For much of the past decade, and particularly the last three years, the cheapest and most effective means of reducing carbon liability has been to try and avoid it altogether.
That’s given handsome bonuses and fees into the hands of PR spinners and lobbyists across the globe, and the party is likely to continue for another few years yet in the US and elsewhere. So given that this option will effectively expire in Australia sometime on Wednesday, should the House of Representatives pass the Clean Energy Future Package, it is not surprising that the anti-carbon tax brigade have given it one last big shove.
Centre stage has been sought by newly-formed group called Manufacturing Australia, which has apparently emerged for a last gasp attempt at derailing the package, drawing on the same sort of scare tactics as Tony Abbott’s opposition and the same questioning of the science as much of his Coalition.
The figurehead for this new group is Dick Warburton, the former Reserve Bank board member who was deprived of an effective forum at the BCA and is no doubt delighted that he has a new platform to express his doubts about the science, and his lack of faith about carbon markets. But it is not entirely clear that his members — which include Amcor, Bluescope Steel, CSR and Boral — are entirely happy being associated with his remarks.
We asked several to endorse Warburton’s comments about climate science on the record, but they wouldn’t. One expressed a view that they had understood the lobby group was to have been more concerned abut “broader manufacturing issues” than the carbon price. That seems disingenuous at best. It is clear that Warburton’s zeal is based more around ideology than business management, but some companies might be happy to have a bet each way.
Consider Warburton’s views about carbon markets, which figure prominently on the climate-denialist website, the Galileo Movement. Warburton says companies don’t like markets because they offer too many variables. That seems to undermine the basic tenor of the capitalist credo, and it certainly isn’t the view of Qantas and Virgin who, as we reported a fortnight ago, had lobbied to be included in the ETS (rather than face a fixed fee via excise duty changes), and the 20 other companies that are likely to join them. Most companies have far greater liabilities to manage each day, in the form of currency and commodity movements.
Qantas and Virgin acted because, now that the die is cast, the task of business is to set about finding the next cheap alternative to dealing with their carbon liabilities. For many, this will lie in a market system, most likely through the purchase of credits overseas. For others, it will lie in tweaking their domestic operations, and producing emission reductions that had hitherto remained hidden.
This was the point underlined, albeit unwittingly, by the Australian Coal Association on Monday, which issued an updated report from ACIL Tasman that estimated how many mines may close prematurely (15) and how fewer “future” jobs would be created (2100) if the package went through.
The problem with the ACIL Tasman report, as with many like it, is that it works on the basis that most company executives are dolts who are incapable of making decisions that could reduce a potential liability. We talked on Monday to ACIL Tasman, who confirmed the analysis is a “simple” product of adding a carbon price to a spread sheet and making a note when the Ebitda goes into the red. It takes no account of the inability of any individual mine owner to take action to reduce its emissions.
So it’s a partial assessment at best. As we reported last week, the Indian-controlled coal miner Gujarat NRE has found that a few “simple” changes to their planned mine extension can actually reduce their liability by around 80%. Gujarat had been considered one of the coal companies most heavily exposed to a carbon price, and had produced some startling predictions about the price of beer rising to $60 a schooner and the end of civilsation as we know it.
But on closer inspection it found new ways of reducing its emissions, including separating new workings from old workings, and using ventilation controls and gas drainage techniques, that could reduce its emissions significantly and cut its exposure from around $16 a tonne to $2.70 a tonne. It would not go out of business. Indeed, it now says its mines should be viable for another 30 years.
And this is exactly the sort of reflection, analysis and action that a carbon price is designed to effect. You can expect this story to be repeated across the country. And if think tanks such as ClimateWorks are correct, then the cost of even domestic mitigation is likely to be much lower than now thought. Though in the case of low hanging fruit such as energy efficiency, you can lead a horse to water, but you can’t make them drink — unless you legislate.
So, after much debate for the course of Tuesday, the Clean Energy Future will finally go to a vote on Wednesday morning. Should it be passed, as expected, then it is as good as law, because passage through the Senate is guaranteed, and the ALP can repatriate the several dozen defibrillators that wags have suggested have been shadowing Labor MPs around the traps for the last few weeks.
Then Labor has to work on an even more challenging task: having turned climate change from a positive to a negative in the last 12 months thanks to its political backflips and procrastinations, it now has to try and reverse that by the time the next election is due in 2013. Proper management of the carbon pricing regime — so that practically noone notices it is there — will be essential to achieving that. It may not be a positive, but it could become a neutral factor.
Labor can, however, take heart that elections can be won by a centre-left government with an unpopular leader that promotes action on climate change and investment in clean energy technologies.
In the Canadian province of Ontario, the leftish Liberal Party last week defied expectations and got re-elected, despite a handsome lead in pre-election polls for the Progressive Conservative Party, which had promised to repeal incentives for green energy, dump a plan to encourage Samsung to invest $7 billion to establish renewable energy manufacturing plants centre, and to reverse a commitment to join the same regional cap-and-trade scheme being established by California.
Of particular interest to Labor will be the fact that, less than a year before the election, the sitting Ontario government trailed the opposition by double figures head to head. And just three months before the vote, polls indicated a 41% to 22% preference for the Tories in approval ratings.
*This article was originally published on Climate Spectator