Direct Action: 'Could be great ... but'

If you were keen to axe the carbon tax, and think carrots are much better motivators of change than sticks, then there was plenty to encourage you at the Carbon Market Institute’s conference held yesterday.

The first half of Environment Minister Greg Hunt’s speech at the conference, if viewed in isolation, could have easily come from the pro-carbon pricing John Hewson or even former US Vice President Al Gore. Hunt pointed at the deadly smog of 1950s London, the spread of typhoid through polluted water in that same city, and the also deadly hole in the ozone layer of the 1980s.  He noted that not only did we find a solution to these problems and other environmental challenges, but we found it quickly and at relatively low cost (and even a benefit) once government got serious.  

It almost represented the perfect counter punch to former PM John Howard’s climate sceptic speech given to the Global Warming Policy Foundation earlier this year. Howard seemed to suggest global warming wasn’t a worry because if it happened to be real, humans' capacity for innovation would allow us to adapt to its effects. Whereas Hunt’s message was once government challenge business to do something to clean up their emissions we’ll surprise ourselves how easily it can be done because of human’s capacity for innovation. 

In addition to the inspiring rhetoric, there were presentations from businesses telling of how they had not only found ways to reduce emissions, but do it at a profit no less. In addition, for those sceptical about whether the government’s Direct Action policy might be the catalyst for emission reduction innovation, all five businesses presenting said they’d be looking to participate in the government’s Emissions Reduction Fund.

Could I be wrong, perhaps? Could the Emissions Reduction Fund be something more than the ugly and unloved offspring of a forced marriage of convenience between Cory Bernardi and Malcolm Turnbull?

Well it seems the answer could be, “Yes... but… ”

If you didn’t bother to probe business attendees too deeply you could walk away with the impression that government will have plenty of abatement projects being offered into its purchasing auction.

But then you ask a few questions and you hear the qualifications come.

One attendee explained that there were several energy efficiency service providers that have projects ready and processes in place to generate credits using the methods from the NSW energy savings scheme. I asked, don’t they have a problem with the ongoing administration involved with a five-year contract rather than getting paid upfront? No, was the answer, because they normally get paid by customers via the ongoing energy bill savings of the equipment they install. 

Then I asked will $10 per tonne of CO2 be enough to get their projects over the line? “Ahh, no,” he said. This was just some extra cream on top of projects they were going to do anyway he explained.  

A staff member of a waste management business was emphatic that they’d be bidding in projects and doing it from the first auction. But these were from methane capture projects that had already been built with support of prior government programs. Again, no difference to business as usual.

One large global corporate explained to me they had a detailed portfolio of projects with business cases all worked up, and had even worked out their bidding strategy for how they’d offer abatement into the auction.

I incredulously asked, so you have a few hundred thousand tonnes of abatement that you could get up with less than $20 per tonne of CO2?

Yep, he responded.

Even though you’ll only see five years of revenue, I asked.

He paused then said, “Oh… well, that has to change”.

Another company that’s very progressive on lowering their carbon footprint said they’d be interested in participating. But they complained to me privately their frustration that right now there was so much yet to be worked out by the government that they had no idea whether participation would be worth the effort. He echoed the sentiments of many others saying, “What’s the government willing to pay? I don’t know” and “What do we have to do for projects to be eligible and how much admin will I have to do?”

His company wouldn’t be rushing to participate. Instead they’d want to see a few auctions take place to see what was on offer and how much work was involved.

Let’s just hope the government is waiting around to hear the ‘but’ that comes after businesses say 'yes, they’re interested' in participating in the scheme.