How Australia's climate policies came to be poisoned by pragmatism

Extract from The Guardian

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Finkel review

A history of failure has left Australia with virtually no genuinely independent advice on climate change

 A coal-fired power station near Muswellbrook. Alan Finkel’s report recommended a clean energy target, rather than an emissions trading scheme or an emissions intensity scheme. Photograph: Dan Himbrechts/AAP

Michael Slezak

Saturday 17 June 2017 08.57 AEST Last modified on Saturday 17 June 2017 09.28 AEST

It might seem a million miles from the climate policy debate of today but Australia’s decade-long climate wars arguably began with perfect being the enemy of good.
On at least three occasions, the chance for Australia to have relatively strong emissions policies were squandered, leaving many people in politics, industry and the environmental movement today wishing that something weaker – but therefore more politically feasible – had been instituted when it was possible.
That legacy has meant a culture of extreme pragmatism has taken over the climate policy debate in Australia. Second-best policies have become the preferred option, until they’ve been ruled out, and suddenly third-best policies are considered the only feasible option.
This pragmatic turn has infected not only the political parties and some NGOs but also official, independent government offices, and left Australia with virtually no genuinely independent advice in the climate policy space.

Has Australia’s acceptance that the perfect is no longer possible meant we have lost sight of what needs to be done?

Last year we saw the once fiercely independent Climate Change Authority water down its advice to make it appear palatable to a Coalition party room containing MPs who don’t believe climate change is really happening. And this month, Australia’s chief scientist, Alan Finkel, released a report recommending emissions cuts that are not in line with what the science demands.

But with Australia’s existing policies destined to push power prices up, decrease the reliability of the electricity system and increase emissions for decades to come, any emissions reduction policy is surely better than nothing. So there is perhaps much to be said for scientific advice that compromises on its principles of independence and evidence, in order to get something done.
But has this turn greased the surface of a slope, leading to government having no honest advice? Has Australia’s acceptance that the perfect is no longer possible meant we have lost sight of what really needs to be done?

Finkel’s political intervention to end the ‘climate wars’

Ahead of releasing his landmark report into the security and reliability of the National Electricity Market, Finkel appeared before Senate estimates.

The chief scientist, Alan Finkel, speaks during Senate estimates before the release of his report. Photograph: Lukas Coch/AAP

Traditionally, the chief scientist has been relied upon for independent scientific advice, both to government and the general public. It’s a position that has remained independent of politics – a trusted source of information, not swayed by the gritty political realities of the day.
Finkel’s testimony before the Senate suggested his advice was not going to tell the government what the absolute best thing for them to do was but, rather, what they could do, given their political inclinations. Reading between the lines, it seemed he was saying it would be tailored so that it was palatable to the government of the day.
“We will be making recommendations around policies that all of the states and territories and the government would ideally agree to around changes to the operation of the system,” Finkel said.
And the nearly universal thread in commentary around the Finkel review – both from those who have applauded it and those who have attacked it – has been to see it as a political document, attempting to find a policy that will do something to lower emissions but will also be palatable to the Coalition.
Finkel, for his part, has denied his report was written “cognisant of the political realities”.

According to Frank Jotzo, a climate economist at the Australian National University, there are three aspects of the report that demonstrate its political nature.
“Firstly, presenting the emission reduction challenge as very much an adjunct to reliability and affordability, which is directly in line with the way government approaches that question,” Jotzo said.
Secondly, and perhaps most obviously, Finkel’s report recommended a clean energy target, rather than an emissions trading scheme or an emissions intensity scheme.
“All analysis aside, that is exactly what you’d do if you were looking for something that is politically acceptable to the government, where the government has ruled out an emissions trading scheme and an emissions intensity scheme – you go looking for the next best thing, which might be acceptable to the government.”
Thirdly, Jotzo said the very weak emissions reduction modelled – and essentially recommended – by Finkel, appeared to be something you’d do if you were tailoring it to a hesitant government. “It could be interpreted as a an attempt to help smooth the way to make this acceptable to government,” Jotzo said.

Losing sight of the science

That last point – the weak ambition of the emissions reductions – has raised the temperature of a lot of commentators.
Signing the Paris agreement, Australia committed to an emissions reduction target of 28% below 2005 levels by 2030. As many have pointed out, Australia’s target is not consistent with the aim of the Paris agreement, which is to limit warming to “well below” 2C.
But, regardless, a lot of work has been done examining how Australia could meet its weak 2030 targets. And, according to that analysis, the electricity sector has to play a huge role.
The electricity sector accounts for more than a third of Australia’s emissions and it is the cheapest place to make cuts – with zero emissions being entirely achievable.
That’s in contrast with other industries, like agriculture, where emissions cuts are incredibly difficult, or manufacturing and transport, which will be able to reduce emissions only after the electricity industry is decarbonised – by relying more on electricity, rather burning their own fossil fuels.
Several bodies have recently estimated how much the electricity sector would need to cut its emissions by for Australia’s entire economy to meet its current Paris targets.
But, instead of relying on any of that work, Finkel modelled a cut in the electricity sector, which is numerically the same as the cuts needed across the whole economy – 28% by 2030.
Bill Hare from Climate Analytics, a climate scientist who has done this sort of modelling for many economies around the world, placed several comparable models of what Australia’s electricity sector needs to cut on a single chart. The result is stark, with the cuts modelled by Finkel sticking out like a burning coal stack.

A chart comparing emissions projections and recommended targets from Australia’s electricity sector from various reports, including the Finkel review. Photograph: Climate Analytics  

“From a scientific perspective this is quite shocking because the almost universal consensus from the modelling exercises for how to achieve the Paris agreement has the power sector doing a lot more than the rest of the economy everywhere in the world,” Hare told the Guardian.
Jotzo said it looks like it must have been done to make it palatable to the Coalition. “Why possibly would you make the assumption that there is a uniform emissions reduction across all sectors? That’s really only if you want to softly softly get something going.”
Finkel has denied that the modelled cuts amount to a recommendation.
But not only did he model emissions cuts that were inconsistent with the Paris agreement but he said any deeper cuts would cause problems for the energy system. And he recommended that, if more ambitious cuts were to be considered by government, the work done in his report would need to be redone, to examine their implications.

“The adoption of a more ambitious target would have larger consequences for energy security as such a target would likely see a higher level of [variable renewable energy] incentivised,” his report said. “The panel recommends that if a higher national target is to be considered, cost security and reliability implications should be re-examined.”
The level of cuts don’t appear in his list of recommendations but, as the quote above makes clear, they emerge as a clear recommendation from the text of the report itself.
Dylan McConnell, an energy expert at the University of Melbourne, said that statement made the chance of Australia meeting its Paris agreement targets much more unlikely.
“In my view that has basically just put up a massive and unnecessary barrier for being more ambitious and won’t really help end the so-called ‘climate wars’,” he said.
“It basically will require anyone, like Labor, to do more work to argue that they can be more ambitious, without lights going out or costs going up. That doesn’t sound particularly amenable to ‘ending the war’, unless Labor thinks 28% is acceptable.”
Some commentators were surprised that Finkel didn’t simply model a range of scenarios and leave it up to the government to choose an appropriate level of ambition.
“What surprised me was there was a recommendation on the extent of emissions reduction to be targeted at all,” Jotzo said. “Those decisions could have been left to government.”
But despite all evidence showing such cuts were inconsistent with Australia’s international obligations, in an interview with the Guardian immediately following the review’s release, Finkel was asked whether the cuts would be enough to meet the Paris agreement. Finkel said: “I genuinely don’t know.”
That claim of ignorance came even though one of the key reports that considered the question being produced by the Climate Change Authority, of which Finkel is a member. It suggested cuts of at least twice that modelled by Finkel were needed in the electricity sector.

Eroding the Climate Change Authority

That particular report by the Climate Change Authority caused a major spat, which closely mirrors the controversy around Finkel’s new report, and highlights the dangerous position Australia could be heading towards.
In September last year, the Climate Change Authority released a review, recommending how Australia can meet its Paris targets.

A windfarm in Bungendore, Australia. Photograph: Bloomberg via Getty Images

It’s worth noting that the Climate Change Authority was once a body that stuck to the science and wasn’t influenced by the attitude of the current government. Under chair Bernie Fraser, it didn’t hold back from telling the government uncomfortable truths.
For example, in 2015, when the government proposed its emissions targets that were later agreed to in Paris, Fraser released a statement, making several confronting “observations” about the government’s targets.
Among those observations, he noted they were too weak, said they would place “Australia at or near the bottom of the group of countries we generally compare ourselves with” and criticised the government’s claim that “Australia outperformed its Kyoto protocol first commitment”, noting those targets allowed Australia’s emissions to keep rising.
By that time, it was government policy to axe the Climate Change Authority, something the Coalition has not managed to pass through the parliament. But they have successfully ignored them and since stacked the board of the “independent” body with former conservative politicians and lobbyists.

In the end the Climate Change Authority’s gamble was lost. The government rejected its recommendations out of hand

Under a new leadership, and with many new members, the authority’s September 2016 report had clearly been designed to present recommendations that, rather than being informed by the science and risked making the government uncomfortable, were designed to be palatable to the Coalition. Rather than proposing good policy, the report tried to find policy that might be acceptable to a government that didn’t want to take action on climate change. As a result, it suggested the Direct Action policy should be strengthened and an emissions intensity scheme should be introduced to the electricity sector.
Moreover, rather than analysing what policies could help meet a “two-degree pathway” – one that would help limit global warming to 2C – it analysed policy that might help Australia meet its existing emissions targets. But, of course, all the science available demonstrated those targets were completely inadequate to meet the 2C goal.
Two members of the authority – climate scientist David Karoly and economist Clive Hamilton – were so outraged by the move that they essentially split from the other members and released what they called a “minority report”.
In their report, they said the authority’s recommendations were “framed to suit a particular assessment of the political circumstances prevailing in the current parliament”, instead of recommending policy based on science and economics, and were “seemingly based on a reading from a political crystal ball”.
“Attempts to craft ‘politically realistic’ policies risk being seen as partisan and damage the authority’s reputation for independence,” Karoly and Hamilton said.
Jotzo, who is not associated with the authority, was also highly critical of the main report. “The intent clearly is to help policy progress in the medium term,” he said. “But it risks locking in a policy suite that will not deliver much, or may cost too much.”
Since then Hamilton and two other members of the authority have resigned over the government’s attitude to climate change and to the authority.

But there was debate about the virtue of the Climate Change Authority’s compromised move. Some of those who had watched the climate wars continue for nine years thought it presented a thread that the Coalition could grab – a last-ditch effort to allow a bipartisan approach to climate policy.
Finkel was, and remains, a member of the authority and defended the controversial 2016 report against Hamilton and Karoly’s criticisms as not only “evidence based” but also “clever”. He claimed criticism of the report was based on “clickbait headlines” and commentators who had not bothered to read the report.
In the end the Climate Change Authority’s gamble was lost. The government rejected its recommendations out of hand. The compromised advice was for nothing and, if anything, just shifted the policy debate further down that compromised path.

The ‘climate wars’ that motivate compromised advice

The political calculation made by that Climate Change Authority report, and the Finkel review, is identical. The idea is that there is no point making recommendations that will be ignored by government, so why not present something that they might listen to?
“Really when an independent review is done, then it can take two approaches,” Jotzo said. “One is to point out the principles and do the analysis on the basis of those principles and come out with deeply principled recommendations.
“Or alternatively it can seek to provide a way to achieve political compromise.”
The motivation for coming out with a report that is not entirely principled cannot be understood without understanding the history of Australia’s so-called “climate wars”, which has been fueled by relatively ambitious proposals failing due to political realities.
This year represents, by some accounting, the 10th anniversary of the war. In 2007, both major parties, led by John Howard and Kevin Rudd, went to the election promising an emissions trading scheme.
Rudd won the election but, by the time he tried to get the emissions trading scheme through the parliament, the Coalition had shifted to oppose it.

Kevin Rudd, who tried to get an emissions trading scheme through the parliament, Julia Gillard, who passed a different version through parliament, and Tony Abbott, who repealed it. Composite: Mike Bowers; Spencer Platt; Sam Mooy/The Guardian/Getty/AAP

They managed to block the passage of the scheme, with the help of the Greens, who opposed it because the targets were too weak, and there was no mechanism by which to ratchet them up. From there, it seemed to be a matter of history repeating itself.
In November 2011, the Labor party, led by Julia Gillard, passed another emissions trading scheme through the parliament. Labelled a “carbon tax” by the Coalition, it was axed after Tony Abbott campaigned and won the 2013 federal election with a central policy of “axing the tax”.
Then, of course, Malcolm Turnbull lost the leadership of the Coalition in 2009 over his support for an emissions trading scheme, only getting it back with the apparent promise to not adopt it again.

Similarly, just when it looked like the Coalition could be coaxed to support an emissions trading scheme for the electricity sector, Turnbull was forced to rule it out.
“That’s the root of all of this,” Jotzo said. “The repeated experience that the political forces against meaningful climate policy in Australia are very strong.
“There have been a number of these kinds of experiences in succession where policy approaches that, in retrospect, seem relatively ambitious were tried and ultimately failed for one reason or another. That’s what’s behind the scaling back of the advice that is provided by these bodies and organisations.”
The closest Australia has come to meaningful climate policy was when it had some meaningful climate policy: the “carbon tax”.
Jotzo said the lessons from that appeared to be that a fundamentally worse policy – but one that was politically more feasible – would have been better, all things considered.
“If you look back at that and say, ‘Hang on, what else could have been done to help make it last”’, then immediately people would say it could have started with less ambition - a lower price [on carbon],” Jotzo said.
“And something could have been done on electricity prices to neutralise electricity prices as an issue. And doing that would have compromised the efficiency of the scheme but in retrospect you would now say it would have given it a chance of survival.”
But whether that sort of calculation ought to be made by the chief scientist – and if so, whether he’s made it correctly – has split commentators and analysts.
David Karoly, the member of the Climate Change Authority who co-authored the “minority report” in 2016 is highly critical of Finkel’s review, for the same reason he was critical of the politically motivated authority report.

The Finkel review - Politics over science

“One of the reasons Alan Finkel was appointed as chair of this electricity review was because he was appointed chief scientist by the current government,” Karoly said, arguing that this government wants to control what advice they receive. “That is not providing independent advice – that is giving advice that is considered to be acceptable by the paymasters.”
When pushed, Karoly accepted that it could be worth compromising the principle of independent advice, if that compromised advice could really help get meaningful climate policy accepted by government. But he thinks Finkel’s recommendations don’t do that.
“I’m opposed to a part-way solution,” he said. “It’s a bit like getting from Melbourne to Tasmania – building a bridge that gets you a third of the way doesn’t get you there at all.
“The whole way there is zero emissions ... I know that the Liberal party doesn’t want to know about that but that is what we have to do.”

Jotzo is more positive about the progress made by Finkel’s political intervention.
“So, the initial reaction is really very positive in that there was really very vocal support from many parts of industry – the energy industry in particular,” he said. “We also clearly had cabinet clearly supporting the Finkel recommendations and we had Labor in opposition with some tentative support for the recommendations.
“And that in itself is a better situation than we’ve had for a very long time in Australian climate policy.
“It’s a good thing that the Finkel review had a crack at it.”
But he said there was a risk in having “independent reviews” going down this more political path, and recommending policy options that aren’t the best ones, given the evidence at hand.
“If it all falls in a heap, then certainly that gamble was lost and for sure there’s a problem. As we move from first best solution to second best and so forth, there’s a risk that we lose sight of what first-best would actually look like – and therefore what we should be aiming next time around.”

• Alan Finkel declined several requests for an interview for this piece.