Aug 15, 2013 - 1:00am
The Coalition’s climate policy will see Australia’s emissions increase rather than decrease, exposing the Budget, our nation’s carbon competitiveness and its national climate interest.
These are conclusions from the most detailed independent assessment to date of the Coalition’s proposed climate policy conducted by The Climate Institute based on modelling by Sinclair Knight Merz-MMA (SKM–MMA) and Monash University’s Centre of Policy Studies.
“Even with conservative assumptions, the Coalition’s policy as it is currently defined would see Australia’s emissions rise about 9 per cent by 2020,” said John Connor, CEO of The Climate Institute.
“To achieve their promised range of 2020 carbon cuts of 5 to 25 per cent below 2000 levels, the Coalition would need to spend at least an extra $4 billion to $15 billion by 2020.”
“The $4 billion is a third of Government estimates, but the emission shortfall is a substantial risk to the Budget that could be substantially reduced if the Coalition relaxed its restrictions on international offsets.”
A range of possible policy options were modelled as key elements of the Coalition policy are uncertain, such as the carbon price penalty, industry baselines, and the future of the Renewable Energy Target (RET).
Key conclusions include:
- Emissions rise: Under Coalition policy scenarios, Australia’s carbon pollution increases by 8 to 10 per cent above 2000 levels by 2020. By comparison, under the current carbon laws, domestic pollution increases by 5 per cent, but international offsets enable achievement of the bipartisan target range of 5-25 per cent below 2000 levels by 2020.
- Government policies reduce more domestic emissions than the Coalition’s: Coalition policy reduces domestic carbon pollution by 200 million tonnes by 2020. The carbon laws reduce 290 million tonnes, about 40 per cent more.
- Current budget isn’t enough: To achieve the 2020 target range, the Coalition would need to spend an extra $4 billion–$15 billion. Removing the restriction on international offsets could reduce this to $190 million - $710 million. Relaxing the RET increases cost by around $250 million.
- Costs and emissions increase over time: Even with ongoing and increasing Federal spending of about $88 billion dollars from 2014 to 2050, emissions continue to rise by around 45 per cent over this time frame.
- Australia’s carbon competiveness falls: Carbon productivity, a key measure of future economic competitiveness, lags behind global average improvements under both the Government and the Coalition scenarios. (Australia ranks low – 17th among the G20 nations – in its ability to compete in the global low carbon economy, as found by The Climate Institute-GE Low Carbon Competitiveness Index earlier this year.) However, it is worse under the Coalition’s policies, which has economic output per unit of carbon emissions at around a third the improvement driven by the current carbon laws.
“As a country highly vulnerable to the impacts of climate change, it’s in our own interest for the world to limit temperature rise to less than two degrees above pre-industrial levels,” Connor said. “The next couple of years are crucial in helping boost global efforts.”
- Carbon pollution is subsidised: The Coalition’s plan includes a penalty for emissions above a company’s business-as-usual baseline, which means all business-as-usual emissions are effectively subsidised by the community. The Climate Institute calculates this subsidy to carbon pollution at around $50 billion to 2020.
“In this context, policies that demonstrably cannot meet our own targets do nothing for Australia’s credibility and will get short shrift overseas. That creates a risk that Australia would return to an obstructionist position in international negotiations – which would of course run counter to our national climate interest.”
To strengthen the Coalition’s climate policy framework, The Climate Institute recommends the Coalition take the following steps:
- Maintain the current legislative framework at least until the completion of detailed policy development and further independent analysis of the potential of the Emission Reduction Fund to achieve up to a 25 per cent reduction in emissions by 2020.
- Commit to remove the legislated 2014 review of the Renewable Energy Target and focus the 2016 review on post-2020 policy settings. Uncertainty in both carbon and renewable energy policy is hampering investment in low carbon solutions.
- Introduce a range of additional regulations to strengthen reductions towards their committed emission reduction range, including: ensuring around 50 per cent of electricity generation is renewable (or clean) energy by 2030; implementing stringent emission performance standards to ensure that the most emission intensive power generation is decommissioned by 2020, and; a raft of energy efficiency actions to ensure Australia boosts its energy productivity by 30 per cent on 2010 levels by 2020.
“In 2010, our quantitative pollute-o-meter assessment of major party policies saw the Coalition perform better than the ALP, even though it still increased emissions. But the current framework, which includes both a price and a limit on carbon pollution, clearly outperforms the Coalition’s policy framework,” said Connor.
“Nevertheless both major parties have work to do to improve Australia’s carbon competitiveness and help pursue our national climate interest. In the absence of a broad carbon limit and price, the Coalition will struggle to do so without a host of new stringent regulatory interventions.”
The release of this work follows the release of an assessment of the Government’s policy framework last week done jointly with the Washington DC-based World Resources Institute.
The Climate Institute conducts a pollute-o-meter analysis of the emissions reduction potential of major party policies at each election. In 2010 the Coalition fared better than the ALP but both had increasing emissions at eight and nineteen per cent respectively.
For further information on how the party policies stack up, see www.2013pollute-o-meter.org.au or www.climateinstitute.org.au
For more information
Kristina Stefanova | Communications Director, The Climate Institute | 02 8239 6299