This is the first in a series of posts about the Australian climate movement.
The Australian climate change action movement (which I will call the “climate movement”) has, in recent years, made an error of strategy. In the hope of winning a victory, however small, activists have become extremely pragmatic and “politically realistic”. This culminated in 2011 in the various environmental groups uniting under the lowest-common-denominator message “Say yes to a price on pollution”. We need to be much more assertive.
Global warming is not just another issue; it is an urgent threat to human civilization. Carbon dioxide (CO2) from fossil fuel burning is its main cause. The extent of climate impacts centuries and millennia from now will be determined by decisions taken in the near future. To avoid passing tipping points for dangerous climate change, humanity must reduce atmospheric CO2 from 392 to ~350 ppm. CO2 in the atmosphere is like radioactive waste: much of it hangs around for a very long time. So to reduce its concentration everybody needs to cut emissions to zero or near-zero as soon as possible. That means we cannot afford to burn most of the world’s fossil fuel reserves; humanity needs to rapidly phase out fossil fuels. If we begin in 2013, we must cut global fossil fuel emissions by 6%/year, and the longer we delay, the steeper the required rate will become. The central solution is to switch to 100% renewable energy. Bear all this in mind over the coming series of posts discussing the politics of climate change.
I’ll begin by going over the history of the current Labor government’s climate policy, for context about how we got to the present situation.
A brief history of Australian climate policy
In December 2008, Labor announced its national emissions reduction target was 5% below 2000 by 2020, with a conditional target of 15% (later raised to 25%) if a global agreement was reached to limit atmospheric CO2 to 450 ppm. The ludicrous inadequacy of this target was condemned by environmental groups and climate scientists, and even the Government’s climate change advisor Ross Garnaut. For three years, the Government has clung to its 5-25% range.
Meanwhile, the Greens supported a global effort to reduce atmospheric CO2 to 350 ppm, which would require all countries to get to zero or near-zero emissions as soon as possible. In the absence of international agreement, they advocated Australia cut its emissions at least 25-40% by 2020, in line with the Intergovernmental Panel on Climate Change (IPCC) recommended contribution from developed countries to a 450 ppm global target. Above all, they argued legislation should place no limit on Australia’s ability to ramp up action in the future.
In 2009, Labor introduced to Parliament its Carbon Pollution Reduction Scheme (CPRS) emissions trading legislation. The CPRS would have locked in for fifteen years Labor’s pathetically inadequate range of targets (a set amount for at least five years and a range for ten years after that), further diluted by unlimited dubious international offsets and counterproductive compensation to polluting industries. The Greens rightly voted it down in the Senate, unable to improve the policy after the Government repeatedly refused to even negotiate.
In January 2010, the Greens announced a compromise policy: a carbon price framework would be put in place, but for at least the first two years it would be a fixed price of $23/tonne with no trading, leaving the controversial questions of targets and international offsets for future debate. The Greens made clear they were still aiming to get to an emissions trading scheme (whether this is the ideal model is perhaps a subject for another post), and the $23 price (an inadequate price based on a 550 ppm target) was intended as an interim measure to break the deadlock until agreement could be reached on deep emissions cuts. If no agreement was reached, the fixed price would have remained in place and gradually increased over time. They also wanted no compensation to electricity generators, and compensation for trade-exposed industries reduced to the levels recommended by Garnaut in 2008.
When the 2010 election resulted in a hung parliament, the Greens agreed to support Labor’s Julia Gillard in a minority government, in return for a Multi-Party Climate Change Committee (MPCCC) to negotiate climate policy. The committee consisted of Labor, Greens, and independent MPs, and was advised by experts. In February 2011, the MPCCC announced they had decided a fixed carbon price would begin in July 2012, and would continue to negotiate on all other details. Success has been mixed: while the Government’s critics claim the Greens are secretly in charge, in reality the Greens have compromised much more than Labor.
The Greens’ plan to negotiate evidence-based compensation for trade-exposed industries fell apart when the Productivity Commission was unable to do the necessary calculations at short notice.1 Their intellectually irresistible criticism of free permits for coal power plants met an immovable object in the Australian Energy Market Commission (AEMC), who argued failure to compensate electricity generators would endanger energy security.2 Although the Greens had originally envisioned that decisions on international offsets would be made later, the MPCCC agreed offsets would be allowed from 2015.3 Their push for other policies to complement the low $23 carbon price had moderate success in a number of measures, notably contracts for closure of 2,000 MW of coal power plants and $10 billion for an independent Clean Energy Finance Corporation (CEFC).4
In the end it came down to a dispute over what should be done if the next Parliament still cannot agree on the contentious matter of targets. The Greens wanted the default to be continuation of the fixed price; Labor advocated a transition to emissions trading with a mere 5% reduction by 2020, as in the CPRS. The final deal was sealed in mid-2011 when the MPCCC reached a compromise. Emissions trading will begin in 2015; rolling-five-year targets will be recommended by an independent Climate Change Authority (another Garnaut proposal); the Government must justify any deviation from its advice; the Parliament will have the chance to scrutinize and the power to disallow those targets; and if they are disallowed then default one-year targets will apply. The Climate Change Authority’s mandate puts no upper limit on the emissions cuts it could recommend. This final compromise was a definite improvement on Labor’s CPRS, though less flexible than the Greens’ original proposal.
The policy package designed by the MPCCC, called the “Clean Energy Future”, is now law.
1. Garnaut, despite having originally been critical of the unjustified compensation in the CPRS, this time recommended it be resurrected for the first few years because it was accepted by business (hardly a point in its favor!). The Greens shifted to advocating “an appropriate middle ground in the interim”, but Labor wouldn’t budge. The MPCCC eventually settled on the CPRS model, in which the highest-polluting trade-exposed industries will get 94.5% of their emissions permits for free, diluting the $23 price to $1.27. Those ridiculously high levels of compensation will be guaranteed for at least five years (down from ten in the CPRS), before being reviewed by the Productivity Commission.
2. In reality, energy security is unlikely to be an issue because the Government can, if necessary, step in and run a power plant itself. The only condition for the plants to receive compensation is that they continue to operate, effectively locking in their existence for years. From media reports it sounds like negotiations nearly broke down over this issue. Ultimately the Greens caved, though the problem is somewhat counterbalanced by two other MPCCC decisions: the compensation is brought forward so it now finishes in 2016 instead of 2020, and 2,000 MW of coal power plants will be paid to close.
3. Offsets will be limited to 50% of emissions permits. Unfortunately, as we will see in my next post, this restriction is not enough to ensure absolute reductions domestically. Also, companies will be able to buy unlimited amounts of Australian land carbon offsets.
4. Other policies agreed to complement the carbon tax include: the consolidation of existing renewable energy programs into an independent Australian Renewable Energy Agency (ARENA); a study by the Australian Energy Market Operator (AEMO) on how to design an electricity grid for 100% renewable energy; and land sector and energy efficiency measures. After the carbon price becomes an emissions trading scheme, it will be complemented by a $15 floor price for investor certainty, and there will be an attempt to account for voluntary actions. However, the Greens failed to get a feed-in tariff, the instrument which has delivered most of the world’s renewable energy; and the carbon price will be working against fossil fuel subsidies worth about $11 billion annually.