After a disturbing gap of several months, Australia finally has a new measure in place to reduce emissions and tackle climate change. The Coalition Government calls it a Direct Action Plan, which is a classic case of Orwellian doublespeak, since the plan is neither very direct, nor does it include much action.
The centrepiece of the Direct Action Plan is a $2.55 billion Emissions Reduction Fund. The Senate passed the Bill establishing the Fund today after the Coalition cut a deal with the Palmer United Party to have the Climate Change Authority review Clive Palmer’s plan for a ‘dormant’ emissions trading scheme that will be activated when Australia’s major trading partners put similar schemes in place. So what’s the problem?
Well, let’s start with the ‘direct’ bit. The Emissions Reduction Fund uses a process called a reverse auction. Businesses, community organisations, local councils, state governments and other members of the community can offer to sell emission reductions to the Clean Energy Regulator, as long as they have followed specific methods to achieve and measure their emission reductions. The Clean Energy Regulator will hold up to four competitive auctions per year where organisations will offer their emission reductions at a particular price for tonne. The Clean Energy Regulator will buy the cheapest emission reductions available, as long as they are cheaper than the benchmark price. This will go on until the funds available for that auction are used up. Contracts will need to be established with successful parties to deliver the emission reductions.
That doesn’t sound very direct to me. Why not use an emissions trading scheme to let the market find the most efficient emission reductions in the economy? Why go to all the trouble of creating a new auctioning process? What sort of guarantee is there that this process will actually find the cheapest emission reductions that are out there? Polluters are free to not participate, which means many won’t bother with the investigations they would need to do to identify emission reductions that may be readily available. And they may be reluctant to incur the transaction costs associated with documenting the emission reductions they have achieved to fit the requirements of the methods specified by the Clean Energy Regulator, and then negotiating a contract for delivery.
What about the ‘action’ bit? Well, $2.55 billion might sound like a lot of money, but it’s spread out over four years. Frankly, it doesn’t match the scale of the problem we are facing with climate change. Numerous studies (here’s one example) have now shown that the Emissions Reduction Fund is not going to be sufficient to ensure that Australia meets its target to reduce emissions by 5% between 2000 and 2020.
We also know that the track record of Australian Governments – of all political colours – in delivering emission reductions is extremely poor. A report by the Auditor-General in 2010 found that previous government programs delivered emission reductions at costs much higher than those expected for an emissions trading scheme, and that many of the programs delivered much less abatement than expected.
The most similar previous program to the Emissions Reduction Fund was the Howard Government’s Greenhouse Gas Abatement Program (GGAP). Like the current Fund, organisations applied to GGAP for funds to reduce emissions. However, the audit report found that only 30 per cent of the promised emission reductions were actually delivered. Nine of the 23 approved projects were terminated and contract negotiation was a major barrier to successful delivery.
Given this background, it is hard to avoid the conclusion that the Emissions Reduction Fund is little more than a fig leaf to cover the fact that the current government does not take climate change seriously.
Filed under: Articles Tagged: climate policy, climate politics
