Hunt called out on ERF auction result: Most funded projects already existed

Federal Labor’s climate change spokesman, Mark Butler, has accused the Abbott government of brazen deceptiveness over the results of its first carbon abatement auction, which he said had only really succeeded in buying around 10 million tonnes of new abatement, at a cost of $66 per tonne.

Quoting evidence submitted to the Senate Estimates Committee, Butler said the the Clean Energy Regulator had now admitted that 107 of the 144 projects recently awarded contracts under the Emissions Reduction Fund were pre-existing.

He said CER CEO Chloe Munro had confirmed these projects, previously paid for by big polluters under Labor’s market mechanism, had been transferred to payment by the taxpayer.

“This means around three quarters of pollution reduction Greg Hunt claimed to have purchased in the first round of the ERF was already happening. At a price of $66 per tonne, Minister Hunt has bought only 10 million additional tonnes of carbon abatement,” Butler said.

“This is a stunning admission by the government’s own agency which can no longer hide behind the lack of detail in this woeful policy.

“The taxpayer is footing the bill for carbon pollution reduction activities that were happening anyway,” he said.

Of course, this is not the first time Butler has called out Hunt on the thorny subject of additionality – whether carbo abatement is new, or would happen anyway.

Here he is on ABC TV’s Q&A a few weeks back:

“So Greg is going to hand over millions of taxpayers dollars to the biggest polluter in the country to continue the landfill gas operations that they have been operating in some cases for more than 10 years … so there’ll be some reduction in carbon pollution but it was going to happen anyway. At the same time, AGL is able to continue increasing its carbon pollution from the coal-fired generators it operates in other part of its business. This is a hopeless policy and an absolutely irresponsible use of taxpayers dollars.”

As we noted on RE earlier this month, additionality is a sensitive subject, both for environment ministers and the carbon market sector.

As Giles Parkinson put it, one of the biggest issues is that it’s so difficult to prove, one way or another. “Which is the central problem of handing out money to individual projects rather than having a market price to provide an economy-wide incentive.

“At best, the federal government can claim to have merely extended the carbon farming initiative and elements of the greenhouse abatement scheme, which supported landfill. Certainly, the abatement is welcome. But would it have happened anyway?”

But according to Butler, the new information from the CER clears up any uncertainty on that front.

“Minister Hunt was so brazenly deceptive when announcing the results of the first auction. He now needs to explain why he’s allowing taxpayers to subsidise big polluters’ carbon abatement,” he said on Tuesday.

John Connor, CEO of the Climate Institute, said the CER’s admission put the credibility of the Abbott government’s key climate policy tool under fresh doubt.

“Senate estimates have highlighted the vast credibility cloud that hangs over current government policy that has switched emission reduction responsibilities from the polluter to the taxpayer and proposed loophole ridden limits on pollution under its so called safeguard mechanisms,” Connor said in an emailed statement to RenewEconomy.

“With the reduction in renewable energy effort, the government will need a lot more policy tools as it now faces up to the challenge of setting post 2020 pollution reduction targets,” he said.

“Those policy tools must tackle the core of our pollution problem – the aging, inefficient and highly polluting coal power plants that are blocking the switch to clean energy and the modernisation and decarbonisation of our economy.”