“Labor’s emissions trading scheme” was the headline the AFR’s editors slapped on an account of the climate policy released by Labor this morning. It was a peculiar description given the article by Phil Coorey didn’t once mention emissions trading.
A charitable interpretation is that the economic rationalists in charge of the Fin cling to the view that an emissions trading scheme is the most economically efficient and lowest-cost means of reducing carbon emissions, and were engaging in wishful thinking that Labor would bravely go to another election with such a policy.
Alas, it’s not to be. There’s no emissions trading scheme here, at least not a meaningful one. Labor proposes to extend the government’s pissweak (to be generous) “Safeguard Mechanism” which purports to threaten a tiny number of companies with absolutely no consequences if they exceed the ridiculously high average industry emission levels. Labor will increase the number of companies affected — from its current number of around 140 — by lowering the emissions threshold at which it applies, but will also allow them to carry over credits for undershooting the industry average, sell those to firms that overshoot, and allow the latter to buy cheap international credits.
But as the number of firms caught indicates, this isn’t much of an “emissions trading scheme”. For a start, the energy sector, which is 52% of Australia’s emissions, isn’t subject to it. So, scratch more than half of our emissions. Next, the agriculture sector, which is responsible for 14-15% of emissions depending on conditions, isn’t subject to it either. So, scratch two-thirds of emissions. And when it comes to transport, which is Australia’s second-biggest source of emissions, around half of that sector’s emissions, or about 9.5% of all emissions, comes from passenger vehicles. So scratch three-quarters of all emissions.
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But wait, there’s more: Labor will also give special treatment to “emissions intensive trade exposed sectors (EITEs), such as steel, aluminium and cement.”
Apart from being trade-exposed and massive and astonishingly inefficient users of energy, those industries are also our most heavily protected and represent a deeply unhealthy intersection of union power (via the AWU and the AMWU), business self-interest and state and federal economic nationalism on both sides. EITEs, famously, got a sweet deal under all of the iterations of Labor’s emissions abatement schemes when in government.
So to the extent that there’s anything resembling a trading scheme of any kind, it’s going to apply to perhaps a fifth of Australia’s emissions, and pretty much none of our biggest sources of them. Instead, Labor has a policy patchwork approach. The energy sector policy centres on several billion dollars in extra funding for renewables and returning to the National Energy Guarantee when the Coalition sees reason on energy (stop laughing). There’s to be an electric vehicle target, backed up with government fleet purchases and incentives for business fleet purchases, plus the introduction of vehicle emission standards, where Australia is a shocking laggard internationally. There’ll be a return to proper restrictions on land-clearing. The government’s ineffably silly Soil Magic handout scheme will be scrapped for a more rigorous Carbon Farming Initiative.
Back when the Gillard government announced its carbon pricing scheme, it had some of the same flaws as Kevin Rudd’s Carbon Pollution Reduction Scheme — like indulging inefficient EITEs — but was buttressed with supporting measures extracted by the Greens like extra investment in renewables (that was the origin of the Clean Energy Finance Corporation) as well as existing measures like the Renewable Energy Target. Ideally, a comprehensive economy-wide carbon pricing scheme should have made such add-ons redundant, but we were never going to get that, so the add-ons became crucial.
Under Labor, there’ll be nothing but the add-ons; there is only the buttressing, not the actual structure. The party that bravely took another emissions trading scheme (one for energy, another for the rest of the economy) to the 2016 election has retreated to a patchwork of sector-specific policies.
Undoubtedly it represents a significant improvement on the non-policy of a climate denialist Coalition, and in service of more realistic emissions abatement targets than the Abbott-era ones Scott Morrison has committed to. But it’s still policy Australian-style, with vested interests, key donors and favoured sectors looked after.