Five things we learned this week …. about climate politics

Five things

The past week’s developments in climate and clean energy policy have been the most dramatic since the Clean Energy Future package was released by former PM Julia Gillard, the Greens and the country independents more than two years ago. But the recent decisions taken by recycled PM Kevin Rudd are less about climate policy but climate politics. The proposal to hasten the transition to an emissions trading scheme was designed with a single purpose – to diffuse the potent “axe the tax” slogan of opposition leader Tony Abbott.

The primary victims of Rudd’s latest “climate wedge” were several schemes – funds supporting energy efficiency for manufacturers, biodiversity investments and farming initiatives – that were operating successfully and, it could be argued, were probably needed more given the dilution of the carbon price signal.

These, however, can be viewed as collateral damage to the bigger picture achievements, which is a rebalancing of the polls that would mean it was all but impossible for an Abbott government- even if elected – to ditch the carbon price. It also would suggest that two of the most vital pieces of the Clean Energy Future package, the Clean Energy Finance Corporation, and the Climate Change Authority, will also stay in place as they require legislation to be passed through parliament.

It’s the cap that counts, not the price

Now that Australia can move more quickly to an emissions trading scheme, it is time to focus on the scale of the emissions reductions target, rather than the price. For this reason it is a good thing that the CCA will remain intact, because sound independent advice will be crucial in the forthcoming debate – which will no doubt be guided by actions from the major economies, and the upcoming IPCC report.

Environmental groups, and even some investor groups, are arguing that Australia’s 5% reduction target was never anything more than a holding position, and a 25% target is needed – not just to ensure that Australia’s coal-fired economy can make the transition to a low carbon world, but also because it responds to the science. Some say that a 15 per cent target is the minimum given the action already taken elsewhere in the world. And, it should be noted, that while the EU currently has a low carbon price, thanks to excessive permits and a lousy economy, it also has the most ambitious climate agenda in the world. Australia is now tied into that.

Is Tony Abbott the Neville Chamberlain of the modern era?

It is becoming increasingly clear that the Opposition’s Direct Action policy, like the approach taken by its mentors in the Republican Party in the US, is based around the insistence that it will be “business as usual”. BAU – as the phrase is known in economic circles – is the default position of all those industries whose ageing business models are threatened by new technologies and a swing to a low carbon economy.

Direct Action relies on the belief that a relatively small amount of taxpayers’ money handed out to some corporates can meet a small reduction target, but there is no attempt to effect this economy-wide change. To paraphrase Neville Chamberlain’s famous phrase, Tony Abbott is, in effect, proclaiming “prosperity in our time”, by doing nothing. (Chamberlain returned from a conference in 1938 with Adolph Hitler proclaiming “peace for our time”). Like Chamberlain, Abbott stands a serious chance of being quite wrong. The only question is how long it will actually take to become obvious, even to the conservatives and the business groups that they are seeking to protect. Probably only after the markets react when it will be too late.

Greens still best bet for strong climate action

Rudd’s resurrection has caused a resurgence of support for Labor in the polls. It could mean that Labor is re-elected in the upcoming election. It certainly means that if the Coalition does win, then it will not be a landslide and the Greens – while unlikely to be a position to play a role in a minority government (could the factions and the mainstream media cope?) – should hold the balance of power in the Senate, and act as a sort of guardian on some of the key policies.

The importance of this was highlighted in The Climate Institute’s latest “pollute-o-meter” – which ranks political parties and independents on their climate policy credentials. The Greens, who have been consistent in framing their policies around the science, and the economics as viewed by the likes of Professor Ross Garnaut and the International Energy Agency, are the only party rated a “5” out of 5 by TCI.

Daylight follows next, with the mainstream parties rated a “2.5” in the case of Labor, and “1.5” in the case of the Coalition. Even more alarming is the rating of the independents who may also have influence in a tight parliament – Nick Xenophon, John Madigan and Bob Katter all rate just 0.5, with Andrew Wilkie rated at  1.5. All the parties then, apart from the Greens, are exposing the country to climate risks, says the TCI’s John Connor. Perhaps the Neville Chamberlain analogy applies more broadly than just Tony Abbott.

Solar will win in the end

Over the past four years Australian households have taken the clean energy transition into their own hands, and spent nearly $8 billion installing solar panels on their rooftops – taking the total installed capacity to some 2,500MW (more capacity than our biggest coal generators). Much of this was driven by generous, and in some cases excessive, feed in tariffs. But since the incentives have been largely removed, interest from households in continuing because they see it as an effective way of reducing their soaring costs of electricity from the grid. The numbers are expected to treble by the end of the decade.

Now there are signs that larger corporations and entities are looking to do the same. As we reported on Thursday, Sunshine Coast council is looking to fund and build its own 10MW solar farm, which it will use to supply half of its electricity needs and keep a lid on costs. This is a very significant development. With cost of large solar probably around 15c/kWh and going down, and electricity prices at nearly double that and going up, it’s a bit of a no-brainer for large entities. This will be the first of many such projects. It will be a revolution for the incumbent energy companies and they had better wake up to see how their business models can be adopted to accommodate this paradigm shift. They have no choice.

Comments

2 responses to “Five things we learned this week …. about climate politics”

  1. juxx0r Avatar
    juxx0r

    Solar is winning because it now takes only around 1000 days to pay off a residential solar system. Less than 3 years. That’s 22 years of free power +/- maintenance.

    The ETS is a joke. They should have stuck with a tax and used every cent of revenue created to build carbon free power generation. But that would have solved the problem, so they can’t do that. Letting the finance industry play around with your carbon price is criminal, it’s like putting a fat kid in charge of the donut shop.

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