Rudd versus Abbott on climate change: what’s the difference?
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The release of the Opposition’s Direct Action Plan on Climate Change has sparked off a political slanging match. The Opposition says its plan is cheaper and more effective than what the Government has put forward. The Government maintains that its Carbon Pollution Reduction Scheme (CPRS) is good policy and that the Opposition’s plan is a joke. Last week a Crikey reader emailed:
So what is on offer and where does the truth lie? What are the proposed objectives of the plans? At this point, both parties have adopted a target of reducing Australia’s “net” emissions by 5% below 2000 levels by 2020. Theoretically, this means there should be no difference in the environmental outcomes from the two plans. However, there is an important point of difference in the nature of the “net” targets. For the Government, Australia’s net emissions will be calculated as gross domestic emissions less removals by domestic sinks (e.g. sequestration via reforestation) less carbon credits imported from overseas. Under the Opposition’s plan, all abatement will be domestic. That is, net emissions will be calculated as gross emissions less removals by domestic sinks — there will be no imported permits. This aspect of the Opposition’s plan should please those concerned about “green jobs”; generally, the more we import abatement the fewer “green jobs” are likely to be created domestically. Excluding imports also avoids problems with the environmental integrity of imported permits. The downside is that the exclusion of imports is likely to increase abatement costs. This is obvious if you ask why polluters import permits — it is because it is more expensive for them to cut emissions than someone else overseas. How are the parties proposing to meet their targets? The Government approach: The centrepiece of the Government’s plan is the CPRS, a standard cap-and-trade emissions trading scheme. Under the CPRS, a limit will be put on net emissions from so-called “covered sectors” (e.g. electricity, transport fuels, industry, waste). Tradeable permits are then either sold or given to polluters, with each permit representing one tonne of greenhouse gas emissions. The total number of permits issued will equal the scheme’s emission limit. Offset credits will also be available in the form of imports from overseas and credits generated by domestic sink enhancements (e.g. reforestation). At the end of each financial year, polluters covered by the scheme will be required to relinquish sufficient permits to cover their emissions. If they don’t have enough permits, they will face penalties. The reason for having an emissions trading scheme is that it should result in emissions being reduced at least cost – the trade in permits allows the market to find the cheapest sources of abatement. Emissions trading schemes also tend to be more equitable than other options as polluters are required to pay for their emissions (i.e. they embody the polluter pays principle). One of the major criticisms of the CPRS is that it will be neither efficient nor equitable. The Government is proposing to give billions of dollars worth of free permits to coal generators and emissions-intensive trade-exposed industries (e.g. aluminium producers). It is also cutting fuel excise to muffle the price signal in the transport sector and has excluded several major pollution sources (e.g. agriculture and deforestation). These features of the CPRS are inequitable and undermine its efficiency — it can no longer lay claim to being a least-cost instrument. In addition to the CPRS, the government has established a collection of additional measures. The main one is the Renewable Energy Target (RET), which mandates that 20% of Australia’s electricity must come from renewable sources by 2020. Like the CPRS, the RET is riddled with design flaws. For example, every kilowatt of electricity generated from a solar panel is multiplied by five for the purposes of the scheme. The RET also includes heat pumps and solar hot water systems. As a result of these features, 20% of Australia’s electricity will not come from renewables by 2020 — the number is more likely to be about 15%. On top of the CPRS and RET are several “bucket of money” R&D and other mitigation programs (i.e. large funds that provides subsidies for various initiatives). Some of these are worthwhile, others less so. The Green Car Innovation Fund, for example, looks more like an old style subsidy for an inefficient industry than a legitimate attempt to promote efficient economic reform. Questions have also been raised about the design and administration of the household insulation and Green Loans schemes. The Opposition’s approach: The Opposition’s Direct Action Plan on Climate Change is in keeping with the modern conservative approach to environment issues. Where centrist parties tend to support market-based approaches that embody the polluter-pays principle, conservatives usually support “beneficiary-pays” programs. Under beneficiary-pays programs, taxpayers offer polluters subsidies to reduce their emissions rather than polluters being required to pay for the damage they impose on the environment. The cornerstone of the Direction Action Plan is an Emissions Reduction Fund, worth $3.2 billion (nominal) over the period 2011-12 to 2014-15. The resources in the fund will be used to support “direct action” on mitigation. By 2020, the fund is supposed to invest about $1.2 billion/year in various measures. The main target of the Emissions Reduction Fund is soil carbon. Landholders will be able to engage in mitigation auctions, under which they tender for subsidies for “all verified new additions in soil carbon”. Through this process, the Opposition thinks they will be able to find 85 million tonnes worth of soil-related sink enhancements, or somewhere between 50-60% of the abatement required to meet the 5% target.
The fund will also provide incentive payments to encourage polluters to reduce emissions below a counter-factual business-as-usual baseline. Under this part of the plan, if the emissions from a business exceed their baseline, their will incur a financial penalty. If they are below the baseline, they can sell the difference to the government via the fund. And if they remain at baseline levels, businesses are not penalised and do not receive the subsidies. Several other measures will receive assistance from the fund. These include subsidies for the planting of 20 million trees (including in urban areas), reducing waste emissions, improving energy efficiency, and promoting the use of coal seam methane. There is also an additional pot of money to provide $1000 rebates for solar panels and solar hot water, $100 million for a solar towns and schools initiative, and $50 million to support geothermal and tidal energy. The problems with the Opposition’s plan are the same as those associated with all bucket-of-money, beneficiary-pays programs — they rarely work, are often rorted, generally result in higher abatement costs and aren’t equitable. This has been proven by research around the world, including by the OECD in the early 2000s. The Howard Government tried the same thing during its tenure in office, mainly though the Greenhouse Gas Abatement Program and Low Emissions Technology Demonstration Fund. The results from both programs are consistent with the research on the cost-effectiveness of similar measures and could generously be described as underwhelming. The table below provides a brief overview of key differences and similarities between the climate policies offered by the Government and Opposition.
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17 Comments
Andrew, thank you for the first articulate non-rant piece on this so-called debate.
Am I understanding it correctly if I say it seems like both the Government and the opposition plans are shite, but that the Opposition plan is marginally more shite than the Government’s plan ?
That was my gut feel from day one, but now it might be a more illuminated gut feel.
I’m puzzled as to why BOTH plans have to be so poor. Endemic gutlessness or a subliminal acceptance that the planet is fucked anyway and that Australia’s contribution won’t matter relative to China, America and Indian GG emissions, Amazon and other deforestaton ?
Bio sequestration won’t work on the scale required.
If a carbon sink really is going to offset continuing pollution, that carbon must be placed guaranteed undisturbed for a thousand years and more, in a place where carbon would not otherwise have appeared and stayed.
You would have to be silly to believe that farmers could be paid to rip up their soil and place under it a bed of charcoal. Most farmers would consider this vandalism, unless of course they were only going to pretend to do so. However an apparent increase in subterranean biomass (perhaps by reducing tillage) would probably be accepted by a cynical auditor, while anyone in the know would expect the biomass to return to near-normal concentrations within a hundred years or so.
The government’s plan to pay foreigners to run similarly dodgy schemes, evades local scrutiny. Neither plan can eliminate the burning of coal.
The Coalition leadership believes climate change is “absolute crap”, and that’s reflected in this ‘Great Big Policy Con Job’.
A small problem with your analysis of the difference between the Rudd/Wong plan and the Abbott scheme. In your table you state that Rudd will be charging the polluters, whereas Abbott will charge the “beneficiary” or tax-payer. Not true, the Rudd plan does charge the polluters, who then oncharge the tax payer and create a GREAT BIG NEW TAX. The science and the people behind “climate-change” (which used to be called global-warming until it was discovered that the globe actually hasn’t warmed at all), is being discovered to be “absolute crap” because of THE FACT that data has been tampered with (for the sake of the Climate Change scientists own preservation and this has now been uncovered and made public). The fact is, it should be mandatory to ‘question’ all scientific data. To be called a sceptic as a derogatory term shows the level of Dictatorship that Australia has become under the Rudd government. Now even Treasurer (sic) Wayne Swann who has delivered a $64 Billion (and growing) national debt to Australia, calls the sceptics “Crackpots”. Why are you a crackpot when what you are doing is questioning the policies of the (errant and incompetent) government. A government that is not even able to articulate or share the details of their ETS with the public anyway. I understood the fundamental conerstone of a democracy was its ability to question its government.
Oh and try asking Penny Wrong (I mean Wong) to provide any detail of the cost to the taxpayer of the ETS or exactly how much the temperature of the planet will reduce by as a result of her new tax. Under the Rudd it appears to be “Just do as you are told, shut up and don’t question us or you’ll be publically ridiculed and branded a crackpot”. In the meantime, by the way, we are going to destroy the ability for Australia to compete in the global market. Unbelieveable. Bring on the Abbott!
@Icon:
There is no point in trying to engage your closed agressive and simplistic mind in a discussion.
The first comment above, thanks to Mike Jones, says it all.
So, Icon, please take your frozen mind elsewhere. You have interrupted the learning process.
Whether believer or sceptic there are real benefits in improving energy efficiency, reducing dependence on imported oil, making industry more sustainable and reducing the impact of dirty industries. It doesn’t need life changing decisions and brinkmanship to move an economy in the right direction. It needs a government with a vision, a whole of government approach and quiet consistency to encourage positive behavious and discourage negative behaviours. Rather than make noises on a world stage our government would be better employed quietly changing our own back yard into a working example of an efficient and sustainable economy.
It would be interesting to know how the concession by China and India to reduce their emission intensity 40% and 20% would compare with Australia. Whether believer or sceptic this would be a desireable ambition for us as well.
Icon, why dont you come out of the closet!
Your Abbott’s staff!
I think Greybeard is on to something. The key is in focusing on promoting and supporting the ideas of improving energy efficiency, reducing dependence on fossil fuels & reducing pollution. These goals are not divisive and lead generally to the same outcomes.
Everyone is still missing the main point. ” Please explain how CO2 is responsible for driving up the temperature?
“Co2 is not a pollutant, it is plant food. High levels of Co2 did not cause the temperature to rise in the past and will NOT cause the temperature to rise in the future” If you disagree with this statement, please explain why?
Jon, have you just posted that question on every AGW thread?
The answers are easy to find. Start here:
http://tinyurl.com/yf9hnua
@Evan
“…The answers are easy to find…”
The “answers” show no relationship.
Even the muppets at realclimate acknowledge a lag where no real and definitive causal conclusion can be drawn.
What part of this question don’t you understand?
Don’t feed the trolls!
These questions were asked and answered by the climatologists in the 1980s and since. Because the answers were authoritative, by the relevant experts, explanations are bonus to the message.
Those of us who respect competent explanations have been given a surfeit of overwhelmingly convincing explanation. Wilfully ignorant people will remain ignorant; it is not our responsibility to explain. They have been told.
I agree with Greybeard too. The benefits of moving, early, to renewables are manifold. It’s going to happen one day, better soon while the cost is known rather than later in a panic.
In my experience, those opposed to change have a vested interest in the status quo.
Any chance of including the Greens proposal in this comparison?
If we want a legitimate emissions trading scheme, we should utelize the recommendations of the party most focused on this issue.
@Roger Clifton
“…Don’t feed the trolls!…”
A typical - yet unsurprising - response when the demand for facts is not forthcoming.
I myself have a “Don’t Feed the Tools” policy, but in your case I’ll make an exception.
“…Those of us who respect competent explanations have been given a surfeit of overwhelmingly convincing explanation…”
You can’t even provide any evidence to support your claim, yet if you follow Evans link above it provides a legion of evidence showing no link between CO2 and temperature whatsover.
Wilfully ignorant people will remain ignorant; it is not our responsibility to explain. They have been told.
Such embarrassing arrogance. Is that what a career in IT engenders?
MPM:
Nice try, but it ain’t so.
Read the referenced articles fully and it becomes clear. Thew apparent rise in temperature before the rise in CO2 is only that - an appearance.
The CO2 signals in, for example, ice cores from the Antarctic, must be interpreted carefully. The shallow snow exchanges CO2 with the atmosphere, so on this very driest of continents, the sample of ice which may be X years old will in fact contain more recent gas samples. Hence, the CO2 signature appears to be older than it actually is.
This is only one way in which a paradox emerges whereby the CO2 horse appears to follow the temperature cart, but the truth is otherwise.
In general, CO2 increases actually and demonstrably did precede temperature rises during the past several ice ages and rebounds.
If pressed, I may provide references, but this is not news - it is quite old hat. You can find them yourself easily, if you have the will to do so.
Oops!
I stated “Hence, the CO2 signature appears to be older than it actually is.” when I meant “… more recent…”.
It’s getting late.
Free kicks all round.