Direct Action keeps state policymakers guessing
Whether set as a fixed price - $23 a tonne in the first year starting in July 2012 - or a floating price by July 2015 if the present legislation survives, a cost for venting carbon dioxide was to be the country's main mechanism for cutting back on greenhouse gas emissions that the overwhelming majority of scientists say are warming the planet.
While conservative state governments typically bellowed against the carbon price, they were generally united in one thing with the Rudd and Gillard Labor governments in Canberra: no more need for duplication of emission-reducing policies. As a result, the governments deemed only about 34 of 74 state and federal policies dealing with carbon reduction and energy efficiency were necessary, according to Council of Australian Governments figures.
So keen were the Queenslanders to put a scythe through their thicket of schemes that they chopped 10 of the 13 programs that were complementary rather than duplicative to the carbon prices, according to the Climate Institute.
The new Abbott government continues its mantra that the carbon tax must go and that its Direct Action program will deliver the pledged 5 per cent reduction on 2000 levels in national emissions by 2020 at a cheaper cost.
The problem for state policies, says David Karoly, a climate scientist at the University of Melbourne, is that there is so little detail about how Direct Action works it is unclear what state policies are now complementary.
There is a real chance that the eagerness to roll back emissions policies has been overdone - and we are also exposed to an over-reliance on a single approach.
"Most countries don't rely on a single measure like a Direct Action policy or a carbon pricing mechanism," Professor Karoly said. "They also use complementary measures. "
A big test will come when major liquefied natural gas ventures - some of them with high carbon dioxide content - are up for environmental assessment.
While projects such as the Chevron-operated Gorgon gas project are going ahead with emission controls in place - its gas contains 14 per cent carbon-dioxide that must be removed - others such as Sunrise, Browse and Arrow have yet to be set limits, said John Hirjee, the senior energy and utilities analyst at Deutsche Bank.
And so will these projects have carbon curbs?
"It depends on what the Direct Action policy is," Mr Hirjee said. "And that's unknown."
Frequently Asked Questions about this Article…
Australia’s carbon price was designed to drive the country towards a lower carbon future by putting a cost on carbon dioxide emissions. Starting at $23 a tonne in 2012, it aimed to reduce greenhouse gas output, helping combat climate change by making polluting activities more expensive.
While conservative state governments were vocal critics of the carbon price, they generally agreed with the federal Labor governments that there was no need for duplicating emissions policies. Many states reduced their own programs, especially those overlapping with the carbon pricing scheme.
The Direct Action program, introduced by the Abbott government, aims to cut national emissions cheaper and pledges a 5% reduction from 2000 levels by 2020. Unlike a carbon tax that charges emitters, Direct Action focuses on paying businesses to reduce emissions, but details on how it actually works remain unclear.
Climate experts like Professor David Karoly say there’s little detail on how Direct Action operates. Without clear guidelines, it’s tough for states to know which of their emissions policies complement the new federal approach, creating uncertainty around coordinated carbon reduction efforts.
Most climate scientists and experts believe relying on just one policy, such as Direct Action or a carbon pricing scheme, is risky. Many countries use a mix of complementary measures to tackle emissions effectively, so putting all eggs in one basket might not deliver the best results.
Big LNG projects, which can have high carbon emissions, will be closely scrutinized for their environmental impact. Some, like Chevron's Gorgon project, already have emission controls, but others still await clear carbon limits. Their approvals could set important precedents for managing emissions in heavy industries.
Investors must navigate a complex and uncertain policy landscape with shifting state and federal approaches. The lack of transparency around the Direct Action program and potential policy rollbacks means it’s tricky to predict how carbon regulations will affect industries and investment returns.
Queensland aggressively scaled back 10 out of 13 programs that were meant to complement the carbon price, aiming to eliminate duplicate efforts and reduce costs. However, this trimming may have gone too far, potentially weakening the overall effectiveness of emissions reduction strategies.
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