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The carbon price should be closing down these industries

Aus opinion, 4 March 2014

As big companies have been announcing plant closures and jobs cuts over the past few months – from QANTAS’ slashes to Holden, Toyota and Alcoa’s closures – progressive and environmental activists have been quick to try and ensure the carbon tax is not given any of the blame. Whilst the Coalition has regularly pointed their fingers at the policy (check out their views on QANTAS and Alcoa for example) many on the left have argued that it isn’t the cause of this destruction, and certainly isn’t the cause of any job losses.

Importantly, each time the left has been backed up. Look again at QANTAS and Alcoa and there is clear evidence that the carbon tax has had little to do with their losses and closures. Alcoa even put out a statement arguing the carbon tax had nothing to do with the closure of their aluminium smelter in Geelong. Each closure has been due to other factors – the rising dollar, internal competition etc etc.

And with that once again Tony Abbott has been caught out in a lie – or at least a massive exaggeration. He has, as he has for years, greatly over-exaggerated the impact of the carbon price.

But whilst Abbott and the Coalition deserve to be called out for their exaggerations and lies, one question has to be asked. Doesn’t the fact that these statements still count as exaggerations or lies highlight that the carbon price is much weaker than it should be?

Let’s go back to the theory of carbon pricing to see what I mean. It’s pretty simple. You put a price on the carbon emissions of our biggest polluters. The extra cost of polluting provides enough of a disincentive to stop companies from polluting, leading them, in theory, to shut down their polluting plants, mines and operations, and in doing so foster a shift towards cleaner energy sources.

That last sentence is key. The very point of the carbon price is to see polluting companies shut down their polluting operations. There’s little middle ground here – many of these industries are inherently polluting and therefore the only way to solve climate change is to transition away from them. Closure have to happen.

And when you look at that fact you can see the climate benefits of some of the recent closures. For example, the Alcoa Aluminium Smelter in Geelong was a highly polluting plant that used the equivalent of 1/4 of the Hazelwood power station’s output. The smelter used so much coal energy that its closure is likely to see a subsequent closure of the Anglesea coal mine and power plant – a pretty decent win for the climate.

The same can be said for our transport industry. For example, air travel plays a relatively small, yet still significant, role in our carbon pollution. A reduction in services and flights, which was part of QANTAS’ announcement, would clearly reduce this impact. The same can be said for cars. Cars play a major role in our transport system and within that the emissions coming from how we get around. Any decline in demand for car use therefore can only be seen as a good thing for our climate. It has been a long goal of environmental activists to see both a shift away from air travel and cars and one towards more use of public transport.

And herein lies the problem. QANTAS, Alcoa, Holden and Toyota are not necessarily the first targets of an effective carbon price. We want to take on the biggest and most impactful polluters if we want to tackle our emissions, and these companies don’t necessarily fit the bill. But even if we’re not targeting these companies specifically, either way a good carbon tax should be designed to see the sorts of closures and shifts we have seen over the past few months. It’s what good climate policy should be about – closing down polluting industries to be replaced by cleaner ones. And that will mean that some jobs will have to go – a tough reality but one we have to deal with.

Of course that doesn’t make these things easy, as the impacts on communities of these closures have shown. But that is the reality of the situation we face – we need to make some hard decisions and face some hard questions. We need to deal with the fact that some things have to close, some jobs have to be lost. And we need to deal with it in a way that helps people in this transition, rather than deny the reality of it.

And therefore if, after a year and a half in operation, the carbon price is not actually leading to the closures and transition it should be designed for, we have to ask the question, is it actually doing its job? If all our polluting industries are staying open – or only closing due to other factors – is it a potential that the carbon tax simply too weak for us to be able to call it an effective climate policy? Or that any carbon price is an ineffective, and ideologically problematic tool, to solve the problem?

This is a difficult conversation to have, but it is an essential one. It is one that is essential to solving climate change and leading ourselves to a clean energy future. It is one that is essential to lead us to a world where making the big changes we need seem possible and doable.

There’s a good political point to be made when calling out Tony Abbott for his alarmism about the carbon tax. It highlights his tendency for exaggeration and outright lying. It can also take away some of his attacks. But in doing so we have to actually ask ourselves, are we forgetting the desired outcomes of such a policy? Closing high polluting plants and industries is the goal of good climate policy. We have to remember that.