04 Jul 2008
The former head of the Prime Minister's Department, Peter Shergold, says any emissions compensation scheme adopted by the Federal Government must encourage people to use less energy.
His comments come as Professor Ross Garnaut prepares to hand down his draft report on an emissions trading scheme that would mean a massive reshaping of the Australian economy.
The Government wants to cut greenhouse emissions by 60 per cent by 2050.
Dr Shergold - who handed his report on emissions trading to the Howard government a year ago - says he is opposed to direct compensation for rising energy bills.
"If you are going to do a form of compensation to households it would be much better to do it through the taxation system and give people the choice about how they use that compensation," he said.
He also argues transport should be included in the scheme.
Dr Shergold has told ABC Radio's AM program that would have a relatively small impact on petrol prices compared with price hikes over the past year.
"The increase in fuel prices has been so severe that people believe this is going to be the long-term trend," he said.
"I would be surprised if it didn't change their behaviour in terms of fuel consumption."
He argues that any emissions scheme set up by the Federal Government should allow the market to drive the price of carbon.
Professor Garnaut proposes putting a cap on emissions and then trading permits for those generating them.
How the permits are allocated - either auctioned or given away is a key question - another is how ambitious the scheme should be.
It will be be more expensive if the target is to make deeper cuts and achieve them more quickly.
Professor Garnaut will discuss options for compensating households who will face higher electricity and other costs.
He will also touch on ways to ensure that the system protects areas most sensitive to the change like the coal producing regions.
'Only part of the equation'
The President of the Australian Conservation Foundation Ian Lowe says it is clear that energy pricing is only part of the equation.
He says the recent dramatic increases in petrol prices prove people are still prepared to pay premium costs for traditional fuel sources.
"We have to have higher prices, whether it is putting a carbon charge on using coal or moving to clean renewable energies," he said.
"The Government's own Department of Resources and Energy estimated 50 years ago we could be getting all of our power from renewables for about 50 per cent more than we now pay which is in the same ballpark as what it would cost if we applied carbon charges."
Energy Supply Association head Brad Page is travelling to Canberra for the release of the report.
He wants emissions trading to happen in a way that does not threaten Australia's ability to attract investment.
"As you implement these very expensive measures, we need to be mindful of what that does to shareholder value," he said.
"Make sure shareholders, which is mainly all the mums and dads out there as it happens in the Australian power industry, they don't just see their wealth whittled away.
"We remain a first class place for investment in all those new technologies that will defeat this greenhouse problem and that's the real issue."
Published: 04 Jul 2008