The idea of trading in pollution was dreamt up by neo-liberal economists in the United States in the ’60s and ’70s.  Faced with public anger over acid rain and polluted waterways, polluters were looking for a way to avoid the policies of direct state regulation used in Europe, in order to save themselves money.

Emissions trading schemes for greenhouse gases are being adopted for the same reason.  This is why all the schemes that have been implemented so far have involved large handouts of free permits to polluters, the “cost” of which they have then passed on to consumers.  Under the first phase of the European Union’s Emissions Trading Scheme, British power companies were able to increase their profits by £800 million per year. As a report commissioned by the UK Treasury put it, this represented “a direct transfer of value from electricity consumers”.

The free permits included in the Rudd government’s Carbon Pollution Reduction Scheme (CPRS) will have a similar effect.  Owners of coal-fired power plants, and polluters in “emissions-intensive, trade-exposed” industries, will be allowed to charge consumers the “carbon price” of the permits they are handed for free.  Where they do have to buy permits from the government, in the first year the price will be “capped” at $10 per tonne of CO2. In subsequent years polluters will be allowed to meet their obligations by buying as many dodgy “offset” credits from overseas polluters as they like.  Any deal Labor strikes with the coalition can only make this worse.

For workers struggling to pay their bills, the CPRS is bad news.  In its second year, the CPRS will probably cost the average household about $300 extra for electricity and gas, and in later years this will increase further.

Although the government has committed to offset this with compensation, it would be very naïve to believe that this will continue.  Ken Henry, who is conducting the government’s tax review, has already talked about reducing the tax “burden” on business.  In the context of a large, not-so-temporary budget deficit, you can expect the government to paint this compensation as a “transitional measure”, and scrap it as soon as it’s politically possible.

The CPRS is also designed to avoid taking real action on climate change.  Currently, Australia’s emissions are about 25 tonnes CO2-e per person.  This makes Australian corporations some of the biggest polluters in the world.  In the European Union, emissions are about 10 tonnes CO2-e per person — still much too high if we are avoid catastrophe, but also much lower than emissions in Australia.

Based on some rough calculations, Australia’s per capita emissions will fall to 16.6 tonnes CO2-e per person if the government adopts the 25% reduction target it says it will implement if the rest of the world agrees to stabilise CO2 concentrations at 450ppm.  This would still leave Australian per capita emissions more than 50% higher than they are in the EU currently (let alone what they might be by 2020 under a 450ppm scenario) — and much higher still than average per capita emissions in the developing world.  There’s no way the rest of world will let Australia get away with this.  Labor’s position seems deliberately designed to destroy any prospect of an agreement to stabilise emissions even at 450ppm, let alone the 350ppm many scientists argue is needed.

This is why any serious attempt to tackle greenhouse gas pollution needs to tackle the real source of the problem: the corporations that profit from the destruction of the environment, and the politicians who defend their interests.  We should demand a dramatic improvement in the public transport system and that the polluters pay for programs such as a massive roll-out of new renewable energy power plants — without households who consume energy in reasonable quantities having to pay higher prices.  It’s the big shareholders in polluting corporations and the bosses who run them who have profited from refusing to do anything about climate change for so long.  So-called “market-based mechanisms” have never had anything to do with making them pay to clean up their mess.

Peter Jones is the author of Saving the planet or selling off the atmosphere?, published in a new online journal, Marxist Interventions.