Australia has a climate policy again – sort of

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The Coalition’s Direct Action – lambasted by its own party as a policy of “fiscal recklessness” – is now officially Australia’s climate policy. No one believes it will meet its own modest targets, but it will allow native forests to be burned for carbon credits.

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Australia can now say it has a climate change policy again – of sorts – after the Senate voted through the Direct Action package following the agreement between the Abbott government and the Palmer United Party led by aspiring coal baron Clive Palmer.

Environment Minister Greg Hunt hailed the passage as “real and practical action to achieve our emissions goals and targets without a carbon tax.”

Image courtesy of ShutterStock
Image courtesy of ShutterStock

The rest of the Coalition, the Palmer United Party, independent senator Nick Xenophon and The Business Council of Australia shared his enthusiasm, but few others were impressed.

The Greens were particularly appalled by details in the Direct Action package that will allow for Tasmania native forests to be cut down and burned to generate electricity.

They noted that the Tasmanian logging industry had hitherto been prevented from claiming such credits under the both the renewable energy target and the Carbon Farming Initiative, but the deal with the Palmer United Party removed  s.27(4)(j) of the Carbon Credits (Carbon Farming Initiative) Act that had prohibited them from earning credits for projects that involve the destruction of native forests.

Greens leader Christine Milne said the deal meant that Hunt could “create any bogus method that says something like, because native forest burning to create electricity will ‘displace’ brown/black coal, that there are less emissions, so they can be eligible for credits to be bought by the Commonwealth.”

“This provides a long-sought after business case for the destruction of Tasmania’s and other forests,” she said, noting that the Warburton Review had also recommended allowing burning of native forest wood to gain renewable energy certificates.

Labor described Direct Action as “a waste of money that will do nothing to reduce Australia’s carbon pollution.”

Environment spokesman Mark Butler cited new research from Reputex that suggested the policy would struggle to achieve even 30 per cent of the current 5 per cent reduction target, let alone higher targets that would match Australia’s commitment to help cap average global warming to 2C.

The Climate Change Authority has suggested the 2020 target should be 19 per cent reduction, and that Australia should aim for reduce emissions by 40-60 per cent by 2030, something it says could only be achieved with a market based scheme.

“It (Direct Action) is a dressed up slush fund that all economists and climate scientists say is expensive and ineffective,” Butler said in statement.

Even The Australian ran a story quoting new Australian Conservation Foundation president Geoffrey Cousins – also a director of Telstra – lambasting the BCA for supporting Direct Action, saying that such a policy would never be approved by the board of any commercial entity.

“If Direct Action was presented to the boards of BCA members they’d throw it out the door,’’ he said. “But here, because there is a pile of cash involved, the organisation supports it.’’

The Climate Institute said the policy would be likely be a millstone than a milestone for the government.

“The agreements with the crossbenchers have made improvements but haven’t established a credible climate policy with a reasonable chance of achieving even the lowest level of Australia’s 5-25 per cent 2020 target range, let alone the deeper decarbonisation of the economy that will be needed beyond 2020,” said John Connor, CEO of The Climate Institute.

“Australia has now moved from a system where some of our biggest polluters started to pay for their pollution reductions to one where taxpayers will pay for those reductions through the Emission Reduction Fund.

“This is an inefficient, uncertain mechanism that risks paying for activities that would have been done anyway. All publicly available independent modelling finds the Fund will fall short.”

Labor let the last word be a quote from former Liberal leader and then environment spokesman Malcolm Turnbull, and leading economists Ken Henry and Ross Garnaut.

The point here is this: if we are indeed going to commit to reducing Australia’s carbon emissions below some business-as-usual baseline level – and that does seem to be the commitment of all politicians in Australia, at least of major political parties – if that’s what we’re going to do, then tackling that issue through any mechanism other than an emissions trading scheme will necessarily be more damaging on the Australian economy.

Ken Henry, interview with Sarah Ferguson on ABC 7.30, 12 March 2014

Having the government pick projects for subsidy is a recipe for fiscal recklessness on a grand scale, and there will always be a temptation for projects to be selected for their political appeal. In short, having the government pay for emissions abatement, as opposed to the polluting industries themselves, is a slippery slope which can only result in higher taxes and more costly and less effective abatement of emissions.

Malcolm Turnbull, House of Representatives, 8 February 2010

 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.

Ross Garnaut, submission to Direct Action Senate Inquiry, March 2014

 

 

 

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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7 Comments
  1. michael 4 years ago

    is it better than no policy? or are there no redeeming features whatsoever?
    i know negativity gets eyeballs, but highlighting at least some positives wouldn’t hurt (i’m not sure what they are, would much prefer ETS linked to global pricing somehow)

    • Paul Andrew 4 years ago

      from what I can tell so far the redeeming(ish) features are:
      1) we actually have a policy now
      2) there will be a reduction in some emissions
      3) there’s a cap on the spending
      4) the cost is shared by all taxpayers – we all now have more reason to dislike and fight against this, especially if you’ve invested in reducing emissions like solar, energy efficiency etc
      5) it leaves a huge space open for a good policy to be created in the future 🙂

      • john 4 years ago

        You of course know the really sad part?
        The RET which was part of the previous policy showed even by a pretty poor investigation that it was beneficial and the outcomes were to reduce the real cost to you and me.
        This policy has to show it can cut the mustard frankly

  2. Chris Fraser 4 years ago

    I agree with all concerns raised in Giles’ piece. So rather than arranging for polluters to pay for polluting (albeit paying the least possible through a functional market mechanism), we as taxpayers pay. So it actually is a tax on carbon, and we pay through income tax – even if we don’t consume the thing that generates the pollution. Hmmm nice work done on taxpayers there.Assuming 5% reduction equals the abatement of 400 million tonnes of pollutant every year with only 400 million dollars per year available, supposedly somebody is willing to undertake abatement through an auction for reward of only 1$ per tonne abated. And if no one wants to be handsomely rewarded at a rate of $1/tonne of abatement, there’s some nebulous thing called a baseline which most polluters will be exempted from, so there will be no compulsion to abate, and no reason to delegate abatement out to anybody interested.I doubt there are many redeeming features, but try just one: There will be a tax on carbon albeit with limited resources to pay for it. CFI abatement will be paid for at $30/tonne because that was the best offer in the auction. That means the desired 5% reduction becomes a mere 0.17% reduction before the allocated money runs out. By then taxpayers are inoculated to the fact they are paying an open-ended carbon tax. Somebody will suggest that polluters pay for abatement in accordance with firmly established and well-policed baselines, and polluters should be able to find the best value from their own choice of abatement. Then everyone will wonder “why did we not think of this before ?”

  3. john 4 years ago

    As I understand it this is how it works.
    The relevant Minister will give approval to finance a submission from a company to reduce its output of Carbon by x amount for y dollars.
    Ok they win the bids for this abatement because they can do it cheapest fair enough
    Now the regulator I do imagine we will have due diligence on this will then monitor the outcomes fair enough.
    Now if they meet the target set out in submission by x- 10% then they will only get y-10% Dollars.
    I know it used to be simple you payed for your zz tonnes of co2
    You invested and reduced it you paid less.
    Now you invest and you get paid but we do have to have the underlying monitoring.
    .

  4. Rob G 4 years ago

    The Abbott government can now add ‘wastage’ to their pitiful portfolio.

  5. Farmer Dave 4 years ago

    As well as all the other disadvantages that commenters have already noted, Direct Action is not realistically capable of being scaled up. This means that either when the Government is mugged by reality or when its groupthink bubble on climate change is burst and it realises how pathetically inadequate its reduction targets are, it will have to start all over again with the attendant delays.

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