In October 2006 the Stern Review on the effect of climate change on the world's economy was released for the British government. This report recommended a range of measures including ecotaxes to address the market failure represented by climate change with the least amount of economic and social disruption. In response to this report and subsequent pressure from the Kim Beazley lead Labor opposition, in December 2006 the Howard Government established the Prime Ministerial Task Group on Emissions Trading, chaired by Peter Shergold, to advise on the implementation of an emissions trading scheme (ETS) in Australia.[8] Following the release of the final report from this task group, the Howard government committed to introduce an ETS.[9][10]
Going into the 2007 federal election, the Labor opposition party presented itself as a "pro-climate" alternative to the Government, withKevin Rudd, who had by then deposed Beazley as leader, famously describing climate change as "the great moral challenge of our generation". Labor differentiated itself from the government by promising an ETS with an earlier start date of 2010 rather than the 2012 timeframe advocated by Howard. It also promised ratification of the Kyoto Protocol, investment in clean coal and renewable energy, and slightly more aggressive targets for renewable energy.[8]
Labor won the 2007 election, and on 3 December 2007 the Rudd Government signed the ratification of the Kyoto Protocol at the 2007 United Nations Climate Change Conference. By ratifying the Kyoto Protocol, Australia was committed to keeping emissions to no more than 108% of its 1990 emissions level by 2012. Australia's ratification came into effect on 11 March 2008.[11]
In September 2008, the Garnaut Climate Change Review, commissioned in April 2007 by Kevin Rudd when he was leader of the opposition, released its final report. Garnaut recommended a price between $20 and $30 per tonne of carbon dioxide (CO2) equivalent with a rise of 4% each year.[7] On 16 July 2008, the Rudd Government released a green paper for its Carbon Pollution Reduction Scheme (CPRS), outlining the intended design of the scheme; a more detailed white paper was released on 15 December 2008.
The CPRS received criticism from both sides of the climate change debate. Environmental lobby groups protested that the emissions reductions targets were too low, and that the level of assistance to polluters was too high. Industry and business lobby groups however argued for more permits and assistance to offset the economic impacts of the scheme on many enterprises, particularly given the context of the global financial crisis.[8] The Malcolm Turnbull lead opposition supported the scheme in principle, although at times over 2009 they indicated disagreement with various details including the timing of implementation of the scheme, timing of the vote on the relevant legislation and on the level of assistance to be provided to polluting industries. The opposition was able to negotiate greater compensation for polluters affected by the scheme in November 2009.[8]
Shortly before the Senate was due to vote on the relevant bill, leadership tensions in the opposition came to a head.[12] On 1 December 2009 Tony Abbott defeated Malcolm Turnbull in a leadership challenge. Abbot immediately called a secret ballot on support for the ETS among coalition MPs, which was overwhelmingly rejected.[13] The Coalition then withdrew their support for the carbon pricing policy and joined the Greens and Independents in voting against the relevant legislation in the Parliament of Australia on 2 December 2009.[14] As the Rudd government required the support of either the Coalition or the Greens to secure passage of the bill, it was defeated in the Senate. In April 2010, the Government deferred the scheme to the post-2012 timeframe
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