The Government is pledging to urgently fix an issue within the Emissions Trading Scheme (ETS), after it emerged some polluters are likely being over-compensated with taxpayer-funded carbon credits.
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The quantity of free credits each company gets is based on a formula with various factors. Among them is the Electricity Allocation Factor (EAF), a rate calculated in 2011 that estimated future electricity price increases caused by the ETS.
It has since emerged the EAF is inaccurate. Numerous assumptions made in setting the rate did not come to fruition, including lower than expected electricity demand and lower gas prices.
It means polluters are being compensated for price increases that never happened.
The good news is that the amount of this subsidy is set by regulation, so it is easy to fix. But at the same time, it is ignoring the elephant in the room. Because as the Parliamentary Commissioner for the Environment pointed out last week, the entire subsidy system is rotten to the core, encouraging emissions while delivering public money to companies that neither need nor deserve it, on entirely spurious grounds. The issue isn't that we're giving them too much for electricity - its that we're giving them anything, full stop. And hopefully, the select committee currently examining the Climate Change Response (Emissions Trading Reform) Amendment Bill will do something about that. If not, then we will need to get a government, and a Parliament, which will.