Prime minister says Josh Frydenberg has to explain himself in wake of climate change policy backdown

Malcolm Turnbull has said he will not impose a carbon tax or an emissions trading scheme.

The prime minister said he would not do anything that increased electricity costs for consumers, especially when households were struggling to pay their bills.

His comments came a day after Australia’s electricity and gas transmission industry called on the government to implement a form of carbon trading in the national electricity market by 2022. The report, which was backed by Csiro, said adopting an emissions intensity scheme was the least costly way of reducing emissions and could actually save customers $200 a year by 2030.

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But the government is reeling from an embarrassing policy backdown by the environment minister, Josh Frydenberg, who said on Monday that the looming review of the government’s Direct Action climate policy would consider the desirability of an emissions intensity trading scheme. He has now disavowed the comment – after Coalition backbenchers warned the government should expect hostility if it attempted to adopt carbon trading.

On Wednesday morning Frydenberg told reporters: “I have a position which is very clear, that we will not be adopting an emissions intensity scheme. We won’t adopt an ETS. We won’t adopt a carbon tax. Whatever way you like to call it.

“What I am focused on is getting this review to look at how we meet our 2030 targets and we have a range of mechanisms in place.”

His media conference came less than 20 minutes after Turnbull said the minister had to explain himself.

“I have just spoken to the prime minister and I saw that press conference,” Frydenberg said. “It was very clear what the government’s position is, and was, namely, that we wouldn’t be putting in place a carbon tax or an emissions trading scheme.”

Tony Wood, the director of the Grattan Institute’s energy program, told ABC radio that Frydenberg’s backdown illustrated how the government had painted itself into a corner with its policy on climate change.

There was no way the government could reach its emissions reduction target, set in place by Tony Abbott and pursued by Turnbull, without putting some kind of price on carbon, he said. An emissions intensity scheme, or a trading scheme of some kind, would help to reduce emissions cheaply.

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“An emissions intensity scheme is not a tax,” Wood said. “The basic idea is that you will reduce emissions, and in the case of an emissions intensity scheme, if people don’t produce emissions above their baseline, which is the way the scheme’s designed, they don’t have to pay for it.

“So there’s no revenue there to be secured by the government if people don’t do what they have to do. So it’s not a revenue-raising scheme like a tax is.

“It’s somewhat ironic that the outcome [of this policy backdown] could be that we end up with a third- or fourth-best policy, and we end up with exactly the opposite of what those who are opposing these schemes would like to achieve – which is we end up with more uncertainty and even higher prices.

“I think what’s happened now is 2017 just became a lot harder for minister Frydenberg.”