Australia’s climate and energy policy debacle

I can’t write this column without discussing the ongoing debacle that is Australian energy and climate policy, although I would much prefer to ignore it.

The Energy White Paper (EWP) was as awful as I predicted. Anyone who relies on it for business planning will likely lose a lot of money. It is completely out of touch with reality: its focus is on growing fossil fuel exports, ongoing privatisation and outdated approaches to reform of electricity and gas supply.

One potentially significant element of the EWP was the proposal to develop an Energy Productivity Plan. In principle this is a very good idea, as it could drive energy efficiency and improve cost-effectiveness of energy utilisation. But don’t hold your breath. There is no timeframe, no clear institutional framework, nor any firm resource allocation. And the kinds of policy measures needed to implement such a plan are anathema
to our present Australian government and the powerful interest groups that dominate energy policy.

We have also had a consultation on the National Carbon Offsets Standard. This is not exactly riveting stuff for most people, but it is very important. It sets the rules on how businesses (and their products) and households can be certified as being ‘carbon neutral’. Unfortunately, the consultation paper forgot to discuss GreenPower, while
it focused, instead, on the fine print of the fundamentals. It did not confront the issue of how to ensure voluntary abatement action be treated so that it is ‘additional’ to other abatement action.

From a narrow carbon accounting perspective, almost all Australian voluntary abatement action, including installing rooftop PV, energy efficiency improvement and buying GreenPower, does not reduce Australia’s greenhouse gas emissions. It simply makes it easier for the government to meet its weak target and leaves more room under the target for others to emit more. This is, to put it mildly, disempowering!

We’ve also seen the first auction under the Emission Reduction Fund. The average price polluters were paid to offset emissions was $13.95/tonne. However, few of the funded measures will deliver direct abatement through reducing emissions. Most involve storing carbon or not clearing land. And a fair proportion of this won’t occur before 2020. An unknown amount of it is just a continuation of activities that were already being supported under the previous government’s Carbon Farming Initiative. Environment Minister Hunt continued to use creative economic analysis to suggest this was cheaper and more effective than carbon pricing.

Australian energy and climate policy is just so bizarre that it is beyond rational discussion, I’m afraid. If you want my more detailed views on all this, my submissions are available at the relevant government websites. My Energy Green Paper submission is at www.ewp.industry. gov.au; the White Paper does not change the relevance of my comments on the Green Paper. My submission on Australia’s 2020 emission targets is here and my submission on the national carbon offsets standard here .

At least there do seem to be some signs that progressive state governments are beginning to move to fill the vacuum created by our truly remarkable national government.