True cost of the ETS

Businesses are starting to work out the harsh reality of the ETS, and the effect it will have on the Australian economy. The Business Council of Australia (BCA) has written to both political parties requesting amendments to give more compensation to energy intensive industries. But right on cue, Ross Garnaut emerges from his cave to make some distasteful remarks about the subject:

The demands came as the government's climate change adviser, Ross Garnaut, warned yesterday against more industry compensation under the "arbitrary" carbon reduction system devised by the government - against his advice - saying it had led to "ugly money politics" and unnecessary budgetary costs.

Professor Garnaut said demands for more compensation for electricity generators to make up for lost asset value because of the carbon price was an "abominable" policy idea.

Bad news for the Opposition as well:

The BCA has rejected the centrepiece of the Opposition Leader's proposed "greener, cheaper, smarter" hybrid emissions trading scheme - the Frontier Economics' proposal for a different treatment of the electricity industry - saying it does not solve industry's problems.

"We sat down with Frontier Economics, but quite frankly you still end up with the same problems," BCA president Greig Gailey said.

Opposition emissions trading spokesman Andrew Robb is consulting with industry before finalising amendments to be put to the deeply divided opposition partyroom, but the BCA's rejection of the Frontier model undercuts the Coalition's assertion that its proposal presents a cheaper alternative for households and businesses.

And the inevitable response from the government:

Climate Change Minister Penny Wong said she would consider the BCA's proposals, but welcomed the fact that "business wants us to get moving, so investors have certainty".

Consider them, and then ignore them. That's the government way.

Read it here.