Recent stumbles in Europe and Australia to implement ambitious climate change programs are providing a “cautionary tale” for the Obama administration and U.S. lawmakers as they consider how to fulfill President Obama’s drive to reduce U.S. greenhouse gases.
A popular backlash against a carbon tax in Australia and major implementation problems with the European Union’s “cap-and-trade” carbon emissions trading program are raising fresh doubts about the two main policy vehicles that climate change advocates have backed to curb greenhouse gas pollution in the industrial world, analysts say.
Australia’s new prime minister, Kevin Rudd, vowed this week to kill the country’s hugely unpopular carbon tax, a move that is expected to save companies billions of dollars and translate into lower energy bills for the average household.
In his first major policy change since regaining control of the ruling Labor Party last month, Mr. Rudd announced that Australia would junk the direct tax on polluters and transition to the same cap-and-trade system that Europe uses to reduce emissions by next summer, which will lessen the impact on the economy.
But the European Union’s cap-and-trade emissions trading scheme, while more affordable than the carbon tax, has run into problems of its own, as the early “market” for polluting rights proved badly out of whack, sending designers back to the drawing board. Also, it may prove less effective at reducing emissions, critics say, and, ultimately, curbing climate change.
Around the world, politicians are finding it difficult to strike a balance between energy policies that effectively reduce emissions while not costing too much and irritating voters.
“Certainly, nothing about the failure of the European Union’s emissions trading scheme or the extremely unpopular Australian carbon tax is likely to encourage American politicians to want to go through the same experience here,” said Lee Lane, climate and energy policy specialist at the Hudson Institute.
Jeff Kueter, president of the George C. Marshall Institute, said such aggressive climate change agendas are proving to be “political suicide.”
“The Australian example is a cautionary tale for any policymaker in the U.S. who is thinking about a carbon tax,” he warned.
But environmentalists and some economists say the Rudd government’s plan to move forward with an EU-style emissions trading scheme does not indicate that the carbon tax was a failure or that the country is giving up on reducing its greenhouse gas output.
Canberra is merely speeding up a plan that was in place to move toward a cap-and-trade system, said Nathaniel Keohane, vice president at the Environmental Defense Fund.
“They’re talking about whether they should use one type of climate policy or another, but I think the important thing is that the Rudd administration is continuing to have a climate policy in place,” Mr. Keohane said.
In fact, Mr. Keohane suggested the cap-and-trade system — in which industries and factories can buy and sell credits to pollute — may be even more effective at reducing emissions, because it sets a roof on how much carbon an entire industry can pollute, where a carbon tax allows for as much emissions as industry can afford.
“The thing about cap-and-trade is, you set the cap and you’re going to meet it,” he said. “There’s a strong advantage with cap-and-trade systems because they guarantee a reduction in emissions.”