Is Bernardi or Hunt in charge?

In trying to work out exactly how the Coalition’s Carbon Emission Reduction Fund (ERF) might work, you can’t help but get a little confused by the contradictory statements made about the policy from different members of the Coalition. 

Just as shadow climate change minister Greg Hunt starts to reassure you, someone else from the Coalition makes a statement that makes you extremely nervous.

In an address to the Sydney Institute on May 30, Hunt made a series of comforting statements indicating the ERF would operate in a manner that removes politicians’ and public servants’ judgement in picking and choosing which projects are funded and by how much. As some examples he stated:

“It is similar to how the international Clean Development Mechanism operates. We will use a reverse auction to buy the lowest cost per tonne abatement. Contrary to what the ALP says, we are source neutral.”

And:

“We will not provide a dollar unless there is an actual reduction of emissions. Just like a contract for wheat, we only pay on delivery of actual abatement.”

This represents a major improvement over what we saw in the Coalition’s 2010 Direct Action election policy statement. 

Hunt says the scheme will be “source neutral” and focussed solely on lowest price. Gone is talk about a “once in a century replenishment of our soil carbon” and “soil carbons will be the major plank of our strategy”. Also gone is talk of using tendering, which opens up the possibility for assorted qualitative criteria that relies on subjective judgement. Instead we have auctions, which would be based on one factor – price.

For those who saw first-hand the debacle of the Howard government’s Greenhouse Gas Abatement Program and the Low Emission Technology Demonstration Fund, this is a major relief.

But then on ABC’s Q&A program we hear Cory Bernardi talk about what he thinks Direct Action will do, and relief is replaced with anxiety.

…Our policy, on the other hand [to a carbon price], has actually real environmental benefits attached to it. We are going to clean up the waterways, we're going to have more trees, we’re going to encourage energy efficiency. Those sorts of things are...
TONY JONES: And you're doing that in spite of the fact you don't believe climate change is happening caused by human...
CORY BERNARDI: Well, you see, one of the things Tony is that I'm the great healer in the Liberal Party...I've brought Greg Hunt and Malcolm Turnbull and Cory Bernardi together to agree on a course of action that is going to have no regrets for us. It’s going to mitigate carbon dioxide, which, I think, is a good thing. But whether that’s going to change the climate or not, it doesn’t matter. There’s going to be resounding, positive benefits.

So Cory Bernardi, who doesn’t think rising concentration of CO2 has any role in warming the planet, thinks he played a major part in developing the Coalition’s policy on climate change?  

He appears to think the policy will be focussed on funding projects based on goals other than lowering greenhouse gases, with emission reductions simply a by-product. It happens to be true that just about every abatement measure delivers a range of other benefits (these are also delivered when abatement is induced through a carbon price, by the way). But I’m a bit doubtful about an auction focussed on lowest cost abatement cleaning up waterways.

Also, without the use of deeming carbon credits upfront I suspect it won’t do all that much for energy efficiency either. And does this mean the flaring of methane from landfills and coal mines – one of the lowest cost sources of abatement available – won’t qualify because it doesn’t deliver much in the way of co-benefits?

The reality is that Hunt has to walk a tightrope in satisfying the desires of different camps within the Coalition. There are a significant number in the Coalition who are ignorant of John Tyndall’s experiments in 1859 and hostile to their implications. But there is also a significant number who respect the judgement of the National Academies of Science of the UK, USA, Germany, Canada, France, Italy, India, Brazil, China, and Australia.

The 2010 election policy statement represented this delicate balance. It stated that for projects to be eligible for funding it wasn’t enough that they deliver abatement beyond business as usual. In addition they needed to “deliver additional practical environmental benefits”. 

The document also states, “Assessment of projects will also take into account any additional significant public policy benefits.”  Such statements, along with the strong focus on soil carbon, were probably part of a deal to get the Bernardi camp’s approval.

An auction focussed solely on lowest cost abatement, however, could well deliver outcomes that are different to what Bernardi’s camp has in mind. This camp may take a harder look at Hunt’s auction proposal and decide that it isn’t the same policy they thought they agreed to. The issue then becomes whether they end up winning the argument in Cabinet or whether Hunt does. 

Tony Abbott probably owes more to those in Bernardi’s camp than those aligned with the National Academies of Science.

To have confidence that Hunt will win the day, it really needs to be Abbott delivering speeches saying he wants to use auctioning and is only interested in lowest cost. So far his statements on the form of the policy are noticeably absent.