Putting a price on carbon will remove an unfair subsidy that industry has enjoyed for too long, says Deutsche Bank’s head of carbon emissions research.
Mark Lewis says it is basic economic theory that companies should meet all costs of doing business. He has been in Australia for the past week meeting political and business leaders and says high emitters in Australia have so far dodged the environmental cost of operating.
”What has been established is that emitting carbon dioxide has an external cost on the environment. Until that cost is captured in the goods and services that emit carbon dioxide in their manufacturing processes then those industries are receiving a subsidy,” he said. ”There is a cost to their activities that is not being priced into their selling price, when economic theory says that it should be.
”The whole terms upon which this debate is being conducted is from a false premise. It isn’t a great big new tax on industry, it is the elimination of a subsidy for big emitting industries.”
Mr Lewis said if ”sensible regulation” is not imposed then the energy industry could suffer a similar fate to car manufacturers in the US.
”I have heard a lot this week that Australians have a right to cheap energy. But even those in the energy industry are [forecasting] prices will rise to become more closely aligned with international prices,” he said.
”The same can be said for coal prices.”
Those comments came as the world’s largest coal exporter, Xstrata, agreed to sell Australian energy coal to Japan at $US129.80 a tonne, up from current spot prices for Australian coal of $US123.20 a tonne and 13 per cent higher than the previous settlement of $US115 a tonne.
After spending a week talking with senior politicians, Mr Lewis said he believed the prospect of passing legislation through the current Parliament was ”serious but not hopeless”.
