Just as parents might bribe a child with a sweet to eat their greens or to perform a chore, the Australian government is offering big polluters billions of dollars to cut emissions. Ordinary Australians will be paying for this bonanza with their tax dollars.
Businesses will be paid to do what they really ought to be doing anyway if they were good corporate citizens. What’s more, the scheme isn’t mandatory. It’s based on incentives and penalties for failing to deliver the emissions cuts still aren’t clear.
The government outlined the latest iteration of its Direct Action climate policy in a White Paper released last Thursday. The centrepiece is an Emissions Reduction Fund backed by $2.55 billion of taxpayer cash over the first four years, with the possibility of more money later on.
It’s a world away from the programme it is meant to replace. Australia already has a mandatory carbon pricing and emissions trading scheme that is hardwired to change corporate and public behaviour to cut carbon. Yet Prime Minister Tony Abbott sees carbon pricing as merely a tax that ought to be scrapped and wants an easier ride for business. He is aiming for the Senate to scrap carbon pricing later this year and thinks Direct Action is a fairer deal.
Critics, and there are many, say Direct Action is weak, remains unclear on exactly how it will work, is not guaranteed to achieve the government’s 5 percent emissions cut target by 2020 on 2000 levels and seems to bend over backwards to please business.
Direct Action also has no nationally implied carbon price and would be reliant on reverse auctions. Participants submit a bid—specifying a price per tonne of emissions reductions—with the lowest-cost projects being selected. So look elsewhere if you want ambitious carbon-cutting projects.
All this might seem a bit surreal in a country historically shaped by extreme weather and is now facing rising costs from deadlier droughts, floods, storms and bushfires.
You would also expect tough climate action from a country that is one of the world’s top per-capita greenhouse gas polluters, a leading coal exporter and a rapidly growing LNG and coal-seam gas producer. In short, Australia has an outsized emissions footprint.
None of this bothers Abbott. While his government officially recognises the science of climate change and the need to curb emissions, he personally remains sceptical and doesn’t want climate policies that are deemed a significant cost on business or voters.
If the Senate approves Direct Action, Australia would have no nationally effective climate policy, critics say. It’s the climate change-fighting scheme you have when you really don’t want to fight climate change.
“With Direct Action there is no incentive for people or companies to change their behaviour; no deep innovation; no new markets. It probably won’t succeed in hitting our emissions reduction targets,” wrote Ben Phillips, a senior lecturer at the University of Melbourne, in a commentary for The Conversation news site.
The Sydney Morning Herald newspaper said Australians were right to be sceptical about Direct Action.
“To be clear, creating this fund will transfer the cost of cutting emissions from the polluter to the taxpayer, should the government succeed in pushing its bill through the Senate,” the paper said in an editorial.
The Greens party, a growing political force in Australia, said the scheme was doomed to fail in its current form.
Acting Greens leader Adam Bandt said a major flaw was the lack of legal obligation for Australia or Australia’s biggest polluters to cut their pollution. “It won’t do what it’s supposedly designed to do,” he added.
Australian Environment Minister Greg Hunt defended Direct Action, saying during the release of the White Paper: “All the signs are we will not just achieve our targets but do it easily, on the basis of early indications in the community.”
The government is hoping the Senate will approve the scheme soon after the new chamber sits in July, when Abbott feels he will then have the numbers to get it approved.
If it is, auctions will begin late this year and will be conducted every three months. Safeguard and compliance mechanisms are still being worked out and are planned to be finalised next year.
The White Paper, though, says the safeguard mechanism will only cover facilities with direct emissions of 100,000 tonnes of CO2-equilavent a year or more. This will be around 130 entities and cover just over 52 percent of Australia’s emissions. For existing facilities, absolute emissions baselines will be set using existing data reported under a national greenhouse gas reporting system.
No word yet on penalties for polluters that bust their baseline emission levels.
What is clear, though, is that the Emissions Reduction Fund is not meant to force the major change in social and business behaviour needed to transform Australia’s coal-dependent economy. The carbon pricing scheme, along with a successful renewable energy target scheme and other programmes also under threat from the Abbott government were meant to do that.
To give you an idea of the scale of Australia’s carbon challenge, the country must achieve cumulative CO2 emissions reductions between 2013 and 2020 of 421 million tonnes. Total national emissions are less than 600 million tonnes now but without any policy and pricing measures, will rise to 685 tonnes by 2020 and 801 million tonnes by 2030, the White Paper says, driven in part by a growing population but also increased production of LNG and coal for export.
For Hunt, pushing Direct Action and bashing the carbon tax is looking increasingly silly. In 1990, he co-authored a university thesis, A Tax to Make the Polluter Pay, which concluded: ‘‘Ultimately it is by harnessing the natural economic forces which drive society that the pollution tax offers us an opportunity to exert greater control over our environment.”
There’s another irony, too. Direct Action may yet fail in the Senate.
Coal miner and politician Clive Palmer, whose party is expected to hold the balance of power in the Senate from July, recently called Direct Action “hopeless” and said his party would not support it.
What a farce it would be if the Senate scraps the more effective carbon price scheme and also fails to support the fake one. What then?