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Jul 03 2014

Palmer’s $0 carbon price will achieve zero

We Australians are more confused than ever about climate policy, according to a new poll – and who can blame us? Clive Palmer’s latest announcement has confused everyone, but don’t be fooled: Palmer’s policies, like those of the major parties, won’t achieve much.

Ever since his election last September, Liberal Prime Minister Tony Abbott has been on a crusade to abolish all existing climate policies (which were already completely inadequate to deal with the climate crisis). He’s already abolished a long list of small programs, obstructed progress at climate talks, and tasked a denier with reviewing (read: scrapping) the Renewable Energy Target (RET). From 7 July, the first sitting day of the new Senate, his government will advance legislation to repeal the carbon tax (scheduled to soon become an emissions trading scheme or ETS), Clean Energy Finance Corporation (CEFC), and Climate Change Authority (CCA). Abbott proposes to replace these with a voluntary Emissions Reduction Fund. Labor and the Greens are trying to defend the policies they negotiated during the former government, meaning Abbott must persuade six of eight crossbench Senators to pass his repeal bills. Palmer controls a pivotal four Senators.

It’s hard to take seriously any climate policy from Palmer, as his aim to build Australia’s largest coal mine is a massive conflict of interests. He has accused the Greens of being funded by the CIA; he waited until just before an election to pay his carbon tax bill; and three months ago he misleadingly claimed nature emits more CO2 than humans. He now claims to have been enlightened by meeting Al Gore. Who knows what he will say or do tomorrow?

Having expressed a bewildering succession of contradictory positions on the repeal bills, Palmer waited until the last week of the outgoing Senate to show his hand. He did so in a grandiose press conference peppered with vaguely greenish and leftish clichés about the common good and the future of all people, with a partial endorsement from Gore and no opportunity for journalists to ask questions. Here’s his new policy in a nutshell:

  • Repeal the existing fixed carbon price, with the sole condition that all savings from the repeal be returned to consumers.
  • Replace it with an ETS with a carbon price of $0 (ie. inactive), not to be activated unless and until the US, China, Japan, EU, and South Korea have all introduced emissions trading schemes.
  • Keep the RET until at least 2016.
  • Keep the CEFC.
  • Keep the CCA, but change it to focus on monitoring other countries’ policies.
  • Oppose the proposed Emissions Reduction Fund.

So what does all this mean?

Firstly, it sounds like Palmer would be willing to repeal the carbon price without any replacement – his only real condition is that savings from abolition of the carbon price be passed on to consumers. His ETS proposal will be an amendment attached to the CCA repeal bill, not the carbon tax repeal bill, making it easier for the Coalition to block it in the lower house (or for the other crossbench Senators to block it, for that matter).

Secondly, as far as I can figure out, nothing will actually happen in an ETS at $0. The pricing mechanism is the part that actually penalizes polluters, and with a zero price there will be zero incentive to even buy offsets, let alone actually cut emissions. The ETS would be an empty shell. Thus Palmer’s plan would remove any penalty for CO2 pollution.

Thirdly, Australia should not make its actions conditional on those of others, particularly poor countries. The internationally agreed principle of “common but differentiated responsibilities” obligates the world’s richest and highest per-capita emitters to show leadership. Setting conditions makes global action less likely, by antagonizing countries who rightly expect Australia to act responsibly. It also means future arguments over Australian climate policy hinge on whether the actions of other countries live up to Australia’s conditions instead of on the urgent need for all countries to act. (Unfortunately, this is the situation we are already in with regard to emissions targets.) And yes, I’m aware many of Palmer’s countries have or are moving toward emissions trading schemes, but I don’t care because their targets are nowhere near what is required and their policy designs are invariably flawed (probably fatally). Australia should act urgently and unilaterally to break the international deadlock.

Fourthly, even if some sort of ETS someday did come into operation, Palmer’s support for it is a reminder of what I’ve been saying for over a year: Emissions trading does not equal effective climate action. Indeed the trading aspect is intended merely to minimize the costs for polluters, and could actually prevent action through dubious offsets. Thus I’ve become very skeptical about emissions trading. I think it would be better to extend the fixed carbon tax, meaning there would continue to be a penalty for pollution without having to worry about it being undermined by emissions trading.

Fifthly, the RET, CEFC, and CCA are good as far as they go but ultimately inadequate. The RET is too low, CEFC is merely counted toward the RET, and CCA is too timid.

Sixthly, Palmer has only promised to preserve the current RET until 2016, during which time it won’t do anything anyway. Because of flaws in the policy design (similar to the flaws in the ETS), the market is currently flooded with a surplus of permits that will last until 2016; a higher target is needed to incentivize new projects now.

Seventhly, Palmer proposes to worsen the worst thing about CCA, its emphasis on watching other countries to make sure Australia isn’t in front. Palmer wants to amend CCA’s remit so it will base its recommendations solely on the level of international action.

Eighthly, from a political point of view it’s good that Palmer continues to oppose Abbott’s tokenistic “Emissions Reduction Fund”, a piece of pure greenwash which will allow polluting companies to increase their emissions wherever they increase production.

Ninthly, Palmer has not put forward an emissions target. The current target, whether it’s the government’s 5% or the legislated default 19%, is ludicrously weak. With a zero carbon price, it’s estimated that Australia’s emissions will rise 12% by 2020.

Tenthly, all these policies relate to only domestic emissions and so won’t have much effect on Palmer’s own investments. I’ll be impressed when Palmer announces a climate policy that impacts exported fossil fuels, Australia’s largest contribution to climate change. (That goes for Liberal and Labor too.)

Overall, Palmer’s new position seems calculated to appeal to the 40% of Australians who want climate action at no cost, tapping into a political consensus created by Abbott and his cheerleaders in the Murdoch media. It also reinforces the business lobby’s argument that Australia should not lead the world. It’s also conceivable that Palmer could be secretly working with the Liberals, or former Liberal leader Malcolm Turnbull (who recently met with Palmer), to provide them with an excuse to break their election promise ruling out an ETS. Palmer’s greenwash makes him even more dangerous than Abbott, whose sledgehammer strategy is quickly making enemies.

When you look beneath the spin, neither the Liberals, Palmer, nor Labor have a real climate policy. Even the Greens have somehow become narrowly focused on lauding and defending the weak climate policies they achieved through working with Labor, instead of loudly advocating climate action on the scale that we really need. Yet the fact that a coal mining billionaire is capable of supporting (with some tweaks) the existing policies shows how insignificant they are in the larger scheme of things. (Even Palmer’s $0 price isn’t that much of a difference as the Greens are making out, as the carbon tax was already going to become an ETS with a low price.)

I’m conflicted about the Greens’ decision to block Abbott’s proposed fuel excise increase, over which the party continues to be divided. The explanation they’ve presented publically, that Abbott is promising the funding will go to roads, is a misleading excuse. Looking beyond that I can see arguments on both sides: on one hand, it is a form of carbon tax. On the other hand, I see political wisdom in blocking Abbott’s entire agenda, as it prevents him from being able to tokenistically point to his few good policies. Just as Abbott has used paid parental leave to portray himself as feminist, and the deficit levy to portray his budget as equitable, when he met Obama he cited the fuel excise increase as proof of his commitment to climate action. (The left of the Greens wanted to completely block supply, which would have effectively shut down the government; that would have been interesting to say the least but they lost the argument.)

Returning to Palmer, the best analysis I’ve seen is from climate activist Simon Copland:

Gore’s willingness to stand next to Palmer potentially highlights the somewhat depressing nature of institutional climate politics in Australia. Even in the face of growing evidence that we need to tackle our carbon emissions faster than ever before, somehow ‘not dismantling’ all of our current policies is now considered a major victory. Palmer has managed to pull off a magician’s trick – effectively doing nothing – whilst at the same time getting support from one of the world’s best known climate politicians in doing so.

This highlights the dearth of any real leadership on climate change from our politicians. The majority of our federal politicians are once again refusing to take the lead we desperately need on the issue, leaving it up to us as a community to take the sort of action we need to reduce our pollution.

So what kind of action is needed? On the weekend of 21-22 June I attended the Breakthrough conference in Melbourne, which discussed this very question and is likely to be the subject of my next blog post.

1 comment

  1. Ben

    Agree on lack of climate leadership. Disagree on reindexation of fuel excise. Good policy is good policy whoever proposes it. Greens should support it and claim credit, despite their fear of giving Abbott a win and being wedged by Labor on ‘cost of living’. They lose out when they appear opportunistic.

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