Stuck with bipartisan carbon delusion

A friend leaned over at a recent dinner function and said “forget carbon – nobody cares about carbon anymore”. And he is probably right.

If climate change was front-of-mind in the run-up to the 2007 election, at a time when 12 years of drought had turned suburban lawns into little deserts, things are very different in 2013.

After the double La Nina effect of recent years (The climate for a new economy, February 2011) many dams have refilled and Kath and Kim are back out on their lustrous lawns sipping ‘cardonnay’.

“Oh those ignorant scientists!” Kath Day-Knight might exclaim. “I quoite loike climate change. It’s noice. It’s different.” 

Technically speaking, neither major party in Australia agrees with Kath. Both sides are still committed, on paper at least, to the task of reducing Australia’s carbon emissions by 5 per cent from 1990 levels by 2020.

But the acrimonious 43rd parliament has led to a point at which that target is as good as torn up.

Labor’s expensive ETS scheme, with its $23/tonne fixed-price period, was co-designed by the Greens to front-load renewable energy investment via the Australian Renewable Energy Agency and the Clean Energy Finance Corporation, so that as high-pollution power generation assets were closed, there would be renewable capacity to replace them.

The Coalition’s much less expensive plan aims to use tree planting, soil sequestration and tax-funded grants to businesses to end polluting activity – though there is no support among economists or scientists that the plan could hit the target in its current form (see below).

The Australian reports today that while AiG still wants a market-based trading scheme (not least because it will have a very low linked price when the fixed-price period ends in 2015), ACCI is urging the Coalition, if it forms government, to scrap the ETS as quickly as possible to “allow for lower energy prices to be passed through”. That overlooks that fact that buying European permits at, say, $12/tonne in 2015 is a very low cost form of abatement.

According to a leaked timetable for implementation of the Coalition's plan, there would be a long period of consultation between scrapping the ‘carbon tax’ and bringing in Direct Action. The Australian quotes Climate Institute chief executive John Connor as saying: "They are proposing to repeal the carbon laws and then leave at least 100 days of carbon confusion while they undertake a public consultation process; I think it'd be far better for the parliament and the public to have a thorough look at the alternative before you repeal what is in existence.”

But that’s where our green lawns come in. Voters who were so concerned about climate change in 2007 that even John Howard was working on an ETS plan, have gone cool on the issue – even if scientists' warnings of biological and economic disruption continue apace.

One study, published in Nature Geoscience this week, says the rate of global warming is likely 20 per cent slower than previously thought. However, Oxford University researcher Alexander Otto, author of the paper, says: “It certainly is no reason to relax or become complacent in terms of climate policy, because the rate of warming that we will see eventually in the coming centuries has not changed from this data. If we were following our current emission trends... we would still look at temperatures at the end of the century significantly above the 2 degrees target that we are talking about.”

But we have become complacent. If Labor, which staked its electoral fortunes on the current ETS policy, loses government and then opts to roll over on the repeal of its own policy (Is this the end of ‘CarbonChoices’? May 17), the richest nation on earth will have chosen bi-partisan support for a policy that cannot work.

I asked Rob Oakeshott, co-architect with the Greens, Tony Windsor and Labor of the ETS scheme, what he thought would happen if a Labor Party in opposition failed to oppose Tony Abbott’s repeal legislation.

Oakeshott was not optimistic: “It would mean no double-dissolution, and Direct Action, an inferior policy, becomes law. That means all the benefits of a market-based mechanism are lost, all the benefits of low cost abatement, and a great deal of investment uncertainty.

“I’ve tried to work the Direct Action policy out, and I struggle. You would have to be planting thousands of trees a day now, and whacking up hundreds of solar panels now to get to 5 per cent by 2020 within a capped amount of money ... and [on soil sequestration] you’d need all that science to prove itself up very quickly.”

But will voters cop Labor getting behind the Abbott plan, when the Gillard government has fought and fought for an ETS solution?

Oakeshott thinks they will: “I would love to be in the camp that says it would matter to voters. But if they’ve just swept in a new government on a promise that they’re going to remove the carbon tax... and stay true to the science [of climate change action] via Direct Action, but have an inferior economic policy, and the Labor party links to them at the hip, I think frankly, sadly, voters will cop it.

“Just like WorkChoices for the Liberal Party, sadly I guess that there’s a real chance that if they go down that path, and that’s what we end up with ... it increases the importance of everyone fully understanding the detail of Direct Action policy prior to the September 14 ballot.

“It is an undeliverable policy in its current framework ... something would have to change. The money [spent] would have to go up, the target would have to go down. The parameters don’t make sense. If it becomes a bipartisan position not to make sense, it leaves voters with not many options.”

The Greens, of course, will say that leaves them as the only option. However many voters will balk at supporting the party that has been so heavily criticised for forcing the $23/tonne fixed price period that, in Julia Gillard’s fateful words “functions a bit like a tax”.

Forget about carbon? This is major economic reform, but one that will now most likely junk half a century of market-based economic wisdom in favour of policy that cannot hit the 2020 target. That will be hard to forget.