May 28, 2007 07:04am Article from: The Courier-Mail
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HOUSEHOLDS face electricity price rises of up to 75 per cent as drought and global warming tighten their grip, but establishing carbon trading may limit the price hikes.
Modelling to be released today shows domestic electricity bills will rise regardless of whether a carbon tax is slapped on power companies to force them to cut greenhouse gas emissions.
The Climate Institute report said if carbon trading were established immediately, price hikes could be contained to 20 per cent in the next 13 years.
But if the Federal Government adopted a wait-and-see approach to carbon trading, home power bills would increase by 75 per cent.
The report comes only days before the Federal Government's long-awaited report on possible international emissions trading, which is expected to guide the Coalition's policy ahead of the federal election.
It prompted Prime Minister John Howard to warn last night that a panic response to climate change would result in severe economic consequences.
"If we overreact, the economy will be damaged and jobs lost," Mr Howard said.
"Equally, we must maintain a strong response so that Australia can play her part in the worldwide effort to reduce greenhouse gas emissions."
But Mr Howard said a price would need to be set for carbon emissions.
Climate Institute chief executive John Connor said failure to adopt carbon trading straight away would lead to higher electricity prices in the long run.
"This research highlights that it would be reckless to delay action, or only take half measures," Mr Connor said.
The warning came after national electricity market regulator Nemmco said on Friday that southeast Queenslanders faced blackouts if the drought continued.
State and territory leaders yesterday urged Mr Howard to launch an emissions trading scheme by 2010, and set an environmentally credible target to cut greenhouse gases.
In an open letter, all eight Labor leaders reminded Mr Howard their governments had committed to a national emissions trading scheme by 2010.
A spokeswoman for state Energy Minister Geoff Wilson said Queensland had opted for a carbon-trading scheme rather than a direct tax on carbon.
She said the State Government was committed to continuing its home electricity subsidies, which run up to $600 a household in regional Queensland.
Australian Conservation Foundation climate spokesman Tony Mohr said the new report was the first to model the impact of a carbon tax on Australian electricity prices.
Previous studies late last year by the Business Leaders Round Table and a joint report by CSIRO, the Worldwide Fund for Nature and government economic forecaster ABARE showed deep cuts in Australia's greenhouse emissions would not derail the economy.
But Mr Mohr said the cost to consumers would rise if selected industries such as steel mills were exempted.
A carbon trading scheme would involve energy users being issued permits to emit carbon into the atmosphere.
Users who could not reach yearly reduction targets could buy credits from users who had.
Labor environment spokesman Peter Garrett said the Coalition recognised climate change was an election issue but was doing nothing to tackle it.
"Labor is seen as doing a better job on it and having better policies," he said.
The Opposition has proposed a 60 per cent reduction in greenhouse emissions by 2050.
The latest figures from the Australian Greenhouse Office show Queensland pumped an extra 2.9 million tonnes of greenhouse gases into the atmosphere in 2005 compared with the previous year.
But the figures also show Queensland cut its emissions by 5.6 per cent since 1990.
Premier Peter Beattie told a climate change conference in Brisbane on Wednesday that a national carbon-trading scheme would be introduced soon.
"The Commonwealth politically cannot avoid being part of it," Mr Beattie said.
The Federal Government is reportedly planning a $23 million information campaign to sell its leadership on global warming.
