Climate change policy – the Coalition

Climate change was a hot-button issue in the 2007 election. Rudd’s promise, subsequently fulfilled, to sign the Kyoto Protocol was extremely popular with voters. The shelving of Labor’s promised Emissions Trading Scheme in April this year, by contrast, provoked outrage and a sense of betrayal, and may have been one of the major factors in his eventually losing the leadership.

It’s not an easy issue to get your head around. Most of us can accept that the planet is warming, with potentially disastrous results. Most of us accept that human activity is directly responsible for much of this problem. It’s when the jargon comes into it – emissions trading, carbon sequestration, abatements, etc. – that we end up lost. In analysing the policies of the major parties and the Greens, I hope to de-mystify some of that.

The Liberal/National Party Coalition has boasted that, going into this election, it is the ‘only one with a credible policy’ tackling climate change. It released its Direct Action Plan in early February this year, and there has been only one statement updating the policy since.

So let’s take a look at this policy. The document itself can be found here on the Liberal Party’s website.

The first striking thing about this plan is how much space is given over to criticism of the Labor government. Three pages are dedicated to ripping apart Labor’s now-postponed (perhaps indefinitely) Carbon Pollution Reduction Scheme – its so-called ‘Great Big New Tax’. The tone is unmistakable – you’ve heard it every time a Liberal politician gets in front of a microphone, and I won’t bother repeating the accusations here. This attack tendency is repeated throughout the rest of the document; even as the Coalition is setting out its own achievements on environmental action, it tries to put the boot into Labor.

Much of the Coalition’s stance depends on opposition to the CPRS. Now that this policy has been all but abandoned by Labor, there is little sting left left in much of its rhetoric. This, of course, may change when Labor reveals its own climate change policy.

Tony Abbott, in an interview with David Speers of Sky News yesterday, categorically ruled out any form of carbon tax, or price on carbon. He also said he ‘doubted’ that countries like India and China would sign up to any kind of carbon price in the forseeable future. Apparently, he was unaware that India already levies a tax on coal.

The Coalition’s climate change policy hinges on an Emission Reductions Fund. Described as a fund to support incentives from business and industry to help Australia meet its 2020 emission reduction target of 5%, it effectively functions as a body for issuing grants. The Fund will be $300m in 2011-12, increasing to $1.2b by 2014-15, and is projected to reduce our emissions by 140 million tonnes per year. According to the Coalition, this fund can be in place by 2011.

The Coalition says it will use the National Greenhouse Emissions and Reporting Scheme to set a baseline of ‘business as usual emissions’ for those industries which are covered by it. Whether this is a uniform baseline, or worked out on a case-by-case basis is not specific in the policy. Businesses who exceed this baseline will be penalised, with the penalties to be set ‘in consultation with industry’. Those who substantially reduce their emissions will be able to sell ‘abatements’ back to the government. What price will be set on these abatements, and what will be done with those sold back to the government is not spelled out in the policy. In effect, they will be rewarded for making their businesses greener. Smaller businesses, and those not covered by the NGERS, will be able to opt-in to the scheme.

Those who keep to the baseline will be neither penalised nor rewarded.

The onus is squarely on business and industry to reduce their emissions. At its base, it is a ‘free market solution’ – the idea is that if it becomes financially worthwhile to do so, business will change its operating parameters. In other words, any given business will end up crunching numbers to determine if the money they get from selling their abatements is better than what they will get from continuing to operate at their current levels of emission. Given that for many businesses, reducing emissions could involve considerable expenditure, there is little incentive for them to try to get under the baseline. Furthermore, this policy allows for no incentive for business to grow. Unless abatements can then be bought from the government, businesses may find themselves in a situation where they cannot grow – and if there is any idea of future availability of abatements, this becomes an Emissions Trading Scheme.

The Emissions Reduction Fund is modelled on an old Howard government initiative called GGAP, in which business was given taxpayer-funded grants to reduce emissions. Unlike the old fund, which was under ministerial control, Abbott’s would be administered by experts (who will be determined by consultation with business, environmental groups and the community).

The bulk of the 140 million tonnes (85 million) is projected to arise from soil carbon replenishment, starting with an offer to purchase 10 million tonnes by 2012-13. Put simply, soil carbon refers to the amount of carbon dioxide that is trapped in the soil, and replenishment refers to ways of increasing the amount of CO2 that can be stored.

As with all elements of the ERF, there will be a call for tenders from farms with strategies to replenish their soil carbon. This may involve anything from tree planting to crop rotation and use of organic fertilisers such as biosolids (a polite euphemism for sewage). The price for these ‘soil abatements’ is set at approximately $10 per tonne. Farms that do not attempt to increase their soil carbon will receive nothing, but equally, will not be required to change their farming practices.

There are several issues with soil carbon replenishment. Some of these are set out in a Scoping Paper issued by the New South Wales Department of Primary Industry in 2008. One of the single most important points is just how much we don’t know about the process. Different soils and different climates absorb different amounts of carbon, and this is further affected by what is actually done with the land. There are only surveys for a very small part of Australia. Complicating this issue even further is the variability of Austraila’s climate. We don’t have any way of measuring from year to year how the levels fluctuate. The cost of a comprehensive survey of the country, and of working out the year-to-year levels could be prohibitive. Finally, some techniques used to improve soil carbon uptake can actually increase other greenhouse gases, particularly methane.

The Coalition’s policy does not take any of this into account. It is written with the assumption that these issues are already resolved. That they are not means that the majority of its emission reduction may not be able to take place at all. Even if they do address these problems, the potential expense would cause a huge blow out in the cost.

The policy goes on to state that ERF could also support forestry management, use of waste coal mine gas, green buildings, energy efficiency, better use of landfill, recycling, composting, and alternative fuels. Again, this is predicated upon private enterprise coming up with an idea and approaching the government for money.

Apart from the ERF, the Coalition has a list of projects that it will fund. It has allocated $60m for ‘clean energy hubs’ in the Latrobe Valley, the Hunter region and Central Queensland. There are no details on what is actually meant by this, but there is a note that it will be determined after consultation with local businesses and communities.

$100m per year is set aside for 1 million solar homes by 2020, in the form of an extra $1000 rebate for solar energy/hotwater. This will be capped at a maximum of 100,000 rebates per year.

125 ‘mid-scale’ solar projects in schools and communities will be funded. Through competitive tenders, assessed on which provided the greatest CO2 savings, grants of a maximum of $2m will be given to ‘suitable towns’, to a maximum of 25 grants. 100 projects, capped at a maximum of $500,000 each, will be allocated to schools.

$50 million will be allocated for grants to non-capital cities and towns to undertake pilot, micro and demonstration geothermal or tidal projects, to a maximum of $2m each.

Money will be withheld from the Renewable Energy Target fund for ‘big’ projects. This includes $2m for a study into the feasibility of using underground high voltage DC cables, which would free up land currently taken up by overhead powerlines and reduce lost voltage. $5m is slated for a study into the feasibility of algal synthesis to capture CO2 and production of biofuels.

There will also be support for the planting of 20 million trees in public spaces. At the time of the policy release, a study was underway to identify suitable areas. This proposal is tied to the ‘Green Army’ initiative announced by Abbott in January this year, which suggests that a suitably qualified workforce could be deployed to target areas in environmental crisis (such as sand dune loss and noxious weed infestation). At that time, Abbott invited suggestions from organisations with experience in such things to suggest how this might be done, but as of now the Green Army remains an idea that was floated, but not fleshed out.

The entire policy is expected to cost $3.2b over four years, and will be funded through ‘normal budget processes’.

Boiled down, the majority of the Coalition’s policy expects business, industry, communities and individuals to take the initiative on tackling climate change. Rather than regulate emissions from the top down, it assumes that providing a financial incentive will result in self-regulation from the bottom up. It is very close to classic Conservative policy – the government functions as a bank and gets out of the way of the actual running of business.

Unfortunately, the proposals as set out do not make emissions reductions attractive – either in terms of future profit, or of avoiding penalties. What they rely on, ultimately, is goodwill. If businesses choose to put prioritise profit over the environment, there is nothing anyone can do to prevent them.

Added to that the problems with the soil carbon replenishment idea, and you have potentially zero emissions reduction by 2020.


2 Responses to Climate change policy – the Coalition

  1. […] not through taxes. Those targets will be met by buying soil abatements and tree planting (and see my earlier blog on the Coalition’s climate change policy for the potential problems there). To underscore the […]

  2. […] not through taxes. Those targets will be met by buying soil abatements and tree planting (and see my earlier blog on the Coalition’s climate change policy for the potential problems there). To underscore the […]

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