Jul 12, 2011 - 3:16pm
This was originally published in Climate Spectator on 12 July 2011.
By Will McGoldrick, Policy & Research Manager, The Climate Institute
Australia's efforts to cut pollution and tackle climate change took an important step forward on Sunday with the release of the 'Clean Energy Future' package of policy measures. In the coming days The Climate Institute will publish its preliminary analysis showing that while not perfect, this package can be a vital step towards a prosperous and competitive low pollution economy.
Critically, the package is an opportunity to break the political deadlock that has been the main barrier to Australia getting on with the job of cutting pollution, reducing energy wastage and unlocking our world-class clean energy resources.
Australia’s political leaders have been squabbling and dithering on the issue of climate change for well over a decade. We’ve seen a series of policy failures and a number of false starts, with neither side of politics able to deliver an environmentally effective and politically achievable solution. There were signs of hope in 2007 when both the Coalition Government and the then Labor Opposition declared their support for a price and limit on pollution. But sadly we’ve had to endure almost five more years of high political drama.
Now, after a nearly nine months of negotiations, and in the midst of an orchestrated scare-campaign by big polluting companies and their supporters, the Government, Greens and independents appear to have broken this political stalemate.
Breaking the political deadlock is a highly significant achievement, which should be keenly welcomed by those of us who have closely observed and engaged in the intense debate over the last decade.
However, the real strength of this package is what it will achieve on the ground. Indeed, if implemented well and with sufficient political will, it has the potential to kick-start the transformation of Australia’s economy from one that is overly dependent on pollution to one that will continue to thrive in the emerging global low pollution economy.
Let’s be clear: this policy package does not guarantee that Australia will meet its internationally committed, bipartisan, 2020 pollution reduction targets of 5 to 25 per cent reductions below 2000 levels. What it does do is set up a sound and credible policy framework that puts that full target range within reach.
This is achieved through a combination of price signals, hard limits on pollution, energy efficiency, carbon farming, early retirement of brown coal generators, and funding for innovation and accelerated deployment of low pollution and clean energy technologies, improved regulations.
In order to deliver the highest possible pollution cuts, the challenge will be to ensure each of these policy levers is well designed and working to maximum effect, to ensure Australia’s economy will be well primed to deliver the greatest possible pollution cuts.
Let’s see what that could look like.
The pollution price will apply, either directly or indirectly to over two thirds of Australia’s total emissions. This includes the electricity sector and all major and rapidly growing industrial sources of pollution. Importantly, from 2015 onwards, the price will be combined with a limit on pollution that will apply to around 50 per cent of Australia’s total emissions.
The fact that the starting pollution price will be relatively low and the eventual cap will not cover all of Australia’s emissions underlines the importance of having the other policy mechanisms working well.
In the electricity sector alone, it is estimated that a limit and price on pollution will save at least 20 million tonnes of pollution by 2020. However, this could be doubled if combined with the proposed early retirement of brown coal generators, assuming these are replaced with renewables. Even greater levels could be achieved if the proposed $13 billion in seed funding for clean energy is well targeted over the next five years.
The proposed energy efficiency programs, including the National Energy Savings Initiative will also play a crucial role, particularly if they are up and running and in full swing early within the fixed price period. The same goes for the Carbon Farming Initiative.
Another important design feature is the link to international markets. It makes economic sense to allowing Australian businesses to partially meet their pollution reduction obligations through investments in credible overseas projects. Crucially, this also enables Australia to make a much larger contribution to global pollution reduction efforts than if we acted in isolation. If our political leaders get it right, most of the pollution cuts can occur at home and international credits can be used as a top up to allow Australia to make a greater contribution to global efforts.
The policy package announced on Monday also opens the door for much needed independent institutions and mechanisms enabling expert reviews and advice about the realities of the science as well as the realities of global action. Greater levels of independent advice, combined with growing international pressure, should help to force Australia’s political leaders, as they must, to lift their gaze well above the 5 per cent target by the time the first caps are set in 2015.
If this package is passed later this year then we can end over a decade of political squabbling, move through the fog of fear and misinformation on climate action and focus on the far greater risks and opportunities.