Extract from The Guardian
While the environment minister is proclaiming a ‘stunning’ result,
the money mostly went on projects begun under the previous government
Last
week the government spent $660m to reduce Australia’s expected
greenhouse emissions by 47m tonnes – a result the environment minister,
Greg Hunt, described as “stunning” and one starry-eyed commentator suggested was so completely amazing it may have won the next election for the coalition.
So what stunning things did we get for our money? Did we start to transform our economy so we use less fossil fuel in the future? Did we buy lasting change? Not a lot. Mostly we spent it on making sure that projects begun under the former government kept going.
About $200m went to ensure that garbage dumps, mines and livestock operations that were already capturing the greenhouse gas methane (and then either flaring it so it becomes less potent carbon dioxide or using it to generate electricity) kept on doing what they were already doing.
Many of these landfill and waste gas projects have been around for a long time. Some sold greenhouse abatement to the now defunct NSW greenhouse gas reduction scheme. Some benefitted from the renewable energy target. Most got credits under the the former government’s carbon farming initiative. All of which means (according to the handful of people who actually understand in detail how this stuff works – most of whom work inside the system or for consultancies advising people how to make money out it and therefore can’t talk on the record) that many of the projects had already recouped their capital costs and were generating an income and would have continued even without additional government funding.
Usually when governments pay for these kinds of projects they have to demonstrate “additionality” – that the money is essential for the recipient to do some greenhouse-gas reducing thing they wouldn’t otherwise have done. But in the case of these projects the Direct Action legislation assumed “additionality’ and did not require it to be proven – in the interests of investment certainty. That means we can’t be sure whether we bought new emission reductions, or whether some of our cash went to reward companies for what they were doing, and would have continued doing, anyway.
Another $300m was spent to ensure that farmers around Cobar and Bourke who had already promised not to clear trees on their land, continued to keep that promise. One enterprising company, Terra Carbon, won 41 contracts, worth $289m, for projects in which farmers surrender land clearing permits they received before 2010.
Again, most of the projects had started under the former government’s carbon farming scheme. And these farmers would probably have started clearing again had they lost the government income stream for not clearing their land.
The question being raised is whether the farmers ever had intended to clear all the land they were permitted to clear, and for which they are receiving payments to leave alone. The area around Cobar and Bourke is a hot spot for these kind of payments because the NSW government gave out so many partial clearing permits in the area to farmers enraged over the 2003 Native Vegetation Act. The state government and the local catchment authority actually helped farmers apply.
Terra Carbon calculates the carbon stored in each farmer’s land and it has also done long-term studies that show actual clearing rates do mirror the issuing of clearing permits.
But chief executive James Schulz concedes this doesn’t mean that “every farmer was intending to clear to the full extent of every permit they hold”.
“That’s not the intent,” he said. “Yes, it is an imperfect system, but we think it is as sound and rigorous as it can possibly be.”
Others with close knowledge of the rules agree they probably mean we spent a lot of money to stop farmers from clearing land they had never intended to clear, or were never going to be able to afford to clear.
“Some of it is land they would have cleared, and we are getting genuine abatement from that, but almost certainly a big chunk of it would never have been cleared and is not additional at all,” said one insider.
We also end up paying many hundreds of dollars per hectare to a farmer for not clearing land that might only cost $50 a hectare to buy outright. From the farmers’ point of view this makes sense, they are being paid to forgo income from that land for many years. But it makes less sense from the point of view of the taxpayer.
Criticism of the way these schemes work is as applicable to the former government – which set up many of the rules – as it is to the current government. Some of it is inherent in schemes based on the impossible task of proving something would have happened in the future.
But as things stand, this is Australia’s main policy to achieve greenhouse gas abatement. With the carbon price repealed and the renewable energy target bogged in political stalemate, this is all we’ve got. And now, under Direct Action, the cost – and risk – is born directly by the taxpayer.
Our $660m certainly bought some abatement, but probably not 47m tonnes. And as my colleague Nick Evershed demonstrates here, even if we had bought 47m tonnes, the rest of the $2.55bn fund is probably not enough to meet Australia’s 2020 emissions reduction target, based on current emissions projections.
The environment minister, Greg Hunt, has been dropping some broad hints that yet-to-be-released projections might be lower – due to things like the decline in manufacturing and changes in how we do the calculations – making it even easier for Australia to reach the target.
It is also possible that with many low-cost energy efficiency projects likely to be ready to bid into the next auction – the price the government will have to pay could fall.
(In 2012 the promise to reduce emissions by 5% of 2000 levels by 2020 was calculated to require the cumulative reduction of 755m tonnes of carbon dioxide from the atmosphere. Most recently that has been revised down to 236m tonnes. The minister is now saying that figure will fall still further. Implausibly, Hunt seems to allege this decline is due to Labor deliberately and falsely inflating emissions projections to try to justify its carbon tax – a ridiculous suggestion since the projections are assembled in the same laborious way as they always have been.)
But the big question is not how Australia might scrape up the emission reductions to meet a 2020 target, but how it could ever meet a tougher post-2020 target. Part of the answer will be diplomatic efforts ahead of the Paris climate conference in December to make sure our long term target is not all that tough.
Another part could be a mechanism buried inside Direct Action which would force big-emitting industries to reduce emissions over time – an alternative to the huge bill the government would face if it was forced to try to continue to buy all the abatement. All indications have been that this so-called “safeguards” mechanism would never really force business to do anything. The prime minister’s office actually delayed the announcement of Hunt’s deal with Clive Palmer, leader of the Palmer United Party, and independent senator Nick Xenophon to get Direct Action through the senate while it was double checking with bureaucrats that the “safeguards’’ could never be turned into some kind of de facto carbon price.
But this week Hunt suggested that might in fact happen.
“The safeguards mechanism is designed to have its real impact in the post-2020 period … it is designed and legislated so as it can be adjusted and it can be tightened in such a way so as to allow for progressive emissions reductions.
“It is is a two-part system. An emissions reduction fund which has a long term future … (and) the safeguards mechanism which allows us to work with individual firms on a budget which can be adjusted and progressively tightened throughout the 2020s through to 2030 and 2040 and 2050,” he said.
If Hunt could get cabinet to agree to impose real emissions reductions on electricity generators and big polluting businesses – to in effect start a baseline and credit emissions trading scheme – that really would be “stunning”. It would also save us from spending even more money trying to reduce emissions by stopping farmers from felling trees they may never have cut down anyway.
So what stunning things did we get for our money? Did we start to transform our economy so we use less fossil fuel in the future? Did we buy lasting change? Not a lot. Mostly we spent it on making sure that projects begun under the former government kept going.
About $200m went to ensure that garbage dumps, mines and livestock operations that were already capturing the greenhouse gas methane (and then either flaring it so it becomes less potent carbon dioxide or using it to generate electricity) kept on doing what they were already doing.
Many of these landfill and waste gas projects have been around for a long time. Some sold greenhouse abatement to the now defunct NSW greenhouse gas reduction scheme. Some benefitted from the renewable energy target. Most got credits under the the former government’s carbon farming initiative. All of which means (according to the handful of people who actually understand in detail how this stuff works – most of whom work inside the system or for consultancies advising people how to make money out it and therefore can’t talk on the record) that many of the projects had already recouped their capital costs and were generating an income and would have continued even without additional government funding.
Usually when governments pay for these kinds of projects they have to demonstrate “additionality” – that the money is essential for the recipient to do some greenhouse-gas reducing thing they wouldn’t otherwise have done. But in the case of these projects the Direct Action legislation assumed “additionality’ and did not require it to be proven – in the interests of investment certainty. That means we can’t be sure whether we bought new emission reductions, or whether some of our cash went to reward companies for what they were doing, and would have continued doing, anyway.
Another $300m was spent to ensure that farmers around Cobar and Bourke who had already promised not to clear trees on their land, continued to keep that promise. One enterprising company, Terra Carbon, won 41 contracts, worth $289m, for projects in which farmers surrender land clearing permits they received before 2010.
Again, most of the projects had started under the former government’s carbon farming scheme. And these farmers would probably have started clearing again had they lost the government income stream for not clearing their land.
The question being raised is whether the farmers ever had intended to clear all the land they were permitted to clear, and for which they are receiving payments to leave alone. The area around Cobar and Bourke is a hot spot for these kind of payments because the NSW government gave out so many partial clearing permits in the area to farmers enraged over the 2003 Native Vegetation Act. The state government and the local catchment authority actually helped farmers apply.
Terra Carbon calculates the carbon stored in each farmer’s land and it has also done long-term studies that show actual clearing rates do mirror the issuing of clearing permits.
But chief executive James Schulz concedes this doesn’t mean that “every farmer was intending to clear to the full extent of every permit they hold”.
“That’s not the intent,” he said. “Yes, it is an imperfect system, but we think it is as sound and rigorous as it can possibly be.”
Others with close knowledge of the rules agree they probably mean we spent a lot of money to stop farmers from clearing land they had never intended to clear, or were never going to be able to afford to clear.
“Some of it is land they would have cleared, and we are getting genuine abatement from that, but almost certainly a big chunk of it would never have been cleared and is not additional at all,” said one insider.
We also end up paying many hundreds of dollars per hectare to a farmer for not clearing land that might only cost $50 a hectare to buy outright. From the farmers’ point of view this makes sense, they are being paid to forgo income from that land for many years. But it makes less sense from the point of view of the taxpayer.
Criticism of the way these schemes work is as applicable to the former government – which set up many of the rules – as it is to the current government. Some of it is inherent in schemes based on the impossible task of proving something would have happened in the future.
But as things stand, this is Australia’s main policy to achieve greenhouse gas abatement. With the carbon price repealed and the renewable energy target bogged in political stalemate, this is all we’ve got. And now, under Direct Action, the cost – and risk – is born directly by the taxpayer.
Our $660m certainly bought some abatement, but probably not 47m tonnes. And as my colleague Nick Evershed demonstrates here, even if we had bought 47m tonnes, the rest of the $2.55bn fund is probably not enough to meet Australia’s 2020 emissions reduction target, based on current emissions projections.
The environment minister, Greg Hunt, has been dropping some broad hints that yet-to-be-released projections might be lower – due to things like the decline in manufacturing and changes in how we do the calculations – making it even easier for Australia to reach the target.
It is also possible that with many low-cost energy efficiency projects likely to be ready to bid into the next auction – the price the government will have to pay could fall.
(In 2012 the promise to reduce emissions by 5% of 2000 levels by 2020 was calculated to require the cumulative reduction of 755m tonnes of carbon dioxide from the atmosphere. Most recently that has been revised down to 236m tonnes. The minister is now saying that figure will fall still further. Implausibly, Hunt seems to allege this decline is due to Labor deliberately and falsely inflating emissions projections to try to justify its carbon tax – a ridiculous suggestion since the projections are assembled in the same laborious way as they always have been.)
But the big question is not how Australia might scrape up the emission reductions to meet a 2020 target, but how it could ever meet a tougher post-2020 target. Part of the answer will be diplomatic efforts ahead of the Paris climate conference in December to make sure our long term target is not all that tough.
Another part could be a mechanism buried inside Direct Action which would force big-emitting industries to reduce emissions over time – an alternative to the huge bill the government would face if it was forced to try to continue to buy all the abatement. All indications have been that this so-called “safeguards” mechanism would never really force business to do anything. The prime minister’s office actually delayed the announcement of Hunt’s deal with Clive Palmer, leader of the Palmer United Party, and independent senator Nick Xenophon to get Direct Action through the senate while it was double checking with bureaucrats that the “safeguards’’ could never be turned into some kind of de facto carbon price.
But this week Hunt suggested that might in fact happen.
“The safeguards mechanism is designed to have its real impact in the post-2020 period … it is designed and legislated so as it can be adjusted and it can be tightened in such a way so as to allow for progressive emissions reductions.
“It is is a two-part system. An emissions reduction fund which has a long term future … (and) the safeguards mechanism which allows us to work with individual firms on a budget which can be adjusted and progressively tightened throughout the 2020s through to 2030 and 2040 and 2050,” he said.
If Hunt could get cabinet to agree to impose real emissions reductions on electricity generators and big polluting businesses – to in effect start a baseline and credit emissions trading scheme – that really would be “stunning”. It would also save us from spending even more money trying to reduce emissions by stopping farmers from felling trees they may never have cut down anyway.
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