Extract from The Guardian
You
asked for this Malcolm, standing in the wind outside the war memorial
this week. You said journalists had “to hold up the truth to power”. But
in the case of your climate policy you’ve made our job easy. You’ve
said so much on the subject that for the most part we can hold up your
own truth to yourself.
This mirror reflecting back your own past verities could become a bit of a theme in your prime ministership, with all that you’ve said and all the things that now constrain you. Or maybe it won’t – it’s still too early to say.
But since you’ve asked for them, here are some of your own truths about climate change.
Lately you’ve claimed the $2.5bn emissions reduction fund (ERF) – part of the Direct Action climate policy you once ridiculed but have now inherited – has been “very successful” and that “all of the advice we have suggests that the government’s policies will achieve the reductions ... that we’re taking to the Paris conference of the parties.”
On Friday (as China – yes, China – announced a start date for its national emissions trading scheme) your environment minister Greg Hunt went so far as to say ours is the “best and most efficient scheme in the world”.
But we all know that’s not true. Not as it stands. And we know you know it because you’ve stuck a pin in its problems yourself.
First – trying to meet deeper emissions long-term reductions by buying them with the ERF is going to become too expensive.
The scheme might meet the 2020 target (a 5% cut of 2000 levels by 2020) but if it does it will be in large part because we vastly overestimated what our emissions would be – the job is now less than a third of what we expected.
But to get to our next target (a cut of between 26% and 28% by 2030) it will cost a bomb. As you told Lateline in 2011 “if you want to ... cut carbon emissions ... in a very substantial way to the levels that the scientists are telling us we need to do by mid-century to avoid dangerous climate change, then a direct action policy where ... industry was able to freely pollute, if you like, and the government was just spending more and more taxpayers’ money to offset it, that would become a very expensive charge on the budget in the years ahead.” Pretty much every expert agrees with what you thought back then.
Second, it’s very hard to know whether the ERF is actually buying emission reductions or just paying people to do things they would have done anyway.
Direct Action’s first “reverse auction” spent $660m to reduce Australia’s expected greenhouse emissions by 47m tonnes, which you and Greg Hunt now claim was a stunning success.
On close examination that’s questionable.
It spent $300m to make sure farmers around Cobar and Bourke who had already promised not to clear trees on their land, continued to keep that promise. Most of them had been getting money under the former government’s carbon farming scheme. Perhaps they would have started clearing again had they lost the government income stream but almost no one thinks they ever intended to clear all the land they were permitted to clear, and for which they are receiving payments to leave alone.
Another $200m went to ensure that garbage dumps, mines and livestock operations that were already capturing the potent greenhouse gas methane kept on doing what they were already doing. Most of those projects had been around for a long time, had already recouped their capital costs, were generating an income and would have continued even without additional government funding.
Back into 2010, you were also already onto this obvious pitfall.
“Arguments of considerable ferocity will arise as to whether a new piece of equipment would have been bought anyway with the risk that the government ends up funnelling billions of dollars to companies to subsidise their profits without achieving any real additional cuts to emissions,” you told parliament, with remarkable prescience.
As you knew, usually when governments pay for these kinds of projects the lucky grant-winners have to try to demonstrate that the money is essential for them to do some greenhouse-gas reducing thing in addition to what they would have done anyway.
But in the case of these projects the Direct Action legislation let them off. It assumed “additionality’ and did not require it to be proven – in the interests of “investment certainty”. We avoided the ferocious arguments you predicted but we have no idea whether all our money went on buying new emission reductions or not.
Is that really “stunning”, or as you said before “a recipe for fiscal recklessness on a grand scale?” We’re pretty sure we know what you would have concluded.
Third, there’s the other element of your policy that could possibly reduce emissions – the “safeguards” mechanism – the bit that sets “baselines” for big industrial emitters. Except the current draft rules explicitly state that it’s not even trying to reduce emissions, it just aims to make sure they don’t go up and undo all the emission reductions the ERF is buying.
And expert analysis, for example by Reputex, suggests it will fail even in that astonishingly modest aim, and instead allow the country’s biggest emitters to increase their greenhouse pollution.
You actually have a chance to change this – consultation on the draft rules closed last Monday, and independent senator Nick Xenophon is saying if they aren’t given at least some “teeth” he’ll disallow them in the Senate – a threat that may not have concerned your predecessor but he’s thinking might just give you pause.
Tougher baselines would start to create a baseline and credit emissions trading scheme. Will you do it? Is that what Hunt has planned after the review you’ll be holding in 2017? If it is you’ll have to give up on the line that you’ve found a way to reduce emissions without any impact on consumer prices.
Fourth, if we are going to reduce emissions we have to change the way we generate electricity. Yes, we have a renewable energy target, but the general policy uncertainty means even the political truce on that issue has not restarted investment. The biggest increase since the abolition of the carbon price has been the dirtiest brown coal fired power.
And we know you know this too.
“The transition from a high emission economy to a low emission one cannot be achieved without major changes to the way we generate and use energy,” you said. “Given that the cheapest fuels are generally the dirtiest, in the absence of a clear carbon price signal, new capacity is likely to be coal rather than gas, rather than renewables.”
Yes, your predecessor was forced into a deal on the renewable energy target, but the ongoing uncertainty means retailers still aren’t building the large-scale renewable developments that are required. You are going to have to give them a sign.
We understand you had to make some concessions to become prime minister. You have promised to work within the current scheme, which Hunt always hoped would morph into a baseline and credit trading scheme over time. And yes, you need time to consult and make decisions, to add or amend or change. To take your own side with you. But your own truths won’t go away and as it stands this stop-gap policy will come badly unstuck.
This mirror reflecting back your own past verities could become a bit of a theme in your prime ministership, with all that you’ve said and all the things that now constrain you. Or maybe it won’t – it’s still too early to say.
But since you’ve asked for them, here are some of your own truths about climate change.
Lately you’ve claimed the $2.5bn emissions reduction fund (ERF) – part of the Direct Action climate policy you once ridiculed but have now inherited – has been “very successful” and that “all of the advice we have suggests that the government’s policies will achieve the reductions ... that we’re taking to the Paris conference of the parties.”
On Friday (as China – yes, China – announced a start date for its national emissions trading scheme) your environment minister Greg Hunt went so far as to say ours is the “best and most efficient scheme in the world”.
But we all know that’s not true. Not as it stands. And we know you know it because you’ve stuck a pin in its problems yourself.
First – trying to meet deeper emissions long-term reductions by buying them with the ERF is going to become too expensive.
The scheme might meet the 2020 target (a 5% cut of 2000 levels by 2020) but if it does it will be in large part because we vastly overestimated what our emissions would be – the job is now less than a third of what we expected.
But to get to our next target (a cut of between 26% and 28% by 2030) it will cost a bomb. As you told Lateline in 2011 “if you want to ... cut carbon emissions ... in a very substantial way to the levels that the scientists are telling us we need to do by mid-century to avoid dangerous climate change, then a direct action policy where ... industry was able to freely pollute, if you like, and the government was just spending more and more taxpayers’ money to offset it, that would become a very expensive charge on the budget in the years ahead.” Pretty much every expert agrees with what you thought back then.
Second, it’s very hard to know whether the ERF is actually buying emission reductions or just paying people to do things they would have done anyway.
Direct Action’s first “reverse auction” spent $660m to reduce Australia’s expected greenhouse emissions by 47m tonnes, which you and Greg Hunt now claim was a stunning success.
On close examination that’s questionable.
It spent $300m to make sure farmers around Cobar and Bourke who had already promised not to clear trees on their land, continued to keep that promise. Most of them had been getting money under the former government’s carbon farming scheme. Perhaps they would have started clearing again had they lost the government income stream but almost no one thinks they ever intended to clear all the land they were permitted to clear, and for which they are receiving payments to leave alone.
Another $200m went to ensure that garbage dumps, mines and livestock operations that were already capturing the potent greenhouse gas methane kept on doing what they were already doing. Most of those projects had been around for a long time, had already recouped their capital costs, were generating an income and would have continued even without additional government funding.
Back into 2010, you were also already onto this obvious pitfall.
“Arguments of considerable ferocity will arise as to whether a new piece of equipment would have been bought anyway with the risk that the government ends up funnelling billions of dollars to companies to subsidise their profits without achieving any real additional cuts to emissions,” you told parliament, with remarkable prescience.
As you knew, usually when governments pay for these kinds of projects the lucky grant-winners have to try to demonstrate that the money is essential for them to do some greenhouse-gas reducing thing in addition to what they would have done anyway.
But in the case of these projects the Direct Action legislation let them off. It assumed “additionality’ and did not require it to be proven – in the interests of “investment certainty”. We avoided the ferocious arguments you predicted but we have no idea whether all our money went on buying new emission reductions or not.
Is that really “stunning”, or as you said before “a recipe for fiscal recklessness on a grand scale?” We’re pretty sure we know what you would have concluded.
Third, there’s the other element of your policy that could possibly reduce emissions – the “safeguards” mechanism – the bit that sets “baselines” for big industrial emitters. Except the current draft rules explicitly state that it’s not even trying to reduce emissions, it just aims to make sure they don’t go up and undo all the emission reductions the ERF is buying.
And expert analysis, for example by Reputex, suggests it will fail even in that astonishingly modest aim, and instead allow the country’s biggest emitters to increase their greenhouse pollution.
You actually have a chance to change this – consultation on the draft rules closed last Monday, and independent senator Nick Xenophon is saying if they aren’t given at least some “teeth” he’ll disallow them in the Senate – a threat that may not have concerned your predecessor but he’s thinking might just give you pause.
Tougher baselines would start to create a baseline and credit emissions trading scheme. Will you do it? Is that what Hunt has planned after the review you’ll be holding in 2017? If it is you’ll have to give up on the line that you’ve found a way to reduce emissions without any impact on consumer prices.
Fourth, if we are going to reduce emissions we have to change the way we generate electricity. Yes, we have a renewable energy target, but the general policy uncertainty means even the political truce on that issue has not restarted investment. The biggest increase since the abolition of the carbon price has been the dirtiest brown coal fired power.
And we know you know this too.
“The transition from a high emission economy to a low emission one cannot be achieved without major changes to the way we generate and use energy,” you said. “Given that the cheapest fuels are generally the dirtiest, in the absence of a clear carbon price signal, new capacity is likely to be coal rather than gas, rather than renewables.”
Yes, your predecessor was forced into a deal on the renewable energy target, but the ongoing uncertainty means retailers still aren’t building the large-scale renewable developments that are required. You are going to have to give them a sign.
We understand you had to make some concessions to become prime minister. You have promised to work within the current scheme, which Hunt always hoped would morph into a baseline and credit trading scheme over time. And yes, you need time to consult and make decisions, to add or amend or change. To take your own side with you. But your own truths won’t go away and as it stands this stop-gap policy will come badly unstuck.
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