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Sep 16, 2010

Kloppers reignites climate debate

Politicians should be wary of business leaders - such as BHP CEO Marius Kloppers - urging action on issues like climate change.

What a terrible hypocrite Marius Kloppers is in calling for a carbon price.

Before the head of BHP is elevated to the status of climate change forward thinker, it pays to recall the wrecking and rent seeking engaged in by BHP-Billiton in relation to the CPRS.

BHP was in the forefront of the gloom and doom warnings about the impact of the Government’s scheme in 2008 and 2009. As the material painstakingly gathered by the Australian Climate Justice Program showed (here — large file), BHP publicly warned of disruptions to gas supply (possibly of “Longford levels”, according to one executive), claimed mining companies would be driven offshore, that the CPRS would cost thousands of jobs, “severely strain the Australian economy” and halt new investment.

bhp1

Any of these claims from a mining company sound familiar?

In fact there’s little new in what Kloppers has said. He explicitly said he wants big-polluting exporters compensated under a carbon price scheme. This is despite the Grattan Institute demolishing the case for compensation in its close analysis of the way the CPRS addressed the purported problem of carbon and jobs leakage.

Kloppers, however, perfectly demonstrates business “support” for a carbon price. It’s support for the idea of doing something about climate change, and of providing investment certainty, but without any support for the consequences of a carbon price — even when they never amounted to more than 4-5% of revenue for emissions-intensive-trade-exposed industries.

This is why, despite declaring support for an emissions trading scheme, most of Australian business went missing in action when it came to the CPRS. Just as they did with the mining tax, they sat back and watched a weak Government be mugged by rentseekers and whingers like the Minerals Council. And this is why, incidentally, Labor and even the independents should think long and hard about taking advice from the likes of the Business Council of Australia on the tax summit next year. Because the politicians can be sure of one thing — Australian business will leave them in the lurch if the going gets tough.

Kloppers’s comments also continue the fetishisation of a carbon price as the only credible climate change policy. As I outlined on Tuesday, the national interest is best served by a three-part policy of pursuing an international agreement to minimise global temperature rise, developing a coherent adaptation policy and pursuing a mechanism — probably a carbon tax — to start ending our world-beating levels of carbon addiction.

There has, I gather, been some debate about whether my elevation of adaptation means I’ve somehow run up the white flag on “real” climate action. There are indeed “adaptation” advocates for whom adaptation is a cover for doing nothing — let the planet cook and we’ll handle the consequences later (coupled with the spurious claim that we’ll be richer by then if we don’t take any action on climate change now, and therefore have more resources to throw at the problem).

But unless you subscribe to the view that a comprehensive, effective and rapid international agreement to halt global temperature rise is imminent, a prudent approach would be to prepare for the consequences of the rise in temperatures already under way, which will be quite enough to cause economic dislocation in more fragile communities in regional Australia. A policy that emphasises reducing Australia’s emissions (whether via a carbon tax or emissions trading scheme or, for example, Warwick McKibbin’s Byzantine scheme) is necessary but not sufficient; adaptation to the likely consequences of our long-term recalcitrance about facing up to the problem of climate change is also required, as is the halting of the remorseless rise in the other 97% of emissions globally.

But Kloppers’ comments ensure the focus will shift back onto the Coalition on the issue, especially given Malcolm Turnbull appears quite happy so far to discuss issues in Greg Hunt’s portfolio as well as his own. For nine months the political focus has, rightly, been on the Government’s position on climate change. Now, perhaps in a manner similar to Clive Palmer’s sudden shift on a profit-based mining royalty regime, Kloppers leaves the Coalition and its “great big new tax” rhetoric looking mildly irrelevant to a debate that has sparked into life in a way that appeared very unlikely before 21 August.

The person who could add most to this debate from the conservative side is Greg Hunt, but he won’t be joining in, except to warn about a great big new tax and the impact on electricity prices of a carbon price — to be distinguished, of course, from the impact on electricity prices of his own policy.

What a terrible shame this once promising figure in climate change politics is now not so much sidelined as an active impediment to effective action.

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57 thoughts on “Kloppers reignites climate debate

  1. Jimmy

    It seems to me that Kloppers wants all the Kudos of being a leader in the climate change debate but doesn’t think his company should wear any of the pain. At the very least it should help to persuade the masses that something needs to be done.
    The really scary thing here is that we seem to be ending up with only the policies BHP approves of (MRRT and carbon price), everybody rightly complains about News Ltd trying to run the country but BHP seeems to be doing a pretty good job as well

  2. Robert Merkel

    Bernard, if you’re referring to my piece, I didn’t mean to suggest you had “run up the white flag”.

    I agree that adaptation will, sadly, be necessary.

    But, politically, I want as much attention as possible on mitigation now. I take your point about the global context, but the global context here is that Australia adopting a carbon price is the best possible message that we can send to the world (most pointedly, that increasingly endangered species, the Moderate Republican Senator whose agreement will required for any substantial American action on climate change) that action needs to be taken and a carbon price is the best way to do it, and need not imperil the economy.

    And, furthermore, I’m not sure that piling up money in an adaptation fund is a good way to tackle the adaptation problem.

  3. Douglas Evan

    Whatever the inconsistencies in Klopper’s position his intervention has greatly strengthened the hand of the Greens as they try to cajole the government into formulating responsible climate change policy. Also as BK writes it has also isolated the opposition despite Abbott’s continuing rejection of a carbon tax. Now Ross Garnaut has piped up to support Kloppers and others will doubtless soon follow. Gillard’s eyes seem to be spinning in her head as she has shifted from no carbon tax and a review of CPRS in 2013 (pre-election) to all options on the table and possible action this term as of today. I reckon we have finally passed the tipping point and progress towards effective climate change policy will accelerate from here on.

  4. Michael R James

    [There are indeed “adaptation” advocates for whom adaptation is a cover for doing nothing — let the planet cook and we’ll handle the consequences later (coupled with the spurious claim that we’ll be richer by then if we don’t take any action on climate change now, and therefore have more resources to throw at the problem).]

    BK was too coy but I am pretty sure he refers to the IPA as described recently by Tom Switzer on Their ABC. (Drum-Unleashed a few weeks back.)

  5. twobob

    Rent seeking aside it is great to see the debate moving on.
    A carbon tax is the way to go and it should be implemented on carbon as it comes from the ground or enters our shores. It should also be applied to imports from countries that do not have an equivalent as well as carbon used in transport, refrigeration ect.
    A rebate should be applied where our PRODUCTS (that means agg, manufacturing ect) are entering markets with no such cost but no rebate should be applied for fossil fuels, minerals or ores.

  6. Jimmy

    Don’t get to excited there Douglas, wasn’t there are similar feeling back in October 2007 that we were finally going to get some action but as Bernard said when push came to shove business were either negative or mute and Abbott & Joyce managed to rally the deniers to bring us to this point.
    Robert – I agree that we need to be negotiating from a position of strength, ie having actually done something, and as most believe we will eventually end up with a global carbon price wouldn’t being infront of the game offer many economic advantages when the world has to cath up.

  7. Observation

    Well, we can all be thankful the people who really run the country have put the carbon tax debate back on the table. Lets hope BHP, Rio and Xstrata have the kindness in their hearts to show us how we should act on other important issues on running the country such as fair tax, infrastructure, health and education. Hey, I’m sure they will even supply a foreign policy for us if we ask them nicely!!

  8. Julius

    BK, you wouldn’t suggest would you that what Kloppers says should have any weight in what we think either about the science or what is good for Australia (except perhaps for Australians qua shareholders in BHP)?

  9. Mike Jones

    Looks like a payback for the mining tax to me. “Just hold this box with the attached burning fuse ….. I’ll be back in a moment …..”

  10. CHRISTOPHER DUNNE

    If Tony Abbott doesn’t feel like he’s just been ‘taken’ by the mining industry for a grubby one night stand under the promise of romance then he really is thick.

    How many long weeks back was it when we heard the Liberal party, up and down the country, extol their natural relationship with mining and the great ‘free enterprise’ that underpins it? How the Liberals would protect it from another GBNT (Great Big New Tax) whether it be the Super Profits Tax of any form of ETS or carbon tax?

    Big mining used Abbott and his motley crew, used ’em and abused, got what they wanted (ie a big backdown from Labor on the Resources Tax) and then the moment they had to deal with the important issue of pricing projects over the coming decades, Kloppers dumped Abbott with the age old ruse: I won’t get into bed with your sister.

    And he didn’t, for a whole couple of months!

    Abbott’s been publicly dumped, and shown as a fool who has no place at the big table with the adults who will now be doing some serious argy barge over the mechanism for putting a price on carbon.

    Forget the great ‘unhinging’, this is the beginning of the great unraveling of the reactionary Abbott.

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