Feb 27, 2014

Can we solve climate change for under $1 billion?

The government's Climate Change Authority has today released a major report which says Australia should do much more on climate change -- a 19% cut in emissions by 2020. But Tony Abbott is unlikely to listen.

Cathy Alexander — Freelance journalist and PhD candidate in politics at the University of Melbourne

Cathy Alexander

Freelance journalist and PhD candidate in politics at the University of Melbourne

Solve climate change for under a billion dollars? It sounds like such a bargain that even Prime Minister Tony Abbott might pay attention. The Climate Change Authority, a key government advisory body, has today handed down its final report on how far Australia should go to address global warming. The verdict is we should do much more: namely, reduce emissions by 19% by 2020. That's if you include the "spare emissions" left over from Australia's gaming of the UN's Kyoto Protocol process. If those are set aside, the CCA wants a 15% reduction (that's on 2000 levels). Compare this to Abbott's target to reduce emissions by 5% by 2020 -- and to let that target drop if it's not met by his Direct Action scheme. The CCA has branded that target "inadequate". But while the CCA wants us to do much more on global warming, it's suggested a bargain-basement escape route that would allow Australia to meet the more ambitious target for an extra cost of just $200 million to $850 million (peanuts in the scheme of things). Some conservationists will see this option as cheating. More on that later. The CCA is an independent statutory body set up by Labor, under chair (and former Reserve Bank governor and superannuation identity) Bernie Fraser. Check out the board here. It's separate to the old Climate Commission, which has become the Climate Council -- that's Tim Flannery's mob. The Coalition government wants to scrap the CCA, and legislation is in Parliament to do so. That will probably be passed when the new Senate sits from July, so the CCA faces closure. It does have other tasks it is supposed to go on with now this report is out, like reviewing the Carbon Farming Initiative. Fraser was asked about his body's closure in a Canberra press conference today; "we're always hopeful, otherwise we wouldn't be here," he said. The CCA is staffed by experts, is respected within the field, and has done plenty of research on this report, working with bodies around the world. Critics accuse the CCA of being Labor / Green-leaning. After all, Left-leaning public intellectual Clive Hamilton is on the board. It's unlikely that Abbott would pay much attention to -- or read -- this 401-page report. It recommends a completely different course of action to the one he wants to take on climate change. Abbott wants to scrap the carbon price, water down the Renewable Energy Target, and bring in a government grant scheme to pay polluters to cut their emissions (i.e. Direct Action). The question is not whether the Abbott government will take this report on board -- it won't -- but whether the Coalition government can continue to get away with dismissing the growing body of domestic and international evidence that Australia is not doing enough on climate change. Fraser hinted that this report may not be embraced by the government, telling reporters today his hope was it would contribute to a lasting consensus on climate change, "down the track if not immediately". Turning to the CCA's report in detail, it found:
"Based on all the evidence available to it, the Authority concludes that Australia’s 5 per cent target is inadequate ... It would leave an improbably large task for future Australians to make a fair contribution to global efforts."
The report's authors researched the climate science and the latest global emissions data, finding "a reasonable contribution" from Australia would be a 15% reduction in emissions. A complicating factor is that Australia has some spare pollution in the bank, so to speak. Australia negotiated a target to significantly increase emissions under the Kyoto Protocol, and our emissions for that period were actually less than the target. The CCA noted that if those spare permits were carried over -- and it's not clear if that will happen -- then the 2020 target should be a 19% reduction. And watch out. As the CCA report implies, if Australia sticks with the 5% target, and carries over the Kyoto credits, we've pretty much made that target already, without the government having to do much in terms of policy. The business of gaming global climate talks and pacts is a busy one, put it that way. Technically Australia has a bipartisan target to reduce emissions by 5-25% by 2020 depending on what other countries do, but you won't hear Abbott talk of any target more ambitious than 5%. Interestingly, the CCA found some of the conditions to bring in a 15% target have been met, but not the conditions for the 25% target. The Greens may not like that. The report also calls for a 2030 target to reduce emissions by 40-60%. We don't currently have a 2030 target, and that one is pretty ambitious. Here's another point of controversy. The CCA is vague on how to meet the emissions targets (that wasn't its main task), but does recommend carbon pricing, regulations, standards, and emissions standards for cars (many countries have those). And "to bridge the gap" between what all that could achieve and the CCA's targets, it recommends buying dirt-cheap emissions permits from overseas. It describes these as "genuine emissions reductions". Not everyone agrees. The UN's at-times controversial Clean Development Mechanism (CDM) allows buyers to pay entities in poorer countries to reduce emissions by doing things like building wind farms and hydro plants. China has swamped the production side and there aren't a lot of buyers, so prices are rock bottom -- currently just 46 Australian cents per tonne for CO2, compared with Australia's current $23 carbon price. The CCA calculated that moving from a 5% target to the CCA's target would cost $210 million to $850 million if that were done entirely through buying CDM permits. The authority recommends the government set up a fund to start doing this. It sounds too good to be true, and for some it is. The CDM system has had governance and verification issues and at times has amounted to paying for "hot air" permits, although some of the dodginess has been weeded out. To its critics, it amounts to rich countries paying poorer ones for projects they would do anyway, as a way for rich countries to get out of reducing emissions at home. But a positive of relying on cheap global credits, as CCA chief executive Anthea Harris told the press conference today, is that the economic impact on living standards and businesses in Australia of reducing emissions would be less. "We need to put things in perspective," Harris said, adding that some business groups might claim the CCA's more ambitious emissions target would be "the death of the economy as we know it". That would not be the case, Harris said. Fraser told the press conference that buying global credits was "the only way of getting there," in reference to the CCA's targets.

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19 thoughts on “Can we solve climate change for under $1 billion?

  1. Roger Clifton

    There’s that weasel word “reduction” again. Let’s not hide from it: we cannot reverse climate change. CO2 level is accelerating upward without bounds, (see graph). There is far too much of the stuff to sequester forever and any partial “reduction” in emissions is just greenwash.

    Yes, we could stop the acceleration, but we would have to either solve the problem of storage for wind/solar or go nuclear.

  2. Interrobanging On

    Firstly, there is no target any more, just a charade. Abbott has fixed the price and if 5% is not met will not increase the spending. The 5% has been getting easier due to falls in electricity emissions (not in sectors with no carbon price), but this should be reason to aim higher, not artificially fix the target at a paltry level that will, as noted, make action after 2020 much harder.

    They are double deniers in being climate change deniers, but denying they are deniers.

    And the inadequate 5% base should be history as other countries are doing more, as the CCA says. Increased action continues to be denied by deniers, but there is an irony: the line for the do-nothing mob that other countries are not acting, especially China and India, is echoed by Abbott/Hunt.

    But Australia is chairing the G20 (what a mistake the majority must now be thinking that is on this and the cringing embarrassment in Davos!). Far from using the forum to push towards some agreement as is claimed is needed, including China and India, Abbott is leaving off the issue as ‘clutter’.

    The ‘no overseas’ permits spin is a kind of xenophobia. It doesn’t make sense not to use *good* projects overseas, because the money goes so much further. Capping landfill and trapping the methane for use rather than fugitive emission in India is the same as doing it in Australia – a tested process. This is why shirts are made in China/Bangladesh/Cambodia etc, and few in Australia – it is cheaper.

    Quoting critics of CDM etc is fine, as the whole business isn’t close to perfect. But realise that a lot of those critics are malicious. Just like Hunt/Abbott/Hockey attacking the Clean Energy Finance Corporation in Australia. That body is successful to date, so there has to be a campaign of denigration to justify its destruction.

  3. Scott

    “Just like Hunt/Abbott/Hockey attacking the Clean Energy Finance Corporation in Australia. That body is successful to date, so there has to be a campaign of denigration to justify its destruction”

    The CEFC only started investing money 8 months ago! Check the 2013 Annual Report; it made a grand total of $147,000 from its investments at the record date and cost the Government $12 million in operating costs, hardly any money invested (around $500 million, 75% in BB rated debt, which is below Qantas at BB+). Very early days to say it has been successful. I’d like to see the 2014 figures…if it lasts that long.

  4. Bo Gainsbourg

    Can’t agree with the overseas permits option. Its a furphy. Even if we could buy substantial permits we are effectively locking in a sclerotised economic structure domestically and simply deferring hard decisions till a later date, when they will have to be done even more rapidly, thus providing even bigger upheaval for the economy and enormous in-built political resistance from the industries that have not begun to implement change. On top of that its all academic if we continue to export coal at the rate we are. So have reductions overseas by all means. But don’t imagine it actually makes it easier for Australia. It just defers an even harder crunch.

  5. Interrobanging On

    Scott, yes ‘to date’ as I said is early days and the wishful thinking of those who want the CEFC to fail may have proven correct. It was a top of the head example of cynical denigration (‘slush fund’, ‘risky hedge fund’, ‘for the white shoe brigade’ etc). As you say, we may never know. The people of WA, plus Madigan and Xenophon might intervene…

    Bo, fair points, especially about putting action off in Australia. Little action now means more action later, as 2020 is an artificial deadline. This is an inherent problem in a fixed term ERF approach, too.

    I was arguing along the lines of “if” one is to trade, then sticking to Australia is false economy. Plus CO2 et al. do not respect national boundaries. Thinking about it, though, perhaps sticking only in Australia gives better net benefit, even if the price is high in Australia, as other countries/companies take advantage of cheaper options internationally….I don’t know!

  6. AR

    There is no hope, for the next century or three of reducing AGW – even if all combustion ceased tomorrow or yesterday or last year. The amount of CO2 already blanketting the atmosphere will, in the next(very) years, finally initiate the thawing of the Canadian & Siberia permafrost which will release all the methane stored since the Cretaceous.
    All we can do now is be glad that we live in Oz, all our own food, (scant) water, land and educated (some might say semi sentient), relateively small population.
    This is going to be one of the better palces to be in the 22ndC. Not t’rrfic but orders of magnitude better than elsewhere.
    So glad that I’m no longer young.

  7. Cathy Alexander

    Interrobanging On, yup you are right. The CDM has its critics, but it has its advocates – and it seems that the system (especially verification and additionality) is getting better. In the early years there were clear problems, as often happens with new schemes of any type.

    I’ll have to look into the CEFC now that it is up and running. Theoretically it does not cost the government much and its money doesn’t come out of the budget. But if its return is much below 3% then its not meeting its objectives. I wrote a profile on CEFC CEO Oliver Yates. HE is a really interesting guy and one to watch

  8. Cathy Alexander

    AR and Roger Clifton, you raise a really interesting ethical point that is little debated. Australia has a relatively “aged” population, with plenty of voters 65-plus (and as a proportion of voters, that’s set to increase as the population ages).

    If we consider that many voters of all ages vote with a fair whack of self-interest, and we see climate change as a threat that is going to get worse and worse (with effects due to be increasing severe with each passing decade), why would older voters prioritise reducing emissions as much as younger ones?

    Yes, some older voters worry very much about the future and about their grandchildren etc. But if you look at the polls, older voters are much less exercised about climate change than younger ones.

    Here’s a proposal. Should we weight a person’s vote depending on how long they are likely to remain alive?

  9. Roger Clifton

    In traditional societies, authority is granted in proportion to how long the speaker has already lived. Speaking for the collective interest, concern by the old for the young is a characteristic of our species. One explanation for the menopause, unique to Homo sapiens, is that we have evolved a “grandmother” role, to oversee the cultural development of children (of naive young women). And from our long experience we alone know the difference between climate and weather.

    One lesson I can draw from my past is the effectiveness of the anti-Vietnam movement, a youth movement that tapped the wisdom of our elders. But I hear no youngsters marching in the street. They seem as complacent of their future as a frog in a saucepan on the stove.

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