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May 17 2013

It’s still the climate, stupid

The Australian Labor government has yet again ignored climate change in its latest budget.

Treasury’s forecast for the Australian carbon price in 2015 (when it is scheduled to become an internationally-linked emissions trading scheme or ETS) has been revised downward from $29/tonne to $12.10/tonne, a belated implicit admission that its decision to link to the EU ETS was misguided. The government’s only response to this sudden epiphany has been to cancel some of the spending that was supposed to be funded by carbon price revenue. A more logical response would have been to abandon plans for international linking (and perhaps emissions trading altogether), ensuring that the Australian carbon price (and revenue collected) remain at a significant level, and that emissions cuts actually occur in Australia.

$159 million has been cut from the Australian Renewable Energy Agency (ARENA), and another $370 million deferred until 2022. The government claims ARENA would not have been able to spend the money, but according to Climate Spectator a single solar thermal project could have consumed its entire annual budget. And wasn’t ARENA created to spare renewables from precisely these sorts of arbitrary budget cuts?

Other spending cuts include $135 million from the Regional Structural Adjustment Assistance Program because the carbon price has not done enough to warrant any adjustment; $98 million from the Low Carbon Communities energy efficiency program (but no cuts to industry energy efficiency subsidies); and $61 million from the Green Car Innovation Fund. Also, a planned increase in the tax-free threshold (from $18,200 to $19,400) has been deferred until such time as the carbon price exceeds $25.40/tonne.

Admittedly some of the spending cuts won’t be missed, such as $780 million from “carbon capture and storage” (a technology which won’t be deployed at scale in time), and $302 million from coal mine compensation (a small fraction of the total). The most damaging compensation, however – $4 billion annually in free permits for polluting companies – remains in place.

There are no new measures to mitigate climate change – no feed-in tariff, no direct funding for renewable energy, no assistance for poor countries. This is despite a desperate need for new policies, and the Australian Energy Market Operator recently concluding Australia can achieve 100% renewable energy by 2030.

The budget was also another lost opportunity to cut fossil fuel subsidies on the order of $10 billion annually, dwarfing renewable energy spending. The only fossil fuel subsidy cut was $1.1 billion over four years from accelerated depreciation for mining exploration and prospecting (preserving about three-quarters of the original subsidy). Other fossil fuel subsidies such as the $6-billion-per-year fuel tax credit remain untouched.

Along with the budget, the government announced changes to land carbon accounting, which combined with changes in Kyoto Protocol rules which Australia lobbied for, are expected to reduce Australia’s measured emissions considerably.

The atmospheric CO2 level recently crossed 400 ppm, which many climatologists argue is already too high to avoid tipping points for dangerous climate change. The preindustrial level was 280 ppm. The safe level has been estimated as somewhere below 350 ppm, associated with ~1°C global warming above preindustrial. The Earth has so far warmed by only 0.8°C (with further warming to come if atmospheric CO2 remains at or above its present level), and already the Arctic appears to be crossing a tipping point, implying even 350 ppm is dangerous.

Yet Treasurer Wayne Swan in his budget speech made no mention of climate change except for passing references to Australia’s carbon price, “clean energy future”, and household compensation. The words “warming”, “greenhouse”, “fossil fuel”, and “renewable” appeared zero times; “climate”, “emissions”, and “clean energy” merely once; and “carbon” merely three times. He mentioned natural disaster relief, but only that it costs money – no acknowledgement that climate change increases extreme weather. There was certainly no acknowledgment of the urgency to act on a large scale.

In the Liberals’ budget reply speech (which largely endorsed Labor’s budget), Tony Abbott made no mention of climate change or the environment other than his intention to abolish the carbon price and Clean Energy Finance Corporation (CEFC). Greens leader Christine Milne was the only one to devote a significant proportion of her budget speech to climate change. One of the points she made was:

The government asserts that receipts from the sale of emission permits should equal expenditure on assistance measures and programs to promote energy efficiency and renewable energy. But why? Given that we are in a climate emergency and deep and sustained emission cuts are a scientific imperative, why should expenditure on climate related programs be revenue neutral? It is like saying that defence should be revenue neutral in a war.

More broadly, this budget highlights a number of points about Labor’s approach. Firstly, it is difficult to see a consistent vision. The budget contains some very strange decisions such as cutting university funding to fund the Gonski schools program, and diverting foreign aid to refugee detention.

Secondly, although the government has abandoned its insistence on immediately returning to surplus, it continues to prioritize fiscal management over actually achieving anything. I don’t buy the claim that running a deficit for a few years is a huge disaster – surely it is more important to solve problems in the real world than obsess over a balance sheet.

Thirdly, although it has apparently started to clear up some tax loopholes, Labor continues to place corporate interests far above the public interest, maintaining massive fossil fuel subsidies while the unemployment benefit remains scandalously low.

Finally, even the government’s claimed priorities, DisabilityCare and Gonski, will not fully ramp up until nearly 2020. Australia’s 5% emissions reduction target is similarly aimed at 2020. It seems irresponsible for the government to promise policies a decade ahead when it may not survive the next election. Why not transform Australia in a single electoral term?

1 comment

  1. Elizabeth

    Great post James with some good observations. Very frustrating response from both major political parties as usual. The cuts and delays to ARENA and renewables is the very opposite of what is needed in this crucial decade.

    Slightly off topic from your blog’s political angle, but I recently moved state and grabbed the opportunity to change energy providers. Doing a tiny bit of research I discovered there’s possibly only two energy providers in Australia who aren’t involved in coal seam gas and who either draw their power from renewables and / or are heavily committed to building infrastructure for renewables. They are Red Energy (owned by Snowy Hydro) and Momentum Energy (owned by Hydro Tasmania). I guess the point I’m aiming at is consumers like you and me can help drive the shift to renewables through the energy companies we choose to give our money to. I recommend a 100% GreenPower account with Red Energy if you can afford the extra little bit, as your money is directly contributing to new infrastructure. But if you’re cash strapped like me you can get a non accredited account with Momentum and at least your money isn’t going to one of the big giants like Origin or AGL who couldn’t give a toss about building renewables infrastructure (although they’d have us believe they do!)

    The point being that where our government continue to let us down, we consumers can and must drive the change.

    Also check out my blog at http://www.elizabethbold.com for more about fighting climate change at the consumer level if that’s something that interests you.

    Also if anyone reading this knows of other renewable energy providers and ones which are actually investing in renewable energy infrastructure (and not involved in CSG) other than Red Energy and Momentum Energy please let me know.

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