Economist Ross Garnaut has delivered another withering critique of the Abbott government’s climate policy, describing its Green Paper on Direct Action as merely “shooting in the breeze”, and the choice facing the Senate as a “Martian beauty contest.”
In a submission to a Senate inquiry into the Direct Action policy proposal, Garnaut also warns that the dumping of the carbon price and replacement by an emissions reduction fund would leave a hole in the budget of $4-$5 billion – and it could very well be a multiple of that.
“If $4-5 billion per annum is a lower bound on the budget deterioration of the budget associated with the shift from Carbon Pricing to an Emissions Reduction Fund that allows Australia to meet its domestic political and international mitigation commitments, what might be an upper bound?” Garnaut writes. “Few would doubt that it could extend beyond several times the lower bound.”
Garnaut, the principal advisor to Labor’s climate change policy has criticised the government’s climate policies previously, but this is his most comprehensive dumping.
He is particularly dismissive of the green paper, saying it does not even specify the objective of the Emissions Reduction Fund, and makes no attempt to analyse the costs of meeting even a minus 5% target, let alone a more ambitious target of minus 15% – which Garnaut and the Climate Change Authority recommend.
“In this it is an unusual document, lacking any semblance of the framework of public interest analysis that is a characteristic of Australian policy-related papers of modern times,” Garnaut writes. “It is not a Green Paper in the sense that the term has been used in Australian public policy … (it) makes no effort to meet the elementary requirements of good practice …..
“Rather than a Green Paper, what is before the Senate is a shooting of the breeze: the raising of a few of the questions that would need to be answered along the way to preparing a Green Paper.”
Garnaut says the Abbott government is wrongly assuming that the emissions reductions that have been achieved in recent years, due to a combined impact of carbon pricing, the renewable energy target and energy efficiency programs, will remain in place.
“The Green Paper takes comfort from the recent fall in emissions trajectories, seeing these as evidence that the meeting of targets will be easier than had once been anticipated. These hopeful assessments rely on the continuation of trends in emissions that flow from institutions and policies that the Government proposes to abolish or to amend.
“The Green Paper takes comfort from a Climate Works paper on the cost of abatement, that suggests that there are many opportunities for reducing emissions at low cost or in some cases with profit to the enterprises with opportunities to reduce emissions.
“It seems to suggest that low cost abatement opportunities of the kind described in the Climate Works paper will manifest themselves as offers to reduce emissions at low cost. It does not ask why firms are not now reducing emissions if it is indeed the case that reductions in emissions would increase profitability.
“It ignores the business reality that if incentives for firms to reduce emissions are reduced, then the rate of reduction in emissions will fall. This is an important reality, since incentives to reduce emissions would be much weaker under the Emissions Reduction Fund at rates of funding currently proposed than under Carbon Pricing linked to Europe.”
Garnaut says the Abbott government, by asking the Senate to dump the carbon price before producing details of its new policy, has placed it in the situation “of a judge of a Martian beauty contest.”
“The Senate was introduced to some indelicate features of the first contestant (the established policies) and invited to award the prize to the second contestant (Direct Action) while the second was still hidden from view. In the Green Paper on the Emissions Reduction Fund, the Government has lifted part of the veil which has hidden the second contestant. We have seen some gnarled toes, and people who are expert in these things can guess at the shape of the rest of the body. The glimpse of the second contestant should make us cautious about awarding the prize to the Martian under the veil until the second contestant is in full view. “
He recommends that the Abbott government dump the fixed price (“the tax”) and move to a floated price, as Labor has indicated it has agreed to do. At least until the Direct Action policy is defined.
That, however, assumes that the Abbott government is series about reducing emissions.
“If we do not accept the knowledge that Australian and global science has discovered about climate change, there is no reason to reduce greenhouse gas emissions,” Garnaut writes. “There is no point in continuing established policies, or in replacing them with Direct Action.”
As Garnaut notes: “The Renewable Energy Target is subject to a review under a Chair (Dick Warburton) who is on public record with statements that modern science is wrong in its knowledge that human activity is a major contributor to global warming.”
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