Rudd missed opportunity to dump failed emissions scheme

Cap and trade emission plans are fundamentally flawed.

KEVIN Rudd is not showing much political or environmental nous by sticking with his Carbon Pollution Reduction Scheme to reduce carbon emissions.

Its big initial political virtue - its diabolical complexity - became a huge political liability when the federal opposition switched from principled support for the CPRS under Malcolm Turnbull to unprincipled opposition under Tony Abbott.

What makes it worse for Rudd is that ''cap and trade'' emission plans are fundamentally flawed and the Australian variant is worse than most. The failure to get a legally binding agreement to reduce emissions at Copenhagen was the final setback to emission trading schemes being an effective means of reducing global greenhouse gases.

This is not an excuse to do nothing. Britain's Met Office says the world is on a path towards a potential increase in global temperatures of 4 degrees as early as 2060. If this occurs, only about half a billion people out of about 9 billion will survive, according to Professor Kevin Anderson, director of the Tyndall Centre for Climate change and adviser to the British government.

In the absence of a global agreement, carbon taxes applied by governments is the only sensible way to incorporate the cost of carbon pollution into prices to discourage carbon-intensive industries and promote a green economy.

The knowing supporters of emission trading are a rump, albeit powerful, of financial interests who see a multi-billion fortune to be made from trading financial derivatives, carbon-intensive industries that see scope for rorting to prolong their industries, and the politicians who support them by gulling the public that they are doing something that will help save the planet.

Corruption thrives on secrecy and its close cousin, complexity. But ETS has powerful opponents that include the International Monetary Fund as well as the green movement.

In the heat of an election campaign that has already started, it is impossible for the government to explain the CPRS except in the most general terms, and most of those who already understand it know it is a lemon. The CPRS is fertile ground for the mother of all fear campaigns, and Abbott has the intelligence and the ruthless cynicism to exploit it. He is flirting with Lord Monckton to shore up his support among the climate-warming deniers and global conspiracy loonies. It won't be long before he applies his Jesuit mindset to exploiting the arguments of the high priests of the environmental movement such as the American scientist James Hansen.

It will be a fear campaign that will have more substance than the 1966 ''downward thrust of communism'' election that won Harold Holt a record majority in 1966 or the 1980 election in which the Fraser government was saved from defeat in the last week with a saturation scare campaign claiming a Labor government would introduce a capital gains tax that included the family home.

The scare campaign was effective because the ALP platform on capital gains taxes had been watered down and made more fuzzy to make Labor more electable.

Two years later Labor won in Victoria with the promise to reintroduce an inheritance tax that explicitly included the value of the family home but with a clear cut-off that meant the tax would apply to only the richest estates. The Liberals did not even attempt to run a scare campaign on the issue. The lesson is obvious. The CPRS was a dead letter with the failure of the Copenhagen climate change summit to reach an agreement. If Rudd was sincere about dealing with climate change (and politically savvy), he would have dumped the CPRS before the resumption of Parliament and announced that the government would introduce a carbon tax at a level that would be stated clearly and politically acceptable.

Fortunately, Rudd has been thrown a political and environmental lifeline by the Greens who have proposed the government take up the recommendation made by the Garnaut Report to introduce a transitional carbon tax of $20 a tonne for two years between July 2010 and July 2012.

Garnaut has done the arithmetic. The tax would raise just over $10 billion a year, half would be rebated to low and middle-income households and the remainder used for structural adjustment of emission-intensive industries and investment in infrastructure designed to produce the most economical forms of renewable energy.

The tax would add about 1.4 per cent to the CPI and the burden would fall on high-income households not

eligible for the rebate and the $5 billion revenue could be used for seeding infrastructure including some of the proposals put forward in Abbott's $3.2 billion package announced last week.

Kenneth Davidson is a senior columnist.