Fact check: Tony Abbott's claim carbon schemes being discarded doesn't check out

Updated

In the run-up to the repeal of Labor's carbon pricing regime, the Prime Minister has argued that other nations are also winding back their emissions trading schemes.

On an official trip to Canada, Tony Abbott told reporters that trading schemes were "being discarded".

"There is no sign – no sign – that trading schemes are increasingly being adopted. If anything trading schemes are being discarded not adopted," he said on June 8.

ABC Fact Check takes a look at carbon pricing around the world.

The claim: Tony Abbott says emissions trading schemes are being discarded around the world, not adopted

Tony Abbott says emissions trading schemes are being discarded around the world, not adopted The verdict: While there is uncertainty in the international carbon pricing market and global agreements are weak and non-binding, individual nations and sub-national regions are increasingly creating carbon trading schemes of their own.

Emissions trading around the world

Mr Abbott made his comment after saying he and his host, Canadian prime minister Stephen Harper, were likeminded on the issue. "You might remember that the Canadian government campaigned specifically against a carbon tax at the most recent election here in Canada and it actually was returned to government in its own right, in part on the campaign against a carbon tax," Mr Abbott said.

Fact Check asked Mr Abbott's office for the basis for his claim about schemes being discarded. No reply was received.

According to a June 2013 report by the Parliamentary Library, there were emissions trading schemes in place across Europe, in parts of the United States and Canada, and in New Zealand, Australia, Japan and legislated in South Korea - where a full scheme is scheduled to commence in 2015.

China was the "most notable" country proposing new schemes, with a network of seven pilot schemes in the design and planning stages, the report said.

The European scheme includes 28 European Union countries and Iceland, Liechtenstein and Norway.

A May 2013 World Bank report, Mapping Carbon Pricing Initiatives, suggested the future was bright for emissions trading.

"There has been a surge in activity in carbon pricing mechanisms over the past year. The wise old statesmen of the cap-and-trade world - the EU ETS, New Zealand and [the Regional Greenhouse Gas Initiative in the United States] - have now been joined by newer, early-stage cousins: California, Quebec, and Australia," the report says.

"Moreover, China, Korea, and Ukraine are crafting their own schemes, adding variety to the mix. In parallel, and with a sense of urgency, governments and other stakeholders are trying to breathe new life into the existing international carbon pricing mechanisms."

I'm not aware of any carbon pricing, either tax or ETS, that's closing down. Ross Garnaut

Increasing or being discarded?

The World Bank's May 2014 report, State and Trends of Carbon Pricing, looks at how countries are faring with implementing carbon trading schemes and says while international schemes are struggling without strong global agreements, national and sub-national (regional or state-based) agreements are on the rise.

"Today, about 40 countries and over 20 sub-national jurisdictions are putting a price on carbon," the report says. It says the reach of carbon pricing is "steadily increasing".

"Progress across the globe is steady. A total of eight new carbon markets opened their doors in 2013 alone. With these new joiners, the world's emissions trading schemes are worth about US$30 billion," the World Bank says.

But it also says - under the heading 'Two steps forward, one step back' - that there are problems with the international market. It lists Australia's plan to scrap carbon pricing as the first one.

"The Australian government plans to repeal its Carbon Pricing Mechanism legislation and three major emitters, Japan, New Zealand and Russia, officially pulled out of the second commitment period of the Kyoto Protocol," the report says.

The Kyoto protocol is a global framework for emissions reductions targets that sets reduction goals for signatory nations. One way countries can meet those goals is to adopt an ETS, but that is not the only way. Also, countries can adopt an ETS without being signatories to the protocol.

The report says there are also problems with the EU ETS, with the design of the mechanism "unable to cope with the major economic downturn", leading permit prices to drop substantially.

The EU says the global financial crisis caused a surplus of permits, and it is working to reform the ETS to ensure emissions reduction targets are met.

The World Bank's report still says carbon pricing is increasing on a national and sub-national level - it's just that international agreements are having trouble gaining traction.

This map from the report shows existing, emerging and potential emissions trading schemes:

Two of the most significant new schemes are China's seven regional schemes, which cover more than 200 million people, and California's "cap and trade" program.

California has been rated as the eighth largest economy in the world and has created a trading system that links in with schemes in several Canadian provinces. It commenced operation in 2012 and while it currently covers just 35 per cent of emissions, will expand to 85 per cent in 2015.

China is also expected to move from regional schemes to a broader national scheme in the future. "The Chinese government is now pursuing a very aggressive program to curb emissions... the central government is on record with a very very tough program to cut back on emissions," economist and China expert Christine Wong told ABC's Q&A on July 7.

What the economists say

Economist Ross Garnaut says he doesn't know of anywhere in the world where carbon pricing is being rolled back.

Professor Garnaut headed an independent review of climate policy commissioned by Kevin Rudd and state and territory governments in 2007 (updated in 2011).

"I'm not aware of any carbon pricing, either tax or ETS, that's closing down and the World Bank [report] is authoritative," Professor Garnaut told Fact Check.

On July 6, 2014, over 50 economists signed an open letter that asked the Government to reconsider scrapping Australia's carbon pricing scheme.

It said: "Australia’s major trading partners are acting on climate change and it is important to have an effective price and limit on pollution in place now to begin Australia’s transition to a low-carbon economy."

Regina Betz from the University of New South Wales Centre of Energy and Environment Markets, who signed the letter, told Fact Check more countries were moving towards emissions trading, not away from it.

"I am not aware of any other country who is dismantling their scheme. I think it is the other way, more countries are considering [introducing] schemes," she said.

Climate advisory panel A panel of climate experts advises ABC Fact Check on its work on climate issues.

This fact check was reviewed by Malte Meinshausen, Frank Jotzo and Tony Wood.

Meet the panel here.

Another signatory, Stephen Howes from the Australian National University, said there had been some backward steps for emissions trading - the global financial crisis caused a significant drop in the price of emissions permits in Europe, and some countries, like Japan and Canada, have walked away from the Kyoto Protocol - but "overall with China introducing pilots and California going ahead you would have to say more adoption than discarding".

"Australia is the only case I know of discarding after adoption," he said.

The verdict

While there is uncertainty in the international carbon pricing market and global agreements are weak and non-binding, individual nations and sub-national regions are increasingly creating carbon trading schemes of their own.

Mr Abbott's claim that "trading schemes are being discarded not adopted" doesn't check out.

Sources

Topics: environment, government-and-politics, emissions-trading, business-economics-and-finance, abbott-tony, liberals, australia

First posted