A political skirmish in Australia could have a big climate impact

June 26, 2013

Okay, it's true, intra-party disputes in Australia don't usually grab headlines up north.


Not in charge anymore. (Marty Melville/AFP/Getty Images)

But the news today that Australian Prime Minister Julia Gillard has been ousted as leader of the country's Labor Party in favor of Kevin Rudd is actually pretty interesting — with potentially broader implications for climate-change policy in the years ahead.

Back in 2011, Gillard's governing Labor Party pushed through a big carbon tax in Australia (which followed an earlier mining tax) — and has been suffering in the polls ever since. The opposition has threatened to repeal the taxes after the elections set for September. So now the Labor Party is reshuffling its leadership and fighting for survival. It's a good test case to see how a big, coal-reliant country deals with global-warming policy. Here's a very crude overview:

First Gillard passed a carbon tax: Back in 2010, Gillard took over the reins of the Labor Party and formed a minority government. The next year, she managed to enact a sweeping climate-change plan that would start with a carbon tax worth about $23 per ton and then, in 2015, transform into a cap-and-trade system similar to what Europe has.

The Carbon Pricing Mechanism, which aimed to cover 60 percent of Australia's emissions, has been controversial. On the one hand, it does appear to be nudging down greenhouse gases, with the power sector reporting a 9 percent drop in the first six months alone. And Australia has pledged to link its forthcoming cap-and-trade system with Europe's in 2015 — a step toward a truly global climate policy.

But it hasn't all gone smoothly: Australia is one of the world's largest per-capita emitters of greenhouse gases and depends heavily on coal. Mining companies have strongly opposed the measure (as well as Labor's new taxes on mines). And early estimates suggested that household electric bills would rise by about $10 per week under the climate plan.

Then came the backlash: All last year, the carbon tax was plummeting in the polls, with roughly half of voters saying they wanted to scrap it altogether. That opposition appears to have softened more recently, particularly after the Labor Party started using the carbon-tax proceeds to cut income taxes elsewhere and sending out rebate checks. Yet a poll last week still found that 37 percent of voters want to scrap the tax.

Not surprisingly, the climate plan has factored prominently into the upcoming Australian elections set for September. The opposition, led by Liberal leader Tony Abbott, has pledged to repeal the carbon and mining taxes altogether. And previous polls showed that the Labor Party was headed for massive losses so long as Gillard stayed at the helm.

So will the carbon plan survive? That brings us to this week's skirmishes. Inside the Labor Party, former prime minister Kevin Rudd has now managed to take over the helm, convincing the rest of his party that Gillard was leading them to certain defeat.

Here are two climate-related questions in the months ahead: Will Rudd try to modify the carbon plan at all? (Update: Apparently so. The Australian reports that Rudd wants to dump the carbon tax and move to the cap-and-trade system more quickly. "Axing the current fixed price for a market-based floating price could see the cost drop to as little as $6 a tonne.")

Another big question is whether the Liberal Party will win the September elections and scrap the climate plan entirely. Abbott has made what he calls a "blood pledge" to repeal the carbon tax if he becomes prime minister.

The jury's still out on whether an ambitious climate policy can actually be viable in a place like Australia. One recent poll found that 84 percent of voters want some sort of action on global warming — particularly after record heat waves and massive wildfires this year. At one point in January, the country got so hot that the Bureau of Meteorology had to add a new color to its weather forecasting map, extending the range to 54ºC, or 129ºF:


Still, not everyone's convinced that an unpopular carbon tax is the best way to deal with this. In the Sydney Morning HeraldTim Colebatch recently wondered whether a patchwork of regulations — on methane, on cars, on power plants, on appliances — might be more palatable than carbon pricing. As it happens, that's more or less the approach the Obama administration is now taking here in the United States.

Update: Well, there's the answer to the first question. The Australian reports that Rudd wants to dump the carbon tax and move to the cap-and-trade system more quickly: "Axing the current fixed price for a market-based floating price could see the cost drop to as little as $6 a tonne."

Further reading:

— There's a good technical overview of Australia's Carbon Pricing Mechanism starting on p. 60 of this World Bank report (pdf).

—  A look at how carbon pricing has been spreading around the world these past few years.  This is hardly inevitable, as Australia shows.

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Lydia DePillis · June 26, 2013