Having commented last month on the increasing influence that green parties and green policies are having on mainstream politics – particularly in Australia where The Greens hold the balance of power – the UK and Australian Governments then managed to produce two classic examples of such greenery.
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On 10 July Julia Gillard, the Australian prime minister, announced plans for a carbon tax that will see 500 of Australia’s biggest polluters pay a tax of AU$ 23/t on carbon emissions from next July. Three years later, a market-based emissions trading scheme will replace the fixed tax. This has proved a hugely divisive move with public demonstrations against the tax and companies threatening to move their investment elsewhere: “There is no other country imposing this sort of carbon pricing scheme,” said Cynthia Carroll, CEO of Anglo American, in a recent interview. “It puts Australia in a difficult competitive position when comparing it to countries that haven’t taken this position, like the US, like Mozambique, like Mongolia and like Colombia.”
That said, the tax did not prevent Peabody and ArcellorMittal from launching a hostile takeover bid for Macarthur Coal, rather dampening claims from Tony Abbott, the opposition leader, that the tax would be a threat to coal’s future. Australia is simply too large a resource to be ignored completely – whatever the tax regime. More likely is that global miners will look to spread investment (and risk) more, taking some investment away from Australia.
What is increasingly noticeable in all this is the long shadow of The Greens on Australian politics. After all, following her defenestration of Kevin Rudd last year, Gillard promised not to introduce a carbon tax. That was, of course, before she became reliant on The Greens to form a Government.
Meanwhile, in the UK the Government published its White Paper on Electricity Market Reform. For more detailed analysis of this, see page 8, but what is worth noting here are the twin policies of a carbon floor price (despite the UK’s membership of the EU’s emissions trading scheme) and long-term fixed contracts for low carbon energy sources. Not only does this mark the end of the UK’s liberalised electricity market, but it could also finally sound the death knell for the UK coal industry as power companies switch to lower carbon alternatives before the first CCS-ready coal-fired plants come online in the early 2020s.
As an odd postscript to all of this, Gillard received support from none other than David Cameron, the British prime minister, who sent a letter congratulating her on the introduction of the carbon tax. Such unity between politicians is unusual: unfortunately, with the green shadow growing ever longer, policies that hit the coal industry are not.