The passage of the Clean Energy Future (i.e. carbon price) legislation through the Commonwealth Parliament today is not the end of the debate, and the legislation will almost certainly need to be amended as its implementation bugs become apparent – e.g. a future Government will need to revisit the petrol exemption. Also, the Government may need to adjust the carbon price if the adverse impacts on business are greater than expected based on Treasury’s optimistic modelling. The Business Council of Australia appears set to maintain its criticism of the carbon price, with a media release today noting:

The Clean Energy Future Package legislation passed by parliament today has the potential to significantly increase risks to Australia’s economic growth and competitiveness…It is extremely disappointing that the parliament has not heeded the council’s calls to include essential safeguards in the legislation and act in Australia’s national economic interest.

The council’s analysis has demonstrated the legislation is based on optimistic assumptions in the Treasury modelling that have not been stress tested.

The lack of safeguards in Australia’s approach is particularly concerning given the uneven pattern of growth in Australia, the increased uncertainty in the global economy, and the lack of progress on international negotiations to put a price on greenhouse gas emissions. The legislation as passed risks placing Australia too far ahead of its competitors in pricing carbon.

It certainly appears to be an odd time for Australia to put a price on carbon, given the teetering trans-Atlantic economy means it is unlikely we’ll see significant action on climate change anytime soon from the US or Europe. Queensland Country Life reported this morning that:

Labor’s pact with the Greens is set to lock Australian business into paying up to double the global carbon price following sharp falls on international carbon trading markets.

The Senate today will pass the ­carbon tax, set to begin at $23 a tonne from mid-2012 and then rising to $29 by 2015, when it is scheduled to become a trading scheme linked to international carbon markets, The Australian Financial Review reports.

But European businesses will pay between $8.70 and $12.60 a tonne after carbon prices in Europe crashed to four-year lows amid new doubts about the Greece bailout.

While I believe coordinated global action on climate change makes sense, unilateral action by Australia does not. Of course, the passage of our carbon price could inspire the rest of the world to take action, but that may be wishful thinking.

My previous posts on climate change may be found here. A couple of the posts focus on the disproportionate impact the carbon price will have on the Queensland economy.