Climate Change Minister Greg Combet has warned climate policy will become "the poisoned chalice" of politics for the next 10 years if the Federal government fails to introduce its carbon tax.

 

Mr Combet said Australia risked long-term economic damage if the proposed reform was abandoned.

 

“If we let this chance pass us by, climate change policy will become the poisoned chalice of Australian politics for the next decade,” he said.

 

“The consequences of this would be profound for all Australians, especially for those businesses that are now so reluctant to take responsibility for their actions and refuse to see beyond next year's prospectus.”

 

Mr Combet said Australia would renege on international obligations and discourage innovation if it failed to put a price on carbon.

 

“We would lock in the status quo and not provide any reward for the innovation, efficiency and technological development that is the only real way of meeting this challenge,” he said.

 

“We would not learn how to live in, let alone how to prosper in a carbon-constrained world, while our trading partners would increasingly see us as industrial dinosaurs.”

 

The comments came as independent MP Rob Oakeshott called for petrol to be excluded from the carbon tax.

 

“I'd be on the starting side of it being out. It is an issue of importance for constituents and for businesses on the mid-north coast,” he told ABC radio, referring to his NSW electorate.

 

The multi-party climate committee, of which Mr Oakeshott is a member, is currently finalising details of the tax.

 

Meanwhile, research by Deloittes says that with east coast gas prices rising, black coal will remain the cheapest way to generate power unless the price on emissions rises relatively quickly to $40 a tonne.

 

The research paper warns that if government policy remains uncertain and investors have no clear incentive to build new gas-fired baseload power, the nation's electricity bills will rise by between $1 billion and $5 billion a year anyway because of continued investment in expensive stopgap technologies.

 

The new research comes as competing industry groups intensify their demands before the deadline in July for a final announcement on climate policy.

 

It appears unlikely that the Government will be implementing the pricing outlined by Deloittes, with Mr Combet saying the starting price would be “well south” of that figure, with the likely figure being between $20-$30 per tonne.