Climate hawks the world over hung their heads last week, as Australia's new government, led by Prime Minister Tony Abbott, axed its carbon tax. One of the more aggressive climate policies, the policy had made some real progress in cutting Australia's emissions, which are very high.
Australia's policy had covered about 60 percent of all its emissions, and levied a tax of about $23 per ton of carbon emitted. In 2015, it was supposed to evolve into a cap-and-trade plan, and link up with the EU's similar carbon-trading system. Now all that's left are a few minor subsidies for emissions reduction.
Let's not mince words: This is an awful development. It's both evidence of the political strength of climate denial throughout the Anglo-American world and the political difficulty of maintaining a carbon tax.
However, there are some reasons to not start panicking quite yet. First, the political history of the carbon tax reveals that it was never put on a proper footing and was therefore always vulnerable. Second, both domestic and international pressure on Australia to reverse course is likely to increase dramatically in coming years.
As Brad Plumer explains, the carbon tax implemented in 2011 was the result of political wrangling, not an open campaign. Then–Prime Minister Julia Gillard (of the Labor Party) had originally campaigned on a promise not to institute a carbon tax, but reversed course when she had to form a government with the Green Party.
The major policy benefit of a carbon tax — and why economists tend to prefer it — is that it's more efficient than a rules-based system, like the EPA's approach, because raising the price of carbon pollution means everyone has to figure out how to reduce their emissions. The major political weakness is exactly the same thing — raising prices tends to be unpopular. With massive and well-funded opposition from Australia's mining industry, there simply wasn't much chance of the carbon tax sticking around permanently.
But the lesson here isn't that carbon taxes are doomed to fail — on the contrary, the lesson is that you need broad-based political support in society if it is to survive. Attempting to do a technocratic end run around traditional democratic operations is just going to make for brittle, easily reversed policy. There is simply no replacement for long-term political organizing.
And the prospects for that look pretty good in the future. Australia is probably not as vulnerable as China or India to climate change, but it is more vulnerable than the U.S. It is already experiencing some of the most extreme climate events of anywhere on Earth. Last year, Australia had a heat wave so intense that they had to add a new color to their heat maps, and this year was much the same. Drought, enormous wildfires, and heat waves have all been very bad of late and will only get worse.
And internationally, while this reversal does harm the case for an international climate treaty, it will also likely lead to a lot of international pressure. Australia's per person emissions are the highest of any major country, and will probably rise with the repeal of the tax. During the forthcoming climate talks this December, Australia is going to look very, very bad. What's more, it depends heavily on trade with India and (especially) China; in a few more years it's easily possible that those badly threatened nations will institute trade sanctions against Australia unless it gets its emissions house in order.
Tony Abbott has firmly placed himself in the rogue's gallery of history. He will undoubtedly be remembered as one of the worst PMs in Australia's history. But with a bit of luck, the situation will only be a brief setback.