Let’s move from the apocalyptic rhetoric of Garnaut to the rather more mundane world of politics and talk about delays, because this is where the fight over an ETS now is.
Despite Brendan Nelson’s best efforts, there’s likely to be very little space between Labor and the Coalition on an ETS. Garnaut’s recommended trajectories, conditional on an international agreement, pretty closely reflect the policy advanced by Malcolm Turnbull and Greg Hunt (whether it’s the policy advanced by Andrew Robb is another matter, but more of that in a minute). Given the strength of industry lobbying, it’s likely — although this is idle speculation — that Cabinet will water down the compensation arrangements for trade-exposed industries further.
The result will be an even weaker ETS than the version advanced in the Green Paper — and one the Coalition will struggle to avoid supporting. The Coalition is not in a strong position on the issue, and especially not after Nelson’s antics in the middle of the year. Rudd will do his best to paint them as climate sceptics, and the Coalition’s business supporters will urge it to get behind the Government’s scheme rather than risk it being toughened up if Rudd has to deal with the Greens and Nick Xenophon. And god only knows what an ETS would look like by the time that idiot Fielding has finished with it.
The key difference will be timing, and there’ll be more pressure on that front if the financial crisis lasts any length of time or there’s a global downturn. We’re already hearing demands from Australian business for the Government to slow down on an ETS until the current “economic uncertainty” is over. Bloody typical. The time to take action was five years ago, both because it would have given us more options and a softer transition and because the economy was commencing a long upswing, but were Australian businesses urging the Howard Government to get cracking on climate change in 2003? With this mob, there’ll always be a reason to avoid taking hard decisions.
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Andrew Robb responded yesterday on behalf of the Coalition to the final Garnaut report. Robb is of a more sceptical mind about climate change than Greg Hunt. Perhaps Turnbull was trying to keep party conservatives onside by moving Robb into the ETS issue. Or perhaps with Robb and Hunt he’s playing an environmental version of good cop-bad cop. Unfortunately, the Coalition are the suspects here, not the interrogators, and it’s hard to see this arrangement working out well, but let’s hope for the best.
Robb held to the line that 2010 was too early to start an ETS, and reckoned the Garnaut Report demonstrated that. Since Garnaut said quite the opposite, that’s a tough line to argue. He also described the Government’s ETS policy development as a shemozzle, which shows where the Coalition will aim to exploit the issue — on the detail and implementation, rather than the overarching policy. It also shows an endearing turn of phrase from Robb. We need more shemozzle-users.
The reasoning of the delay issue is complex but bear with me. Garnaut doesn’t discuss three trajectories, as everyone (including me) has reported, but four. The three that are reported are the 450ppm best case (25% cut by 2020), the 550ppm more likely case (10% cut by 2020), and the “Copenhagen Compromise” where the conference next year fails to yield a comprehensive international agreement – a 5% cut by 2020. But there’s a fourth put forward by Garnaut, in which absolutely no deal of any kind is reached in Copenhagen.
This is the stuff of nightmares for anyone seriously interested in mitigating climate change, and Garnaut says it is unlikely — that some deal, even if confined to developed countries, is likely to be reached. But if no deal at all is reached, Garnaut says there’s no point having any emissions targets — but that we should adopt a “waiting game” and have an ETS based on the fixed price that he suggests we adopt between 2010-12, extended until we eventually reach an international agreement. The price would rise each year, but not be aimed at reducing emissions significantly. In Garnaut’s view, this would keep alive the chances of an international agreement.
That’s the basis for Garnaut’s strong view that we should start in 2010. There are no specific costs associated with delaying a year or two years — at least, none that are modelled in the report. Instead, Garnaut talks about delay as reducing our options. The costs are likely to be in extending business uncertainty and reducing investment and job creation. There’s also the simple arithmetic that if we aim for a 2020 reduction target, the longer we wait, the harder it gets. But most of all, it undermines our capacity to contribute to reaching an international agreement.
But in practice, the slippage of an ETS start date to 1 July 2011 will start to look like an attractive option for the Government, putting it out beyond the election and giving a sop to industry whingers. It will also remove the last impediment to the Coalition credibly blocking the establishing bill, meaning both sides of politics have ownership of the issue if it goes badly. Copenhagen — where on previous form nothing much will happen — can be cited as a reason for the delay. It will also please the bureaucracy, which will be under the hammer to get a scheme up and running, including establishing an oversighting agency, in less than eighteen months.
For all his climate change rhetoric, there is minimal evidence that the Prime Minister sees climate change outside normal politics. The Government’s political interests come first. Garnaut has delivered a politically-palatable set of recommendations. The task now is to use them in accordance with the Government’s political interests.