The ten-year battle over how Australia addresses climate change is now concluded, and taxpayers, and the economy, are the losers.
Labor’s energy policy for the coming election entirely abandons market-based mechanisms for reducing carbon emissions, in favour of taxpayer investment in additional generation and transmission capacity and household-level storage. The Clean Energy Finance Corporation will be the vehicle for additional capacity investment, accompanied by a miniature version of the Greens’ 2016 storage subsidy policy: $200 million program for batteries in 100,000 homes, designed to accelerate the growth of battery production.
The CEFC will have the role of underwriting new power capacity in accordance with the ACCC’s recommendation to increase competitive pressure on the big three gentailers — which is the recommendation the Coalition is exploiting as a way to fund new coal-fired power stations and bind future parliaments to prevent any emissions abatement policies. The benefit of using the CEFC is that, unlike the Coalition’s desire to fund coal-fired power, Labor doesn’t need legislation to do it — it already exists.
Those government-funded programs will be the mechanisms to achieve Labor’s more realistic emissions reduction target of 45% reduction on 2005 levels by 2030 (compared to the Liberals’ hopeless, Abbott-era 26-28% target). There will be no market mechanism of any kind — no carbon tax, or emissions trading scheme, or emissions intensity scheme, or Clean Energy Target. Even the fifth-best regulation-based policy of Malcolm Turnbull, Scott Morrison and Josh Frydenberg, a national energy guarantee incorporating emissions targets, which was endorsed by the Coalition joint party room, won’t be embraced by Labor unless the opposition Coalition agrees to it after the election.
The climate denialist rump of the Coalition will thus continue to dictate policy even from the opposition their actions consigned them to. It’s a stunning achievement and brings to an end the policy war over climate action mechanisms that flared in the Liberal rebellion against Malcolm Turnbull in 2009. Abbott and co have won, even if they have now retreated to an even more extreme position of outright denialism of climate change at all.
It’s also a retreat by Labor from its 2016 position, when it gave the finger to both the commentariat and the Coalition by proposing not one but two emissions trading schemes — an intensity-based one for electricity producers and one for other industries. It was an act of signal policy bravery, in effect daring the Coalition and News Corp to run as big a scare campaign as they could; in the end, it played no role at all in the election outcome.
With Labor odds-on to win the coming election, there’s no big-target strategy this time, but an embrace of the kind of big-government, tax-and-spend ideology on emissions abatement Tony Abbott had the Liberals commit to in 2010. The government is already insisting that Labor’s higher targets will mean higher electricity costs for consumers, but in the absence of any kind of market mechanism from Labor, that logically can’t happen, not with renewable-based power now consistently cheaper than coal and gas. That won’t stop the government and Energy Minister Angus “The Invisible Man” Taylor, or the government’s allies at News Corp, from claiming it incessantly, but it’s taxpayers who will bear the cost of Labor’s emissions abatement, not consumers.
Oh, wait — they’re mostly the same thing. But voters don’t know that. They think governments spend, not taxpayers. That’s why in poll after poll, voters — even conservative voters — say they want governments to invest more in renewable energy, while being far more divided over market-based mechanisms like carbon prices and emissions trading schemes. They’re happier for tax dollars to be spent building renewable energy — a kind of victimless crime, as far as they can see — rather than the shift to renewable energy being done far more efficiently, and at much lower cost, via a market mechanism, which may lead to slightly higher prices for consumers. It’s a lesson in behavioural economics, really: voters prefer not to see they’re paying for something, even when they are, and paying more than they should.
Oddly, at a time when neoliberalism is being belted by even the Liberal party, a market mechanism to reduce carbon emission was a great example of neoliberalism fulfilling its promise: we had a carbon pricing scheme from 2012-14, it reduced emissions, and it did so even more cheaply than expected — far more cheaply than will happen after the next election, either way.