David Wroe and Katharine Murphy
October 20, 2011
The world's top green investment groups have hailed Australia's carbon tax as a boon for investors. Photo: Nicolas Walker
THE world's four major green investment groups representing $20 trillion in funds have hailed Australia's carbon tax as a boon for investors, strongly backing the government's claim that the scheme will deliver economic benefits.
The report, commissioned by groups representing 285 pension funds and other institutional investors around the globe, found that Labor's carbon price and financial assistance for green technology ''should provide investors with real confidence'' in investing in renewable energy in Australia.
It backs recent accusations by some in the energy industry that Opposition Leader Tony Abbott's vows to repeal the carbon tax and the uncertainty this was creating could damage investment.
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Mr Abbott has faced questions about whether his decision to axe the scheme - including the permits electricity generators say they need for ''hedging'' - will expose a future Coalition government to compensation claims and trigger a jump in power prices.
Yesterday he said: ''We are very confident that we can remove the carbon tax without becoming liable for compensation.''
He said it was possible to avoid a compensation liability by understanding the design of the Gillard government's scheme and giving business ''fair warning'' not to buy forward permits. Permits are current for 12 months, they expire at the end of the financial year and are not tradeable or transferable until 2015.
Mr Abbott's comments yesterday suggest the Coalition would not move to shut down the carbon scheme entirely until the end of the relevant financial year, when permits have expired, thereby limiting compensation liability.
Coalition climate spokesman Greg Hunt said the opposition would keep its pledge to scrap the carbon tax and that gave Australian business certainty, ''unlike Labor's false promise of no carbon tax at the last election. Business has that certainty and can make decisions based on that commitment.''
The new report by British investment expert Rory Sullivan praised Australia's clear carbon reduction targets, its transparent climate policy and the fact that the carbon trading scheme would be clearly linked to international markets. But it noted that one of the major risks was ''political risk, in particular that the opposition Liberal Party may unwind elements of the proposals if elected''.
Nathan Fabian, chief executive of the Investor Group on Climate Change, one of the four groups that commissioned the report, said: ''International investors believe Australia's policy framework is one of the best in the world for investment certainty. Experience shows that when good policies are rolled back, confidence of investors is undermined for several years.''
He added: ''Investors believe that carbon pricing is the only real, long-term policy solution for Australia.''
The other three green investor groups involved were Europe's Institutional Investors Group on Climate Change, the US-based Investor Network on Climate Risk and the United Nations Environment Programme Finance Initiative.