Climate policies all at sea Opinion Article

Aug 15, 2013 - 5:00pm

This article was originally published on the ABC The Drum on 15 August 2013. 

John Connor
CEO of The Climate Institute

Fact checking is a friendless endeavour. You're too nice to one, too close to the other.

The Climate Institute's now regular  Pollute-o-meter  - an election assessment of the emissions reduction potential of the policies of the major parties - gets it every time.

In 2010, with its citizen assemblies and vague regulatory approaches to new coal-fired power stations, the ALP did worse on possible emission reductions than the Coalition. At the time, we assessed that the ALP's policies would see Australia's emissions increase by a whopping 19 per cent by 2020.The Coalition fared better but still saw an eight per cent increase in emissions.


In 2010, with its citizen assemblies and vague regulatory approaches to new coal-fired power stations, the ALP did worse on possible emission reductions than the Coalition. At the time, we assessed that the ALP's policies would see Australia's emissions increase by a whopping 19 per cent by 2020.The Coalition fared better but still saw an eight per cent increase in emissions.


But a lot has changed. After an epically toxic battle, Australia now has a legislated price and, with emissions trading, a limit on carbon pollution.

Analysis with the World Resource Institute shows that with the current policy Australia can achieve what both major parties have promised the Australian and international community – a 5-25 per cent reduction in carbon emissions by 2020 (from 2000 levels).

The policy isn't perfect: the assessment revealed that the reliance on international offsets risks leaving our economy too dependent on carbon emissions if we don't play closer attention carbon and energy productivity factors.

But now new analysis, based on data from Sinclair Knight Merz (SKM) and Monash University, finds the Coalition policy increases emissions by around nine per cent, posing greater risks to the Budget deficit, carbon competitiveness and national climate interest.

The experts modelled a range of scenarios to test key uncertainties in the Coalition policy. They raised and lowered the renewable energy target, explored different approaches to baselines and applied a carbon price penalty similar to domestic and international experience. Even making some conservative assumptions, by 2020 all scenarios increased on 2000 emissions levels by eight to ten per cent.

On Sunday night Tony Abbott re-committed to a decrease of five per cent and to "act accordingly" if stronger targets up to 25 per cent are required.

If the Coalition sticks to doing this just with reductions here in Australia, then the Budget through 2020 is exposed by $4 to $15 billion. The $4 billion is a third of the figure used by the Government, but a big whack nonetheless.

Where the emissions come from doesn't matter. Using international offsets could reduce these figures to $190 from $710 million, according to analysis from SKM.

Despite the Coalition's policy focusing just on domestic emissions, the Government's policies actually drive greater reductions. Because the carbon laws apply a broad-based price signal, they drive a greater response across a broader array of activities including supporting the investments made under other programs like the Renewable Energy Target.

As a result the carbon laws achieve 290 million tonnes of domestic emission reductions by 2020. This is roughly the equivalent of shutting down all Australia's coal and gas power stations and taking all of the cars off the road for a year.

It is around 40 per cent more than the Coalition's policy, which achieves 200 million tonnes reductions.

The policy also does not make large emitters take responsibility for their pollution, effectively subsidising high carbon activities like burning coal.
 
Using a similar methodology to that used by the International Monetary Fund to calculate post tax energy subsidies, The Climate Institute calculates that this subsidy to carbon pollution equates to around $50 billion to 2020.
 
Meanwhile, although the Coalition's policy has changed little since 2010, the world of climate action has moved on. Over 190 countries have agreed to finalise an international agreement covering commitments from all major emitters by 2015.
 

China has emerged as the world's renewable energy superpower; mainstream investors are questioning the future of the global coal industry on the back of falling clean energy costs and growing carbon constraints; and climate change has moved to the highest levels of the USA's and China's strategic dialogue.

Policies that cannot demonstrably meet our emission goals risk institutionalising a return to an obstructionist or unhelpful climate diplomacy (remember the world before we ratified the Kyoto Protocol).

Longer term policies that don't prepare us to prosper in a world moving to limit carbon pollution make us at best less competitive.

At worst, we risk hitching our economic future to industries with decreasing long-term value.

Both major parties have a way to go before they position the nation to deal with the realities of climate change and global megatrends in clean energy development.

It is, however, hard to escape the conclusion that the Coalition's policy - unless the party adds some serious extra regulatory interventions in support – has major deficiencies, uncertainties and risks.

This is why we urge the Coalition to leave the current carbon laws in place, at least until the Australian and international community have seen further policy development - and credible independent economic analysis - showing the Coalition's policy gives the nation a good chance of achieving up to the 25 per cent reductions the Coalition says it supports.
 
To be fair the Coalition has not had the resources of government to develop its policy framework. But let's not hitch our national climate interest to an uncertain policy.


John Connor

John Connor was CEO of The Climate Institute from 2007 to March 2017. Whilst qualified as a lawyer, John has spent over twenty years working in a variety of policy and advocacy roles with organisations including World Vision, Make Poverty History, the Australian Conservation Foundation and the NSW Nature Conservation Council. Since joining The Climate Institute in 2007 John has been a leading analyst and commentator on the rollercoaster that has been Australia’s domestic and international carbon policy and overseen the Institute’s additional focus on institutional investors and climate risk. John has also worked on numerous government and business advisory panels.

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