Industries warming to ‘carbon bank’ idea

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AAP - Industry and economic leaders are divided on how an emissions trading scheme should operate but have warmed to the idea of an environmental central bank. Leading climate change economist Warwick McKibbin wants a central carbon bank similar to how the financial system has a Reserve Bank of Australia.

Prof McKibbin, who is a Reserve Bank board member, was a keynote speaker at an emissions trading conference in Brisbane on Monday.

“We should run climate policy like we run monetary policy,” Prof McKibbin told AAP.

“The Reserve Bank of Australia is a credible system with the goal to bring inflation down within a target band within a period of time.

“With climate policy, you need to do the same thing and have an independent institution which sets the short-term price of carbon.

“If we get more information about climate change we can tighten the target or loosen the target in a way that is transparent and credible.”

He said the current government approach gave most of the rights to Treasury.

Queensland Farmers’ Federation chief executive officer John Cherry said Prof McKibbin’s model had merit.

“He’s trying to provide certainty of the price,” Mr Cherry said.

“It’s a question which model will provide the most certainty.

“Either way, Australia should start low, get use to it, get the system sorted, and progressively move from there and ensure we have an ETS that is internationally compatible.”

Australian Aluminium Council executive director Ron Knapp said the government needed to make sure industry could still be competitive with the rest of the globe.

“You don’t try and force a level of emission in Australia that is in advance of where the globe is proposing to go, otherwise we will be closing industries down and seeing investments move to other countries,” Mr Knapp said.

“If there was a global plan in place then we will see the alumina industry grow over time and not contract.”