Liberals Part 2: Their “Direct Action” is neither

This is the second part of a series examining the Liberal Party of Australia. Part 1 covers the party’s climate change denial and intention to abolish various existing climate policies. This part examines the climate policies they promise to introduce.

The first question to ask about the Liberal Party’s climate policy is “what is it?” This question is a lot more difficult to answer than you might think. One of the reasons why I have not focused on the Liberals is because although they are aggressive on process, their policies are vague if not contradictory. If they weren’t favored by nearly half of Australian voters, I would say the Liberals are the parliamentary clowns. Nevertheless, I will examine the few details they have provided.

The Liberals propose a set of measures they spin as a “Direct Action Plan”, a frame that has been uncritically adopted by many journalists. While the phrase “direct action” brings to mind images of protestors chained to bulldozers, the content of the Direct Action Plan is rather less exciting, neither particularly direct nor very active.

The plan is mainly articulated in a policy document released before the last election (all quotes below are taken from this document unless otherwise attributed). It is unclear how current this document is: it is nearly three years old so the timeline will obviously need to be condensed to meet the 2020 deadline, and the Liberals have since mentioned various revisions and reinterpretations, some of which I may have missed. Presumably a full updated policy will be released before the next election; in the meantime I have assumed the old document is accurate except where I am aware of later changes.

The plan is supposed to directly cut CO2 emissions 5% below 1990 by 2020, very similar to Labor’s meaningless target (with the positive difference that the Liberals would not use international offsets, a point I will come back to in Part 3). The Liberals also ostensibly support Labor’s conditional target range of 5-25%, though they have not mentioned it for a long time. Indeed, they rubbish their own 5% target. Liberal leader Tony Abbott has described it as “crazy” in the context of China’s increasing emissions. On other occasions Abbott has gone even further (which a leaked list of talking points shows was scripted), claiming the target will not reduce global temperature for 1000 years (missing that the point of climate action is to limit the rise of global temperature). The Liberals can’t have it both ways: is a 5% target insignificant or Liberal policy?

The measures are also supposed to “improve the environment” (whatever that means). In reality they will do little to stop worsening the environment, let alone improve it. The Direct Action Plan makes frequent references to non-climate-related benefits, which looks suspiciously like a dog-whistle to climate deniers. Abbott has done nothing to counter this impression by downplaying the seriousness of climate change: “Climate change is an important issue but it’s not the only big environmental problem we face let alone the greatest moral challenge of our time.” He says the Liberals’ approach is to “let the scientists argue” about the size of human influence on the climate while taking “prudent and affordable precautions”. That might have been a reasonable position given the level of scientific understanding about three decades ago, but is completely unjustifiable today: scientists have already argued about it and long since reached a conclusion based on overwhelming evidence.

Emissions Reduction Fund

The centerpiece of the Direct Action Plan is an Emissions Reduction Fund. From its description, it appears to be like a baseline-and-credit scheme (a kind of reverse carbon price) except with non-tradable credits. Liberal environment spokesperson Greg Hunt even describes it as a “national equivalent” of the NSW Greenhouse Gas Abatement Scheme (GGAS), a baseline-and-credit emissions trading scheme which ran from 2003 to 2012. He also claims it is the same model proposed for the Labor government’s Carbon Farming Initiative Non-Kyoto Carbon Fund. Instead of a mandatory carbon price which polluting businesses must pay the government, the Emissions Reduction Fund would pay polluters to voluntarily cut emissions by enough to meet the national 5% target.

The Liberals say they have chosen this model because they “are committed to incentives rather than penalties” and “will never accept the proposition that you can only save the environment by killing the economy”. It is a similar approach to that of the former Liberal government. The problem is if there no penalty in a policy, it is toothless. They describe their plan as “effectively a no regrets policy. We’re doing the sorts of things to reduce emissions that make sense anyway.” But climate change requires urgent action on a scale far beyond what makes sense anyway.

In the Liberals’ own words, “businesses will not be penalized for continuing to operate at ‘business as usual’ levels”. That is, there would be no penalty for continuing along a business-as-usual emissions growth trajectory that, if followed worldwide, will cause an unimaginably catastrophic ~6°C of global warming by 2100 – and the Liberals believe that is a selling point. Only businesses that pollute above their “baseline” (ie. their projected business-as-usual emissions) would be penalized, which is meaningless because: “Given the trend toward lower emissions-intensive activity, and the economic growth projections that have been built into ‘business as usual’ emissions estimates, [a penalty] is only expected to apply in exceptional circumstances.” Also, “penalties will not apply to new entrants or business expansion at ‘best practice’”, whatever that means.

Companies that cut emissions below their baseline would be rewarded by the Emissions Reduction Fund in what Hunt describes as a “reverse tender process”. The incentive to cut emissions would not be upfront. Instead, companies would voluntarily cut their emissions and apply for support from the Fund. An independent regulator would audit each project to measure the abatement achieved. After the emissions cuts have been delivered and verified, the government would pay for the cheapest ones. The Liberals believe credits under the Fund will on average cost $12-15/tonne.

Projects must meet the following criteria:

  1. Reduce CO2 emissions
  2. Deliver additional practical environmental benefits
  3. Not result in price increases to consumers
  4. Protect Australian jobs
  5. Not otherwise proceed without Fund assistance

Criteria 1 and 5 are obviously appropriate, but 2, 3, and 4 may be counterproductive by unnecessarily limiting the scope of the Fund for no impact on emissions. In particular, “protecting Australian jobs” is generally used as code for protecting existing industries rather than transitioning to green jobs.

The voluntary, non-penalizing, post-delivery nature of the Emissions Reduction Fund means there is no guarantee that any emissions cuts would take place. And even if the target is achieved on paper, there would be huge problems with ensuring that the emissions cuts would not have happened anyway (in the jargon, whether they were “additional”). This is especially an issue considering the amount of details yet to be nailed down. Many of those details, including the baselines, additionality test, and penalty for exceeding a baseline, are to be determined by consultation with polluters.

The emissions target would presumably be defined as 140 million tonnes of abatement below business-as-usual in 2020, instead of an absolute 5% cut in 2020. If companies’ baselines are set unrealistically high, then the emissions credits would not add up to the 5% target.

Furthermore, there are worrying signs the Liberals may be planning to quietly replace their emissions reduction target with a GGAS-like target to reduce emissions intensity (ie. emissions per economic output). Abbott says the Emissions Reduction Fund is for “reinforcing what businesses are already doing”, citing energy efficiency as the best way. Abbott boasts: “Australia has already achieved a reduction in its emissions intensity of nearly 50 per cent over the past 20 years without a carbon tax through direct action policies and businesses taking economically sensible steps to save on power and transport.” In reality, emissions intensity reductions are meaningless because historically emissions intensity has tended to fall automatically as emissions rise, and that is exactly what happened in Australia in the past 20 years. More of the same will perpetuate the climate crisis; to solve it we need to do things differently!

As should be apparent from the above, “it will be up to the market to determine what the money is actually spent on”. Yet this inherent unpredictability is contradicted by a lot of statements the Liberals have made about what the Emissions Reduction Fund is likely to finance and how much it will cost.

The 2010 document says up to 60% of emissions cuts made through the Emissions Reduction Fund would come from storing carbon in soils, or as they put it, “a once in a century replenishment of our soil carbon”. This depends on the assumption that soil carbon offsets will be, well, dirt cheap. But the Liberals’ optimism about the potential for soil carbon storage relies on dubious calculations. WA land management scientist Ben Rose argues the Liberals have overestimated the rate at which soil carbon can be increased by a factor of 20-100. He also says measured, permanent, and Kyoto-compliant soil carbon offsets require a price 2-20 times the $10/tonne anticipated by the Liberals. So if the Liberals spend as little as what they intend they will not be buying real emissions cuts. Furthermore, the Carbon Farming and Trading Association say farmers will not sell soil carbon credits for $10/tonne. If these numbers are anywhere near correct, they point to outright incompetence by the Liberal Party.

In any case soil carbon storage, although a necessary part of climate action, is not likely to be permanent and should not be considered a substitute for urgently phasing out fossil fuel CO2 emissions, a proportion of which will stay in the atmosphere for millennia. If it remains the Liberals’ focus, then they will be focusing on the least urgent action required.

The Liberals also claim the Emissions Reduction Fund will incentivize emissions cuts by the most carbon-intensive power plants, though the interpretation of this has evolved over time. Hunt said in September 2010: “if the Coalition had formed government, we would be negotiating with the owners of Hazelwood and Yallourn power stations about converting either or both from brown coal to gas” (which was bad enough to begin with, because fossil fuels should be replaced with renewables). In May 2011, he said the Fund could “potentially” drive this but “only if this is the lowest-cost way of reducing emissions”. In July 2011, Liberal finance spokesperson Andrew Robb said in response to a Labor-Greens agreement to pay for the closure of coal power plants (later cancelled): “the single biggest abatement measure in the Government’s scheme happens to be a Direct Action proposal”. Yet the same week, Abbott told an audience of manufacturing workers the Liberals wouldn’t close coal power plants and would even allow new ones to be built. Since then, the Liberals have said their policy is to “clean up rather than close down power stations”, whatever that means.

The Emissions Reduction Fund may also support emissions cuts through energy efficiency and green buildings, electricity generation from native forest biomass and waste coal mine gas, forestry, landfill, composting, recycling, transport fuels, and more. Like soil carbon, some of these proposed solutions are of dubious merit. Storing carbon in forests, as with soils, should not be used to offset fossil CO2 emissions. Waste coal mine gas and native forest biomass are waste products of coal mining and deforestation respectively, so their use as energy sources arguably incentivizes those activities. In June 2012 Hunt said energy efficiency is likely to be a much bigger component than originally estimated, hopefully an indication the Liberals will abandon their intended reliance on soil carbon.

All the above becomes especially important when you realize the Emissions Reduction Fund will have only a limited pool of money to spend: $10.5 billion through to 2020 according to the 2010 document (though it would now have to be spent in seven years, not ten). As Hunt boasts at every opportunity, for example here, “The costs are fixed and capped and offset against savings. We will not spend a dollar more.” This raises the question of how they can ensure they will meet their target. This is especially problematic because the Fund’s current costings depend on achieving 60% of its abatement through buying soil carbon offsets, thus it is difficult to see how it could make genuine absolute emissions cuts without going over budget.

Other Direct Action Plan measures

The Direct Action Plan includes the following measures in addition to the Emissions Reduction Fund:

  • $1 billion One Million Roofs Solar Program to deliver a million additional solar PV or solar hot water systems by 2020.
  • A 6,000 GWh carveout in the RET for emerging renewable energy technologies.
  • $150 million over four years for community renewable energy projects.
  • $60 million over four years to create “Clean Energy Hubs” in the Latrobe, Hunter, and Central Queensland regions.
  • $50 million over four years for Green Corridors and Urban Forests initiative to plant 20 million trees, to be implemented by a “Green Army” of 15,000 people.
  • Reinstatement of a “Greenhouse Friendly” voluntary program axed by Labor.
  • Public forums to facilitate debate.

Though these are not necessarily bad ideas, they are mere bits and pieces utterly dwarfed by the scale of action required. They are not the comprehensive set of policies needed to decarbonize Australia’s economy. The renewable energy measures, while welcome, are relatively minor elements of the Direct Action Plan (though I am pleased to see the Liberals say the emissions saved would be additional to the Emissions Reduction Fund).

The One Million Roofs Solar Program would provide a $1,000 rebate for either solar panels or solar hot water systems “on top of existing incentives”. However, the number of rebates would be capped at 100,000 rebates per year, 10% of which would be accessible to community groups. The Liberals recently reaffirmed this policy, though it would now have to be done in seven years, not ten. (CORRECTION 16 January 2013: Greg Hunt has clarified the program would still go for ten years, presumably meaning the end date has been delayed from 2020 to 2023.) Anyway, if the current rate of solar PV installation continues (though it may be jeopardized by the windback of supportive government policies), then there will already be 1 million solar PV homes by the next election, 2 million by 2017, and 3 million by 2020.

A RET carveout for emerging technologies is potentially a good idea, though I think it should be additional to the present target so as not to crowd out technologies that are commercial today.

The community renewable energy funding would run for four years and fund at least 25 “Solar Towns” projects, at least 100 “Solar Schools” projects, and at least 25 “Geothermal and Tidal Towns” projects. The projects would be chosen “on the basis of greatest savings per dollar of funding”.

The “Clean Energy Hubs”, instead of deploying renewable energy as is urgently needed, would involve merely “clean energy research and development”.

The tree-planting program is pretty insignificant. Greenhouse Friendly, as I understand, was a pretty forgettable voluntary program.

Measures beyond the Direct Action Plan

At Clean Energy Week 2012, Liberal energy spokesperson Ian Macfarlane and colleagues outlined the Liberals’ approach to renewable energy. Renew Economy described their message as:

perpetuating myths about renewable energy and ensuring it is described mostly as expensive and unreliable. It aims to slow, rather than hasten, its deployment, all the while suggesting that the “real” solution is “just around the corner” – it just needs to brew in a test tube for a little while longer.

This is consistent with the position the Liberals had when they were in government, as well as the Liberals’ decision to keep the Australian Renewable Energy Agency (ARENA). It is the same position taken by many conservatives overseas, particularly Danish anti-environmentalist Bjorn Lomborg. In reality, we already have the technologies needed to power Australia with 100% renewable energy, and the urgency of dramatic emissions cuts means we don’t have time to wait around for cheaper ones to be invented. Though we should invest in all technology stages between R&D and maturity, what we urgently need now is large-scale deployment of existing renewable energy technologies, which will bring down their costs.

The Liberals’ broader environment policy includes a National Energy Efficiency Partnership to set voluntary energy efficiency targets for energy-intensive businesses – again, here I think the key word is “voluntary”. Also, Hunt mentioned in June 2012 that the Liberals are working on demand reduction measures. It is not clear whether they go beyond the National Energy Efficiency Partnership, but Hunt reinforced the Liberals’ insistence on a voluntary incentive-based approach, not a mandatory penalty-based approach. Leaked Liberal speakers notes from July 2012 mention another policy: spending the remaining $65 million allocated for the cancelled Solar Scheme.

Internationally, the Liberals would advocate that the US, China, India, and EU negotiate sector-specific agreements to cut emissions through the G20. The Liberals would also propose a Global Rainforest Recovery Plan to halve emissions from rainforest destruction by 2020. Again, these things would not necessarily be bad; a sector-by-sector approach has the advantage that (unlike emissions trading) it acknowledges different types of emissions result from different economic processes and play different roles in the climate system. On the other hand, the Liberals’ probable intention is to shift the focus away from binding fossil fuel emissions targets under the UNFCCC, just as the former Liberal government negotiated the well-publicized but meaningless Asia-Pacific Partnership on Clean Development and Climate (APP) to divert attention from its refusal to ratify the Kyoto Protocol.

All in all, to use language which Abbott might outside of a family program, the Liberals’ climate policy is complete crap.

In Part 3, I will defend the Liberals against incorrect criticisms of their climate policy.

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