There’ll be much debate, analysis and argument — much “argy-bargy”, in the Prime Minister’s quaint parlance — over the next few months over whether the Government’s ETS will navigate its way through the Senate. It won’t. No-one outside the Government thinks it is anything but a dog of a scheme. The Opposition, Xenophon, Fielding and the Greens only differ on the reasons why they dislike it. The multiple inquiries into the scheme won’t change anyone’s mind. They all think it doesn’t do much and does it very badly — and they’re right.
If the economy was still booming and we were fretting about inflation and why it is so damn hard to get a tradesman to turn up these days, the Prime Minister would be well-positioned to prosecute his Mr Moderation agenda of responsibly addressing climate change. Voters are still concerned about climate change, but have other things on their minds at the moment.
Penny Wong continues to try to score political points by claiming Malcolm Turnbull has been driven to oppose the ETS by Peter Costello. Time for a new script, Minister. Indeed, maybe it’s time for a new Minister, given Wong’s success in alienating just about everyone in the entire climate change debate. Rarely has a minister been so utterly at odds with every stakeholder in her portfolio.
Moreover, the Opposition’s statement that the scheme will both cost jobs and do nothing to curb emissions is literally correct, even if not quite in the way they mean it. The Government scheme will not establish incentives to reduce emissions and will not drive any transition to low-carbon industries and the jobs that will emerge from them. And by offering such an unambitious target it will undermine efforts to establish a global deal that might prevent Australia from suffering the worst effects of climate change, with the employment consequences that will flow from that.
So, scratch one ETS from the list of climate change options, at least for a couple of years. We might get lucky and see a comprehensive global deal emerge from Copenhagen in December, and an aggressive commitment to emissions abatement by the Obama Administration, which might in turn restore momentum to the debate in Australia, but Kevin Rudd has covered off that possibility by insisting that any stronger targets will only be after 2020 and will require a “mandate” from voters. So, there’s no danger of Australia actually doing anything much on that front.
Meantime, annoyingly, climate change continues, without appearing to recognise that we humans are having an economic crisis. Last week’s Climate Congress concluded that “the worst-case IPCC scenario trajectories (or even worse) are being realised.” The worst-case IPCC scenario is a temperature rise of 4.0 degrees C, with a likely range of 2.4 to 6.4 degrees C, in the next 90 years. “Temperature rises above 2 degrees C will be very difficult for contemporary societies to cope with,” the Congress also concluded, in rather understated fashion.
If only it were all a left-wing plot.
The debate therefore needs to move quickly to a post-ETS level. A carbon tax, the next best option, is liable to be just as poorly-designed and influenced by big polluters as the Rudd Government’s ETS. We’ll therefore have to move the Australian economy to a low-carbon path the old-fashioned way, via government expenditure and incentives. This approach is far less efficient than market signals, it is rife with opportunities for winner-picking and pork-barrelling and it places politicians and bureaucrats at the centre of the transition, when it should be consumers and the private sector. But with the failure of the ETS, it’s the only one we’ve got.
This means significant investment — in the billions — in accelerating the commercialisation of the one off-the-shelf renewable technology available — solar power; dramatically reducing the fuel consumption of Australia’s vehicle fleet, developing and rolling out biosequestration initiatives and extending energy efficiency measures to the country’s commercial building stock.
Unlike the ETS, those measures would draw support from all the non-Government parties and most industry stakeholders.
Further strengthening incentives for renewable energy — for consumers via a gross feed-in tariff, and for businesses via tax breaks for renewable energy firms — might enable the Government to have a serious chance of meeting and even exceeding its Renewable Energy Target.
These are all second-best solutions in the absence of price signals embedded in the economy, but they look like the only solutions that will get through our political system. Given the urgency of the task, it’s a case of doing whatever will work.