Despite being the most critical long-term economic challenge facing Australia, climate policy has been almost entirely missing from the election campaign. As the major parties have puzzled over how to engage a disillusioned electorate, and particularly younger voters, they’ve been mostly silent on an issue that is already costing Australia and will have a major dislocating economic impact in decades to come.
The Coalition prefers to avoid the issue entirely; the Nationals and climate denialist Liberals have demanded that Malcolm Turnbull entirely reverse his former opposition to the Abbott-era “Direct Action” policy (Turnbull criticised it as potentially massively expensive, and the product of a refusal to take climate change seriously). Turnbull, having secured the prime ministership, has been happy to acquiesce, suddenly supporting the policy he once ridiculed. Problematically, however, Direct Inaction — which involves paying carbon-intensive companies to curb emissions, often for efficiency initiatives they would have undertaken without any taxpayer support anyway — simply can’t meet the emissions reduction targets the government committed to as part of the Paris agreement. According to the Australian Industry Group, reaching the government’s target of a 26% cut on 2005 emissions levels (note they use 2005, not 2000, to make the target look better) by 2030 using Direct Inaction would cost up to $250 billion.
The Coalition hasn’t explained how it will resolve this problem beyond the vaguest of words about some “Energy Productivity Plan”. There’s no costing for an expanded emissions purchasing plan going forward. Strangely, some in the media have attempted to argue that Direct Inaction contains the seeds of an emissions trading scheme, which could flower after the election at the same time as the Real Malcolm emerges from his chrysalis. These arguments have been angrily rebuffed by Junior Industry Minister Greg Hunt, who slapped down suggestions his scheme might actually achieve anything.
So, there is no actual Coalition policy on climate action, unless they find a spare quarter trillion from somewhere.
The Greens have released several climate action policies, as you’d expect. Unlike the major parties, they’ve spoken at length about climate action and how they intend to pursue their goals, and they committed to stronger abatement targets than the Coalition. Signally, however, this iteration of the Greens is far more interventionist than the Greens under Bob Brown and Christine Milne, when the party strongly supported a market mechanism as the primary tool for carbon abatement, aided by subsidiary mechanisms like a renewables investment fund.
Under Richard Di Natale, the Greens are going to the election with a broad “aim” to have “a range of market-based and regulatory mechanisms including a strong, effective price on carbon”. However, the Greens’ specific policies so far don’t deal with a carbon price but with intervention measures: funds to encourage community-led renewable energy projects, tax credits for the critical area of battery storage, a new $500 million body, Renew Australia, to drive the growth of renewable energy to 90% by 2030, pollution standards that will progressively shut down coal-fired power stations, a $1 billion transition fund for affected workers, and a levy on coal exports.
Labor, even before Tony Abbott was ousted, had decided to risk recommitting to an emissions trading scheme — indeed, not one but two of them, and committed to almost double the Coalition’s emissions abatement target, adopting 45% on 2005 levels by 2030, at the bottom end of the level recommended by the Climate Change Authority. It is also proposing 50% renewable energy by 2030. Its electricity emissions trading scheme won’t be of the Gillard-era variety, but a baseline-and-credit scheme that should result in no net cost on the generation sector — though the details are to be worked out once Labor is in office, like the details of the non-electricity sector trading scheme, which will probably rely heavily on international permits. Like the Greens, Labor is also focusing on workers affected by the transition to a lower carbon economy, and it will have a “Strategic Industries Reserve Fund” of $300 million, $200 million for Concentrated Solar Thermal and another $100 million for community renewables projects, as well as tighter motor vehicle emission standards.
The party that may well hold the balance of power in the Senate after the election, Nick Xenophon’s NXT, also has a climate action policy, but one of great vagueness. It does refer to “an efficient and effective emissions trading scheme (ETS) based on world’s best practice” but only as an example of something that might be supported by the party, as well as that “Government policies need to facilitate innovative and job creating energy industry opportunities through research, adoption, education and manufacturing of new technologies .” NXT is unabashedly protectionist, declaring on its website “we are 100% supportive of assisting key industries with a smart targeted approach that leads to a net benefit in economic growth … all forms of assistance/incentives should be directed to those businesses that produce, or are able to produce, innovative products that people want and technologies that benefit the economy and community.”
If there’s any sort of agreement among the parties that will make up the key decision-makers after the election, it’s that no matter what, the Gillard-era carbon pricing scheme — an extraordinarily efficient, low-impact scheme that materially reduced emissions at low cost — will never return. Instead, we’re likely to see extensive taxpayer support for renewables, regulatory measures, handouts to companies to close dirty power plants and, possibly, an emissions trading scheme heavily reliant on international permits.
There’s no doubt voters support this sort of approach: there is strong support for Labor’s 2030 renewable energy target, even among Coalition voters (voters also want much higher emissions reduction targets than those proposed by the government) and very strong support for “incentives for renewable energy” — 49% of voters support renewables incentives with little difference by voting intention, while just 13% support an emissions trading scheme (still, that’s more than Direct Inaction). Despite it being taxpayers who pay for renewables incentives, voters seem to see those as somehow less painful than a carbon pricing scheme.
The result is, at best, a significantly less efficient, and more politicised, transition to a low-carbon economy, with governments picking winners rather than allowing the market to operate more efficiently. However, it’s of a piece with an election campaign and a political period where protectionism and interventionism have been very much to the fore — from Labor, which promises to pump money into manufacturing, from the Coalition, which has sought to make a virtue of wasting billions on local defence procurement, and from the unashamed protectionists of NXT.