Trapped in Abbott's bizarre parallel universe

The Coalition wants to address global warming. Abbott also says we must dig up all our coal. The RET's aim is to reduce emissions, but it's not working because it drives out coal power. The government hasn't fully budgeted Direct Action, but it will easily achieve 2020 targets. Welcome to Abbott's universe.

Tony Abbott, in a speech last Wednesday to the Minerals Council’s Parliamentary Dinner, made an incredibly revealing but little noticed comment:

“.. if there was one fundamental problem, above all else, with the carbon tax was that it said to our people, it said to the wider world, that a commodity which in many years is our biggest single export, somehow should be left in the ground and not sold. Well really and truly, I can think of few things more damaging to our future.”

Now, maybe he’s discovered some miracle fix that will enable us to inexpensively clean-up coal’s CO2 emissions. Strange he hasn’t mentioned it.

Otherwise, this is pretty much a polite way of saying ‘climate change is crap’.  

Sometimes it feels like we’re engaged in some elaborate and surreal charade at present. 

Environment Minister Greg Hunt says the government accepts the science surrounding global warming and agrees on the same emissions reduction targets as Labor. In addition, when it was flagged by the prior Labor government that axing the carbon price would endanger achievement of the Renewable Energy Target as well, Greg Hunt said this wasn’t true. He said that – whether under Labor or Liberal, and even with the axing of the carbon price – we’d have the same amount of renewable energy.

So, in spite of Tony Abbott saying there would be few things more damaging to our future than leaving some coal in the ground, we all engage very seriously in the government’s climate change policy processes.

But then we have a review of the Renewable Energy Target where stakeholders are told that economic modelling will place no monetary value on avoidance of carbon emissions. And word trickling out of stakeholder meetings with members of the review panel is that they refuse to engage on the need to consider how Australia will decarbonise its electricity supply over time to meet emissions reduction commitments beyond 2020 consistent with Coalition policy.  

You then have to wonder whether we’ve entered into a weird parallel universe when organisations such as the Australian Energy Market Commission and major energy suppliers, like Origin Energy and Energy Australia, seem to think that the Renewable Energy Target driving the closure of major coal-fired power stations is a sign the policy isn’t working. 

But isn’t replacing highly emissions-intensive coal power stations with zero emission renewable energy kind of the point of a carbon pollution reduction policy?   

No – it’s proof of a market distortion, apparently. And even worse – it’s government picking winners.

OK then, well what about we just put a simple, transparent price on carbon emissions when they’re emitted – irrespective of source – to get around this picking winners problem? 

Would that make the Minerals Council, the Australian Petroleum Production and Exploration Association, and RET reviewer Brian Fisher happy, who all complain about the RET picking winners?

No, can’t do that either apparently. Might tip people off overseas that when you burn coal it releases lots of CO2.

Oh and by the way, says the AEMC and Origin Energy, because you’ve got rid of that carbon price you should also reduce the Renewable Energy Target, too. This is because with the carbon price gone wholesale electricity prices will decline making renewable energy projects no longer financially viable. 

But if we’ve thrown out the most important emissions reduction measure in the carbon price, doesn’t that kind of make the Renewable Energy Target even more important if we’re to achieve our emission reduction targets?

Wouldn’t we maybe tweak the RET scheme to adjust for the loss of the carbon price rather than pull it down? Especially given Greg Hunt promised that abolition of the carbon price would not undermine the RET? 

But how stupid of me, I forgot we’ve got the budget-funded Direct Action Emissions Reduction Fund. It will be fully effective at achieving our targets and much more efficient than anything else.

In fact, it will be so efficient that the Coalition will be able to procure 431 million tonnes of CO2 abatement within six years, with almost all of it done in the last two years beyond the budget forward estimates. All at an average cost of just $12 per tonne. (Or perhaps even less, given the expected expenditure of the fund was halved in the May budget papers.) This is about a third to a fifth of the cost estimated by credible experts in detailed and reasonably transparent modelling reports.

But what would experts know, Minister Hunt is “confident”. 

Why is he confident?

Well, if you have time for a laugh you could read the Senate Estimates dialogue below. It seems to suggest that the government hasn’t actually done any detailed economic modelling to assess the budgetary impact for Direct Action to achieve the 2020 abatement target. And if it has, it certainly isn’t prepared to share it with the rest of us.

But why bother with all that stuff anyway. According to Dick Warburton, who is leading the review of the RET, it’s doubtful whether global warming is much of a problem anyway.

– – –     – – –

*Extract from Senate Estimates Hearing -26 May 2014:

Senator URQUHART (Labor): The current target for emissions reduction is five per cent by 2020. How has the capacity of the ERF to achieve this been modelled?

Mr Power (Department of Environment): I am aware of a number of external modelling parties who have done some work in a proxy manner. None of those studies have been conducted and directly modelled the actual white paper policy; they were conducted before that. ………..

Senator URQUHART: What about the departmental modelling, can you provide that?

Mr Power: The department has not released any modelling in relation to the Emissions Reduction Fund. As I said, it is a matter for government to release any estimates and it would consider that through its projections process.

Senator URQUHART: If the department has not done any modelling how do you expect to reach the targets?

Senator Birmingham (Liberal – Parliamentary Secretary for the Environment): That is not what Mr Power said. What Mr Power has highlighted is that there is a process for 2014 projections being undertaken but, based on the 2013 projections, we are aware of the abatement task that is required to meet the five per cent reduction on 2000 levels by 2020. We are confident that the structure of the ERF and the budget provided to it will allow the government to do so. Of course, further projections – the 2014 projections – are expected to be finalised near the end of the year and released somewhere around the New Year period.

Senator URQUHART: There is $2.55 billion of public money; why will you not release that material?

Senator Birmingham: We have released a lot of material and we have been through a very comprehensive white paper process in relation to the design of the Emissions Reduction Fund. The 2013 projections are publically available and the 2014 projections will be made publically available.

Senator URQUHART: But I am talking about the modelling. Why will you not release the modelling that the department has done?

Senator Birmingham: The government has been through a very open and consultative process in designing the ERF to achieve the bipartisan target.

Senator URQUHART: That does not answer my question. Why will you not release the modelling?

Senator Birmingham: I think there is ample information out there. There is all sorts of advice provided to government over time, but what we have been very conscious of in this process is ensuring that the design of the ERF is robust. That is why we have engaged in such extensive consultations, been through a green-paper and white-paper process and made sure that we have in place a structure that can achieve abatement to achieve the 2020 targets without the type of punitive mechanisms that your government imposed.

Senator URQUHART: None of the material that you have released covers the projected abatement. Why will you not release the modelling that you have done?

Senator Birmingham: The material released gives clear demonstration on how the government intends to achieve its targets – bipartisan targets. Ultimately, of course, we will be judged and the success of the ERF will be judged on meeting those targets. We are confident that will occur.

Senator URQUHART: That still does not answer my question.

Senator Birmingham: I do not think I have anything else to add. In opposition we went through a very detailed process of looking at the potential sources and costs of abatement in government in getting the design of the ERF right. We are confident it will meet the targets.

Senator URQUHART: There is a serious majority of stakeholders who do not believe that you have released anything like enough detail, so why will you not release that?

Senator Birmingham: I would invite people to have a read of the white paper if they want some more detail on the ERF.

Senator URQUHART: I am sure they have got detail on the ERF, but I am talking about the modelling that it is based on.

Senator Birmingham: On these budget estimates processes and the expenditure of public funds the ERF is our primary vehicle.

Senator URQUHART: Which is $2.55 billion.

Senator Birmingham: We have been very transparent in its development and we are very confident that it will meet the targets.

Senator URQUHART: This is $2.55 billion of public money.

Senator Birmingham: And that is why we have gone through a very thorough, transparent, open, consultative and engaging green-paper and white-paper process to get the structure of the ERF right.

Senator URQUHART: Why won't you release the modelling?

Senator Birmingham: That is what that whole process has been about.

Senator URQUHART: If you believe it is so good, why do you not release the modelling?

Senator Birmingham: We have been quite open through this whole process. I cannot help but keep repeating that the development of the ERF has – in the very short period of time that the government has been in place, with a lot of hard work from a lot of people – seen the green paper released, seen extensive consultations and seen us make sure that we get the model right. We are confident that the type of process outlined will deliver value for money abatement for the taxpayer that will ultimately get us to the target. The test will ultimately be in terms of reaching that target.

Senator URQUHART: You are so confident, but you are not prepared to release that document for fear that it might show something.

Senator Birmingham: You are talking about a document that may or may not even exist.

Senator URQUHART: I am sure there is modelling. Are you suggesting that there has been no modelling?

Senator Birmingham: The government has all sorts of advice to it, and advice to government is not something that we traditionally explore at these estimates.

Senator URQUHART: I understand that, but I was asking about why you would not release the modelling.

Senator Birmingham: I am not sure what the modelling you are talking about is.

Senator URQUHART: The department modelling.

Senator Birmingham: I am not sure what the modelling you are talking about is. There are all sorts of input and advice received by government.

Senator URQUHART: So you are going to spend $2.55 billion, and there is no modelling.

Senator Birmingham: Very wisely and prudently and in accordance with the terms of the white paper.

Senator URQUHART: And no modelling?

Senator Birmingham: Very wisely and prudently to accrue genuine abatement in accordance with the terms of the white paper.

Senator URQUHART: But without any modelling from the department.

Senator Birmingham: We have had lots of advice from the department in the construct of the ERF, as we have from all manner of other stakeholders, and we are very grateful for their participation in that process.

Senator URQUHART: Does that modelling prove that the ERF will work and achieve the targets?

Senator BIRMINGHAM: The government is confident that the ERF will allow us to achieve the bipartisan target by 2020.

Senator URQUHART: Are you confident on the basis of the modelling?

Senator BIRMINGHAM: We are confident.

Senator URQUHART: On the basis of the modelling that you have received?

Senator BIRMINGHAM: We are confident.

Senator URQUHART: Alright, I will move on because I think you are just going to keep saying the same thing over and over.  

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