The Coalition’s “direct action” climate change policy is in further disarray after shadow minister Greg Hunt was reported as admitting that a Coalition government would not be able to purchase biosequestered carbon as cheaply as anticipated in the policy’s costings.
The policy aims to meet a 5% emissions reduction target by 2020 by spending an average of $1.2 billion per annum in an “Emissions Reduction Fund” that will purchase 140 million tonnes of abatement per annum through to 2020. The policy and its costings rely on purchasing 60% of that abatement via “soil carbon”, which is not recognised in international carbon abatement agreements, for a price of $8-$10 a tonne.
On July 22, Hunt visited the western Victorian town of Woorndoo to discuss soil carbon and the Coalition’s policy, and his visit was positively covered by the Terang Express in its July 28 edition. During the visit, local journalist Tristan Price asked Hunt about the price of purchased carbon abatement under the policy. Hunt is reported as saying “I won’t predict what the market will deliver. The market could do 1-2 million tonnes for under $10 a tonne.”
Mr Hunt’s office has since told Crikey he did not make the remarks and he would be asking for a retraction. “We are even more certain that the target can be achieved at a lower cost and in higher volume,” a spokeswoman told Crikey. However, Crikey understands that Price and his editor are standing by the report as accurate.
If correct, Hunt’s statement is profoundly damaging because “soil magic” is by far the cheapest abatement in the “Emissions Reduction Fund” costings. If it can only provide abatement for $8-$10 a tonne for 1-2 million tonnes of abatement, rather than the 85 million tonnes planned to be purchased by the Coalition, then the costings will dramatically blow out. Hunt’s costings already appear to have blown out once, after he stated in May that the average price of abatement purchased under his policy would be $15 a tonne, rather than about $11 a tonne in the Coalition’s original costings document.
But the costing of the policy, which has not been backed by any economists, agricultural scientists or climate scientists, has been one of its many weak points from the outset: Crikey reported in February last year that one of Australia’s leading soil carbon experts, Professor Alex McBratney, of Sydney University, believed biosequestration abatement would be more likely to cost $20-$40 a tonne. Professor McBratney confirmed his view to the Terang Express two weeks ago, suggesting soil carbon would be likely to cost about $30 a tonne, more than three times the budgeted cost. Earlier this year, Malcolm Turnbull noted that the policy would “become a very expensive charge on the budget in the years ahead”.
Worse for Hunt, he was embarrassed by comments by Woorndoo farmer Mark Veale, whom Hunt met accompanied by popular first-term local MP Dan Tehan. Veale is a strong advocate for soil carbon and has already undertaken extensive work on carbon sequestration on his own property. However, he told the Terang Express that while he is willing to undertake soil carbon initiatives voluntarily, the Coalition’s plan “won’t be a big enough carrot” and “at the moment there’s not enough incentive”.
Hunt’s office this morning told Crikey “we stand by the estimates provided in our original policy. We strongly support the right of everyone to have an opinion.”
Hunt has had a bad year with numbers: he stumbled badly on Lateline in March when he confused square kilometres with kilometres square, and issued a press release welcoming Nicolas Sarkozy’s plan to drop a carbon tax, when the story was over a year old. Recently, he criticised the government’s carbon pricing package for including international carbon permits that the package in fact ruled out.