Australia lags in carbon pricing

AUSTRALIA is lagging behind its major trading partners in measures to reduce carbon pollution dependence, doing 17 times less than the United Kingdom in financial terms, a new report finds.

Research group The Climate Institute argues that just because a country like Australia doesn’t have an emissions trading scheme (ETS) or carbon tax does not mean it isn’t making business responsible for pollution or driving the transition to a lower pollution economy.

It commissioned Vivid Economics to compare the incentives for clean energy in Australia, China, Japan, South Korea, the United Kingdom and the United States.

It did this by converting direct policies such as emissions trading with indirect pricing policies such as regulations, subsidies and incentives into a price tag on pollution, measured in dollars per tonne of carbon pollution.

A similar analysis will be done for the new multi-party climate change committee.

The UK came out in first place, with its pollution price and participation in the European ETS giving it an equivalent price tag around 17 times that of Australia’s.

The Climate Institute’s Erwin Jackson said as a result, investment in clean energy in the UK reached around $US11 billion ($A11.1 billion) in 2009.

“The UK’s low pollution economy now compares to its healthcare and construction sectors,” he said.

“Over 900,000 people are now employed in the UK in low pollution businesses and jobs in these sectors have been growing strongly despite the UK’s economic downturn.”

In second place was China, where the implied carbon price tag was eight times that of Australia’s, and where $US35 billion ($A35.35 billion) was invested in clean energy in 2009.

Australia came second last, with only its renewable energy target and some state government policies contributing to its implied carbon price.

South Korea came last of the six countries compared.

The research supported a market-based mechanism like an ETS as the cheapest way to reduce pollution.

Mr Jackson said it was now in the hands of the newly established multi-party climate change committee.

“Alongside a price tag on pollution, urgent measures are needed to make clean energy cheaper, reduce energy bills and improve energy productivity,” he said.

The Climate Institute and KPMG will release the report in Sydney on Tuesday.