Greg Hunt - the lazy student who got lucky

Tomorrow is the big day where world leaders converge on New York for UN Secretary General Ban Ki Moon’s climate change pow-wow (or in Tony Abbott’s case, skip it while attending a terrorism meeting the next day in New York).

The point of the meeting is to avoid the kind of debacle we saw in Copenhagen in 2009, where world leaders came together to do a deal for reducing emissions within the space of a few days, but hadn’t done the necessary homework to make such a feat possible. In December next year they’ll be having a second go at trying to stitch-up a deal in Paris to formalise and transparently lay out countries’ commitments to reduce emissions for a period after 2020.

Ban Ki Moon is hoping that if he can get together as many very senior leaders as possible in advance, they’ll be able to lay out their cards and sort out some of the key sticking points now, such that by December 2015 a reasonable deal can be achieved.

But it’s probably a good thing that Tony Abbott isn’t wasting his time at the summit because the government doesn’t appear to have thought about what it is and isn’t willing to offer under a post-2020 agreement. Foreign Minister Julie Bishop has already ruled out providing an offer at the summit of post-2020 emissions reduction targets. What’s more, the government doesn’t even have a process and timetable in place to work it out, such that it’s properly prepared in advance of Paris.

So why care?

Firstly, deciding how much you’re willing to reduce emissions over the period 2020 to 2030, and on what conditions, is kind of an important decision.

Presuming the target actually takes global warming seriously, it will have significant implications for the shape of the energy sector and a range of multi-billion infrastructure investment decisions. You don’t really want to pluck a number out of thin air. You’d presumably want to engage with business and the community as well as scientists and economists to think through the implications of different options. Also you probably want to put some thought into how you might be able to achieve such a target, including the likely policy mechanisms.

Now it is always possible to back-out of any target you might pledge. Canada did it with the Kyoto Protocol. But this time round it looks as though not just Europe but also the United States and China will be signing-up to the 2015 agreement. According to the Climate Institute’s Erwin Jackson, each of these jurisdictions is likely to have prepared its own emission commitments by the first quarter of 2015. Do we really want to be making a pledge to these jurisdictions, as well as many other major economies, that we have no real intention of honouring?

The government should now realise that developing meaningful policies to reduce carbon emissions involves a lot more work than a press release and a dollop of cash out of the budget with a billion number attached to it.

In the lead up to the 2013 election, Greg Hunt promised he’d have the Direct Action Emissions Reduction Fund abatement auction scheme operational by July 1 this year. Well almost three months later, there’s no sign of an auction being scheduled and the scheme is yet to be legislated.

The government released an update on Friday last week detailing the progress of its abatement auction scheme, now called the ERF for short. The number of abatement options that are now ready to bid into the auction (when it is eventually held) has barely progressed beyond those already eligible under the prior Labor government’s Carbon Farming Initiative.

In addition, the legal contract that government will enter into with abatement suppliers appears to have disappeared into bureaucratic limbo land. As has a market-testing investigation into whether a contract term of five years is too short for anyone to make a reasonable quid from supplying abatement such that it’s worth participating in the scheme.

There’s now only three weeks left in this parliamentary sitting session during which the Senate is sitting and capable of passing legislation. After that the government would have to wait until late November or December which rules out an auction taking place this year. This leaves the government half a year behind schedule.

Yet it may not matter, if recently released analysis by Frontier Economics is accurate. Frontier Economics has been crunching the numbers of what the latest downgrade in projected electricity demand from the Australian Energy Market Operator means for Australia’s emissions. The result is stunning, showing the government’s emission reduction target has become vastly easier to achieve – all without them having to lift a finger.

The most recent government projections of Australia’s future emissions, from late 2013, estimated that the country needed to reduce its emissions by 421 million tonnes of CO2 between now and 2020 to meet the minimum target.

Frontier believes the abatement gap is now closer to between 225-279 million tonnes of CO2, provided the government doesn’t reduce the Renewable Energy Target.

This is truly astounding, equivalent to taking Australia's entire car fleet off the road for two years. This new data means even the mangled mess that is Direct Action has half a chance of meeting the government’s minimum emission reduction target, with some sensible tweaks and additional funding.

It’s as if the Environment Minister Hunt had his homework eaten by a dog but it was then regurgitated as something far better than he could ever have designed. But will the government be able to repeat the feat under the Paris 2015 agreement?