Low Emissions Target

The beauty of a Low Emissions Target as a climate action policy is that, as a kind of lowest common denominator, it means everyone wins — and for that matter loses.

Having ruled out, due to the rabid climate denialism of the Liberal right, the most efficient emissions abatement policy of a pricing mechanism, and then the second most efficient abatement mechanism of an emissions intensity scheme, we’re back to government regulation, which is at least better than government grants programs. The government has in effect dumped the farcical Emissions Reduction Fund, which paid polluters for abatement schemes they would have undertaken anyway. Alas, Greg Hunt’s soil magic will never be woven across Australian farms again. But how to meet those decidedly unambitious Paris Accord targets?

A Low Emissions Target is essentially a Renewable Energy target, but with the “renewable” bit expanded to include low emissions technologies. This allows “clean coal” and gas in, making it palatable to denialists who think the only decent energy is coal-fired energy. What they probably don’t know, but which Malcolm Turnbull, Josh Frydenberg, and for that matter anyone who can count does know, is that “clean coal” and “carbon capture” are at best, absurdly expensive technologies that can’t hope to compete for investment dollars with the cost of renewables now, let alone further down the price curve where the latter are trending.

That’s why, when Malcolm Turnbull unveiled his enthusiasm for “clean coal” at the start of the year, he was met with resounding indifference from the people who actually make investment decisions on such matters. The only investor to express interest in “clean coal” was, inconveniently, Clive Palmer, not exactly the kind of businessman Turnbull would be keen to hold up as an example, given he’s being sued by the, ahem, colourful former politician. An LET thus lets Turnbull peddle the myth that coal has a future in Australia’s domestic energy supply, safe in the knowledge that no additional coal-fired power plants are ever going to be built here.

The only problem is that, via the Clean Energy Finance Corporation, taxpayers might end up wasting a few hundred million on mythical “carbon capture” projects, but that’s a relatively small price to pay in the scheme of things and it might create a few temporary jobs along the way.

An LET also allows gas-fired power; in fact, the gas industry has been lobbying for the inclusion of gas in the Renewable Energy Target for a while. Alas, that industry has managed to upset pretty much everyone in the country, including the government, and how many investors will be queueing up to build gas-fired plants given the inflated price of gas on the eastern seaboard and the badly distorted nature of the gas and pipeline “markets” is anyone’s guess. Gas-fired power was, once upon a time, going to be the transition technology to a renewables future; the industry has been so rapacious, greedy and, in the case of Santos, plain incompetent, that that future is vanishing before their eyes, a splendid triumph of short-termism.

That leaves renewables (or, if an innumerate multi-billionaire who doesn’t mind doing his or her dough emerges, nuclear power), where investment is ramping up again in Australia after falling off a cliff after Tony Abbott savaged the industry.

That is, an LET, unless the “low” threshold is set so absurdly high that anything goes, will operate much like the renewable energy target, but with the capacity to incorporate investment in gas-fired power if that industry gets its act together. But Turnbull and Frydenberg can tell the right, hand on heart, that coal can still have a future if investors are prepared to stump up the cash.

Whether the denialists among their colleagues actually believe that is an important question for the stability of the government. But then denialists believe all sorts of nonsense. No reason why they wouldn’t fall for this too. And that can let the adults in the room get on with building a sustainable and reliable power grid.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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