‘Unstable’ climate policy could lead to massive spending, missed targets

Analysis released today by The Climate Institute has warned that the Abbott government’s recent stance on climate change may lead to Australia failing on its projected emissions reduction targets.

The new analysis warned that the federal government’s carbon pollution policy, and its ability to achieve even the “inadequate” minimum 5 per cent 2020 reduction target, was looking even more unstable, and would require massive additional spending in 2019 and 2020 or significant regulatory intervention.

“While the Government maintains it can spend the $2.55 billion it promised over four years through its Emissions Reduction Fund (ERF), our analysis finds that the Budget’s forward estimates of just $1.15 billion would produce just a small fraction of the emission reduction needed,” Climate Institute CEO John Connor said today.

“We find that the ERF’s budget over the forward estimates will only reduce emissions by much less than a quarter of the minimum 5 per cent target by 2018, with more than three quarters to be achieved in two years.”

The Climate Institute’s analysis draws on pre-election independent modelling and reveals some key points.

Under the spending outlined in the Budget, by 2018 the ERF will have purchased only about 60 Mt of verified pollution reduction. Another 360 Mt is needed in 2019 and 2020 just to get to the 5 per cent target.

The annual rate of emission reduction reaches about 20 million tonnes per year by 2018, but needs to go up to about 180 tonnes a year the very next year – a nine-fold increase.

Any cut to the RET will require more funds or regulation as the RET is estimated to reduce emissions by about 70 million tonnes by 2020.

Victoria’s abolition of its energy efficiency scheme will also increase emissions by another 10-25 Mt with the proposed abolition of the national Energy Efficiency Opportunity program also making things harder.

“Treasury’s estimate of $1.15 billion on verified pollution reduction is a vote of no confidence in the ability of the tax payer funded ERF to build up the scale or reductions. Meanwhile, the Government is turning its back on over $12.5 billion in revenue from current laws which would also deliver 15 per cent reductions,” said Connor.

“Our analysis underlines the folly of shifting the burden of emissions reduction from the polluters to the taxpayers. It shows why we shouldn’t rest our hopes on the annual arm wrestle of the budget process and why we should stay with current laws which set clear limits and provide billions from business taking some responsibility for their emissions.”