Today the Grattan Institute’s Energy Program director Tony Wood has dumped the niceties and called a spade a spade, or perhaps a figleaf a figleaf. The institute issued a press release accompanying a government submission declaring that:
“The federal government’s Direct Action Policy and Emission Reduction Fund do not make up a comprehensive climate change policy consistent with holding global warming to two degrees.”
It notes that:
“...the Green Paper lacks vital detail and does not provide confidence that key elements of the Government’s design principles for the Fund will be met.”
Of course, this is pretty much obvious to anyone with a familiarity about investment decisions surrounding energy and carbon-intensive equipment.
Shortly after the release of the Emissions Reduction Fund Green Paper, Australia’s most experienced and largest tree carbon credits business announced it will rationalise its carbon credits business and focus on investments in aquaculture.
We’ve got the Energy Supply Association telling a Senate Committee"
“…we consider it unlikely that there will be significant participation from our sector in the Emissions Reduction Fund.”
Leading carbon market analysts, Bloomberg New Energy Finance, have observed,
“All of the bankers we have surveyed have said projects under the scheme will be practically unfinanceable."
This has since been backed up by recent statements by the National Environmental Law Association which said the big four banks won’t touch the scheme with a barge pole.
So, given that it looks as though no one is willing to bet a dime that this thing will work properly why is the NSW regulator – IPART – telling the Australian government:
“In particular, we are of the view that the Renewable Energy Target should be closed because it is not complementary to the Emission Reduction Fund.”
We’ve seen this before.
Remember when the Labor government was trying to introduce an emissions trading scheme. This was supposed to be the great economic reform that would solve all our climate change ills.
At the time, and for many years to follow, the Business Council of Australia, the Chamber of Commerce and Industry, the Minerals Council, the Australian Coal Association and the Australian Petroleum Production and Exploration Association formed a conga line of rent seekers demanding that all other carbon emission reduction measures be dumped immediately (including IPART’s “complementary” NSW Energy Savings Scheme) on the basis that they were not “complementary” to the emissions trading scheme.
Meanwhile, they spent every second minute white-anting the emissions trading scheme, playing an Oscar winning support actor role to Abbott’s Al Pacino. As he screamed and yelled and generally dramatised every waking moment of our lives with hyperbole, there they were saying, ‘yes it’s true, it’s horrible’ – and all the while their member businesses invested tens of billions of dollars in new LNG plants and mines.
And in the industrial manufacturing sector, in spite of the carbon price’s imminent demise we see it make not a jot of difference as a range of manufacturers close.
Guys, the game is up.
The Renewable Energy Target is the key policy that will keep a lid on emissions from our biggest source of emissions, electricity supply. Gas prices are skyrocketing, making it completely uncompetitive with coal. So let’s not trot out out-of-date figures suggesting that the RET is an exorbitantly expensive source of abatement because it ignores gas.
Yes, it is true that a well-designed policy which encouraged a broader suite of abatement measures would be more efficient. But it has to be well-designed. There was a possibility that the Emission Reduction Fund could have worked half reasonably. But the five-year abatement purchasing contract period is too short, the emission baselines applying to polluting facilities are too weak and the budget for the fund is completely inadequate to achieve the government’s targets.
Generally, when humanity is trying to solve tasks where failure has dangerous consequences we worry about something beyond efficiency – it’s called robustness. When you really care about avoiding failure redundancy is not a bad word, it’s a necessity. Any major piece of major infrastructure you can think of is built with redundancy so it still functions even if some components break down. As an example, our electricity system is planned around meeting demand events that would only be exceeded one-year-in-10 plus the failure of the largest power generating unit.
According to the US EPA, if you happen to believe future generations’ welfare is as important as our own, then it would be worth paying around $US68 to avoid the emission of a tonne of CO2 in 2020. That’s more than what we pay for abatement under the Renewable Energy Target.
Until such time as the Coalition’s Emissions Reduction Fund has resolved the considerable doubts that exist about its effectiveness, efficiency and critically its robustness, calls to scrap the RET or any other policy that’s effective at reducing emissions, because it is not “complementary”, can be safely ignored.
They are symptomatic of weak analysis that seems to ignore, or perhaps more accurately not care, about the importance of avoiding dangerous climate change.