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Australians: Climate Change vs. Economics

Today the Australian Parliament blocked a cap-and-trade bill, which has been one of the pet legislative projects of Prime Minister Kevin Rudd. This is a good example of the choice lawmakers across the world are facing — whether to favor strong economic policy or strong climate-change policy. And at least in Australia, the majority of policymakers have sided with business. Leaders across the world would do well to take note of Australia’s domestic climate-change debate as they pack their bags for Copenhagen.

“The right time for an emissions trading scheme is when the rest of the world is signed up for one and that way all the economies will labor under the same emissions constraints,” said Tony Abbott, whose skepticism on climate change helped him displace opposition leader Malcolm Turnbull. He also said, “I am very happy to see the Australian Prime Minister cut a big figure on the world stage, but we aren’t going to damage the Australian economy to serve Kevin Rudd’s ego.”

Abbott is right, and the climate-change-policy advocates face one key impediment: while economic realities are undeniable, climate-change concerns remain nebulous (especially given this week’s Climategate). Nations can hardly be expected to charitably submit to a big economic disadvantage. So countries and politicians can’t be blamed for addressing their more certain interests first.

Since last year, Australian business has called the cap-and-trade bill “a company killer.” The Business Council of Australia examined 14 companies and determined that at least three would close altogether if the cap-and-trade bill passed, and two more might soon follow. It also cited research claiming that companies’ pre-tax earnings would suffer by 22 percent on average. The Australian populace seems to be listening; according to a recent Lowy Institute poll, climate change has fallen to their seventh foreign-policy priority.

But the climate-change lobbyists have done an especially laughable job of addressing economic concerns, especially after the defeat of the cap-and-trade bill in Australia.

Tim Hanlin, chief executive of Australian Climate Exchange, frets that businesses are “now back in the dark” and will struggle to make investment decisions “with no certainty about the carbon price.” But Mr. Hanlin misses the point that the very policy he endorses is the problem, not the solution. Australian businesses aren’t timid about investment itself; they’re justifiably hesitant to invest when they face crippling taxes and restrictive government policy.

Likewise, John Connor, CEO of the Climate Institute, said: “The defeat of [the Australian cap-and-trade bill] is a not only a stumble for Australia doing its bit on climate change, it is an economic stumble, and a competitiveness stumble for Australia. The low-carbon train is leaving the station around the world and Australia is haemorrhaging investments in clean energy industries and technology to competitors in developed and developing countries.” Connor should consider: if low-carbon industry is really as significant an economic boon as he believes, if it really is so surprisingly efficient, if it will really save money and create jobs — shouldn’t it be able to compete even if government doesn’t cripple its rivals?

The climate-change lobby will have to do a better job of defending their position than they’ve done today. At least in Australia, those most ardent about climate change are not enough of a majority to ram bills through the Parliament. They need the support of the moderates and the conservatives — the very groups Rudd and his followers have alienated with their polarizing language. So these same climate-change-policy advocates must now turn to persuasion and honest debate. That promises to be difficult. The urgency of the climate-change message has, thus far, been more easily paired with emotion than rationality.