Garnaut wont speculate on fuel under emissions trading

By: Jason Whittaker

The Federal Government’s climate change adviser is declining to speculate on how much fuel will rise under an emissions trading

The Federal Government’s climate change adviser is declining to speculate on how much fuel will rise under an emissions trading scheme despite claims it could be up to 10 cents per litre.

In releasing his interim report on climate change, Ross Garnaut chose to leave questions concerning carbon and fuel prices until he completes his final report.

Garnaut says the report will recommend targets and trajectories for emissions reductions and what effect such recommendations will have con carbon and already record-high petrol prices.

"The answers will have to wait for the completion of the modelling," Garnaut says.

"It would not be helpful to speculate now."

Despite Garnaut’s position, industry groups such as the Business Council of Australia (BCA) say emissions trading will increase fuel by 10 cents per litre based on oil industry estimates.

In a speech in Sydney on July 3, BCA President Greg Gailey told attendees carbon trading will "likely add another 10 cents per litre to the price of petrol".

But in saying that, Gailey supported the inclusion of fuel in emissions trading but warned industry should not be forced to absorb the costs.

If it does, Gailey says many emissions-intensive businesses will be forced into bankruptcy. He says the Federal Government must put in place measures to alleviate the pressures of emissions trading.

According to Gailey, an emissions trading scheme will have two immediate impacts on businesses. The first is that they will use energy more efficiently, the second that they will pass on higher costs to consumers.

Gailey’s comments are particularly relevant to the trucking industry, which has long argued it will be forced to pass on increased costs, such as fuel, in the form of everyday goods such as groceries.

But he says industries struggling to pass on costs will suffer lower growth, resulting in less jobs and under-investment.

To avert this, Gailey says businesses affected by emissions trading must work with the Government in transitioning to a low-emissions economy.

"Business controls the means of production and, under the right policy frameworks, will make the long-term investments in low-emissions solutions," Gailey says.

And although the Opposition continues to pressure the Government into excluding fuel from emissions trading, Gailey says it must be included rather than being "put in the ‘too-hard-basket’".

"Simplicity at the expense of effectiveness increases the likelihood that we will get the policy wrong—at a tremendous cost to households, businesses, the economy and the environment," he says.

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