Climate policy and the art of political survival

When Bernie Fraser, the chairman of  Australia’s Climate Change Authority, and his senior staff members meet up with his British counterpart David Kennedy this week, the most pressing issue on the agenda may well be this: the art of political survival.

Fraser is no stranger to the demands of chairing an independent body created to provide independent advice to the government of the day. He was, after all, the head of the Reserve Bank of Australia for seven years from 1989. But the RBA was never threatened with extermination, as the CCA is.

The CCA was created as part of the Clean Energy Future package hammered out by Labor with the Greens and the country independents. The idea – promoted by the likes of Professor Ross Garnaut – was to replicate the success of the Committee on Climate Change in the UK, which had won bipartisan support as an independent advisor whose policy recommendations were almost invariably adopted by the government of the day.

The UK CCC has, by and large, succeeded in taking the politics out of the crucial climate change debate. That has not happened in Australia because the CCA is on the hit list – along with the carbon price, the Clean Energy Finance Corp and other measures – should the Liberal-National Party Coalition win government.

The CCA’s offices in Melbourne – which have gathered together many of the leading experts in Australia on climate change and clean energy policy – are more likely to be converted into a mess tent for Tony Abbott’s Green Army, should there be a change in government. It has already upset vested interests by refusing to bow to their demands to dilute the renewable energy target.

Fraser has also expressed his frustration that the CCA could be closed “on an overnight whim”. In an interview late last year with RenewEconomy, he said that would mean a very valuable resource would be dispersed. “That would be a tragedy,” he said. “Climate change issues are not going to go away.”

RenewEconomy was fortunate enough to catch up with Kennedy during his visit to Australia this week, which comes at the invitation of the CCA, possibly to help politicians understand the importance of an independent voice on climate. After all, they already exist in Australia on monetary policy, productivity, consumer pricing and competition – and climate change is about as fundamental an economic transition as anything encountered in the last century.

Kennedy himself is no stranger to political controversy. According to press reports from the UK, he was considered a shoe-in for the job of heading the combined energy and climate change departments, but the proposed move was vetoed by Conservative Prime Minister David Cameron on concerns that the former senior energy specialist at the World Bank, who had previously advised on emissions trading schemes and the economics of nuclear energy, was “too green.”

Regardless of his personal career moves, it is clear why the CCC – which Kennedy has headed since its creation in 2007 – will enjoy the tenure, whichever party is in power in the UK, that will likely elude the CCA.

The first thing is that, in the UK, the debate around climate change and clean energy policy is not distracted by the need to act, because the science is agreed. “We don’t have a debate about the need to act,” Kennedy told RenewEconomy. “There is the odd climate sceptic around in the UK, but not many.”

Possibly because of that, the CCC recommendations correspond a lot closer to the science than they do elsewhere. The UK, on the recommendation of the CCC, has an ambitious emissions reduction target of 50 per cent by 2025. And to achieve this, and encourage the investment in clean energy technologies that will deliver the bulk of those reductions, the UK has a £30 ($44) carbon tax, which is additional to the carbon price framed by Europe’s emissions trading scheme.

This carbon tax on the energy industry will rise to £70 ($A101) by 2030, and has the enthusiastic support of the energy industry, which realises that without a carbon price providing the incentive, the investment in clean energy technology – which in England means a greater reliance on nuclear, off-shore wind farms, and a cocktail of biomass and marine energy – simply would not occur.

The CCC is currently reviewing that target, and Kennedy concedes that it will be a challenge to keep it, given the downturn in the economy. But he notes that funding for low-carbon initiatives have (so far) been untouched by government cut-backs.

“The basic principle with climate change is that it is sensible to start transitioning now, rather than waiting,” he says. “There is still broad consensus on the need to act, and the need to act early. But there are legitimate questions about competitiveness.”

There are also questions about the affordability of such measures for households. But even with the scale of the UK’s energy carbon tax, it only imposes a minor addition to the household bills – in the order of 2-3 per cent by 2020. “The important thing is to talk about the benefits, and what emerges is a story that it is economically sensible to do this,” Kennedy says.

“The more you invest now, the cheaper it will be later. You need to invest in the capital stock. If don’t do anything now, and in the future there is a global deal for reducing emissions – which I think there will be – we will need to do it in a rush. And that will be much, much more expensive.”

Kennedy says that it is clear that the world is acting, even if it is, by and large, on an individual country or regional basis. But he notes the initiative being taken beyond the EU: in China, the rest of Asia and in the Americas. Whether this translates into an ambitious global compact by 2015, as the UN hopes, remains to be seen.

“It’s hard for me to imagine a world that does not act, given the science. The question is when we have an agreement, how ambitious it will be? There is a degree of uncertainty about that. My inclination is that we won’t get the most ambitious deal, but we may get enough to avoid the worst effects of climate change.”

Kennedy said he is reluctant to buy into the Australian debate about climate change action, or even the future of his Australian counterpart. But on arrival, he did seek advice from the best possible source. “My taxi driver said he wasn’t interested in politics, but he had been told to be very worried about the carbon price. But he hadn’t seen much impact on his electricity bill, and industries hadn’t closed down. He said it wasn’t as scary as some people said it would be.”