post-carbon economy, and with it a climate politics that can finally meet the scale of the challenge we face. 

Gareth Bryant
Gareth Bryant is a Lecturer in the Department of Political Economy at the University of Sydney.
1 Comments
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  • Jolyon Sykes
    May 24, 2019 at 3:17 pm

    This is a major shift in ALP policy and might just bring me back to vote for them. The ALP seems to accept climate change as more than a possibility, opening up the question of what to do abot it. There are several communities in Australia and overseas that will be flooded if the climate does continue to warm and sea levels rise by half a metre or so. This is where action is needed to prepare those communities and to move them if they so desire.

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