Remarkably, the government's "Direct Action" climate policy appears to become even worse with the release of Environment Minister Greg Hunt's "white paper". Sneaked out the afternoon before an Anzac Day long weekend while the royals were in town, the white paper confirms what has been universally assumed -- that Direct Action is a policy figleaf not intended to seriously make a difference to Australia's carbon emissions. But after nine months in government, it had been expected that Hunt, having the benefit of public service resources and a consultation process initiated by a green paper (albeit one also sneaked out right before Christmas) would at least deliver a coherent policy. Alas, no. While the white paper contains copious details of how the $2.55 billion fund -- it was $3.2 billion in 2010, and $3 billion at the 2013 election -- will deliver handouts to businesses, the critical "safeguard mechanism" designed to ensure that whatever carbon abatement is purchased by taxpayers isn't offset by increases elsewhere in the economy remains vague, and looks more and more like a dead letter. Hunt has refused to spell out how the safeguard mechanism will work, with the white paper promising only that "the Government will implement its policy objectives in the most efficient way possible" (a statement to be read with the invisible caveat "except for a carbon pricing mechanism") and that "the Government will work with businesses to establish a flexible framework for complying with the safeguard in the unlikely event of baselines being exceeded". But to ensure that this "unlikely" event is even less likely, the only detail Hunt has provided for the safeguard mechanism is to ensure that it is as difficult as possible to show that businesses might have increased their emissions and compel them to reduce them:
  • The only firms subject to the safeguard mechanism will be those emitting more than 100,000 tonnes of CO2 a year -- just 130 firms;
  • The safeguard mechanism won't kick in until mid-2015;
  • The inaptly named "baseline" for the mechanism will be the highest emissions level the company has achieved in the last five years, not the lowest;
  • No additional reporting requirements will be established to monitor the 130 firms;
  • Businesses exceeding their "baseline" will be allowed to average their emissions over a number of years;
  • There will be no financial penalties for exceeding the "baseline"; and
  • The electricity sector, the biggest emitter of CO2, will be the subject of unspecified other arrangements.
Thus, what little we know of Hunt's safeguard mechanism is that it assumes business won't exceeded baselines, establishes plenty of conditions to allow them to exceed baselines without being found in breach, and if despite all that a business still somehow is found to have gone beyond its identified levels, there will be no financial consequences. Perhaps Hunt can name and shame companies that are found in breach late on a Friday afternoon. Such is Hunt's generosity to business, the white paper even debates whether companies that fail to provide the level of abatement they have committed to in their applications for a handout under the Emissions Reduction Fund should be allowed to simply get away with it, instead settling on proposing they merely be required to buy excess credits (don't call it a trading scheme) from other grant recipients that have produced more than they committed to. Nor does the white paper address one of the core problems of the entire policy, that the Emissions Reduction Fund will fund abatement projects that companies would have proceeded with anyway, in effect turning it into an industry assistance program with minimal impact on emissions. Hunt continues to insist that his fund will easily achieve the minimal bipartisan goal of a 5% reduction in 2000 emissions by 2020, although no funding beyond forward estimates is guaranteed. He remains alone in purporting to believe that. In fact, the most likely sources of reductions in Australia's overall emissions will continue to be the de facto carbon price imposed on consumers and businesses by the gouging of electricity companies under the guise of network infrastructure costs, and the Renewable Energy Target, assuming Hunt is successful in his desperate rearguard defence of the RET against the attacks of climate denialists within the government. The only really positive aspect of this debacle is that at least we're only wasting $2.55 billion on pretending this government believes climate change is real and Australia needs to address it.