Federal Politics

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Opposition climate plan could cost extra $24b - study

THE Coalition's climate change policy could end up costing an extra $24 billion if ''Direct Action'' fails to achieve its assumed ambitious greenhouse emissions reductions from soil carbon and tree planting, an analysis provided to the government says.

The Coalition says it will pay just $10.5 billion over 10 years to achieve the same emission reduction target as Labor - 5 per cent by 2020 - through a competitive grant scheme that envisages 60 per cent of Australia's task would be achieved through storing carbon in the soil.

The Coalition says it would not need to supplement its policy by buying carbon credits on the world market and has attacked the government for allowing companies to buy up to half their required permits offshore.

But the Climate Change Minister, Greg Combet, claims Direct Action is in fact a plan to do nothing to change Australia's greenhouse emissions, including proposing no change to the biggest source of greenhouse gases - electricity generation. The Opposition Leader, Tony Abbott, has even said he would like to see Australia build more of the highest-emitting brown coal-fired power stations.

An analysis from the Department of Climate Change calculates the cost of delaying effective domestic action to reduce emissions would be ''acute'' since new investments in high-emissions technology would be ''locked in'' during the years of inaction.

If effective action was delayed significantly it would be impossible to achieve Australia's target by domestic action alone and governments would have to resort even more to international permit purchases to meet the goal, it says. The department said it would cost $23.7 billion for Australia to buy the emissions reductions it is supposed to be achieving by 2020 on the international market.


Because the international permit price is scheduled to rise over time, if Australia delayed buying the offshore permits it needed until 2020, the price tag could rise to $27.7 billion.

The analysis comes as both Labor and the Coalition prepare for a ferocious election-style campaign in the weeks after the tax begins tomorrow.

Labor's strategy is to ridicule Mr Abbott's claims about the impact of the tax, with two ministers planning to visit Whyalla tomorrow to see if the town has been - as Mr Abbott once warned - ''wiped off the map'', and Labor distributing a pamphlet entitled ''Abbott's little book of carbon tax deceit.''

But the Coalition plans to continue its highly successful campaign on the cost of the tax and its allegations that the scheme will make some Australian industry uncompetitive.

Earlier Treasury modelling found the Coalition's policy of banning the purchase of international carbon credits to help meet Australia's target would mean it would cost $62 a tonne to reduce emissions in 2020 rather than an estimated $29 under Labor's emissions trading scheme.

Business groups have strongly argued for the ability to buy some pollution permits offshore to allow Australia to meet its targets without drastically slowing growth. The Treasury modelling shows that a ban on international permits would double the reduction in expected gross national income due to taking climate change action.

The original Direct Action policy states that, like the government, the Coalition would seek to pay for the early closure of a brown-coal-fired power station, but this part of the policy was abandoned last year when Mr Abbott visited the Latrobe Valley and said there was no reason for Australia to stop generating electricity using brown coal.