Continue reading »]]> 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?

Continue reading »]]> Yesterday the European Parliament voted down a European Commission proposal to postpone the auction of 900 million permits for the European Union Emissions Trading Scheme (EU ETS) from 2013-2015 until 2019-2020 (called “backloading”). The proposal was predictably opposed by Poland and other eastern European countries, and unfortunately also met resistance from conservative forces within some western European governments. After the vote, the EU carbon price fell to a new depth of €2.63/tonne (AU$3.33/tonne), far too low to drive any emissions cuts.

Even if backloading had gone ahead, it would have been merely a temporary measure to slightly boost the EU carbon price. It would not have fixed the fundamental structural problems with the ETS, which include a 2020 target which has already been met (20% below 1990); a surplus of 2 billion permits which could last until 2045; free permits for certain industries; international offsets; and no floor price to continue driving decarbonisation through the present recession. The failure of the EU ETS is contributing to a resurgence of coal-fired power in Europe.

The European Commission will continue to push for backloading, as well as more substantial changes to the EU ETS. One of their proposals has been raising the 2020 target to 30% below 1990. But even the European Commission no longer seems to be talking about raising the 2020 target, despite the fact that the present target means no emissions cuts for eight years! It now instead proposes a 2030 target of 40% below 1990, which would still allow the surplus to continue until 2029.

All this raises serious questions about whether emissions trading is a worthwhile path for climate policy-makers to continue down. Some environmental groups, including Friends of the Earth, argue the EU ETS cannot be fixed and should instead be scrapped in favour of more direct policies like feed-in tariffs. Their argument has never been more convincing.

It is telling that among the advocates of backloading are businesses who support the EU ETS as an alternative to a potentially more stringent mix of national measures (just as in Australia businesses support a federal ETS as an alternative to potentially more stringent mix of federal and state measures). That is already happening to an extent – Germany has feed-in tariffs, the UK has a carbon floor price, and Scandinavian countries have various taxes on fossil fuel consumption – but more EU member countries might introduce new climate policies if the ETS was no longer there to distract them.

Implications for Australia

Australia’s present policy is a fixed carbon price of $23/tonne, scheduled to turn into an internationally-linked ETS in mid-2015. Like the EU ETS, it is full of holes. Yet the Labor government is obsessed with emissions trading as its central climate policy; if it wasn’t for the Greens, Australia would already have an ETS. Having introduced the carbon price, Labor thinks its job is done, and arranging to link the Australian ETS with international ones seems to have become its climate policy focus. A link with the EU ETS has already been agreed, and the Australian carbon price is expected to be determined by the European one.

Labor talks about international linking as though it advances climate action. In reality, carbon trading and offsets were never intended to cut emissions. It is the “cap” part of “cap-and-trade” that limits emissions, while the “trade” part supposedly minimizes the cost by ensuring emissions cuts are made where they are cheapest – which seems unlikely to produce good outcomes considering the cost is (or is at least supposed to be) largely paid by polluters. A source of emissions cuts may appear cheap because it is dodgy.

Whether the Australian ETS can be fixed remains to be seen. Last week I outlined some of its major flaws and how they could be fixed. Unfortunately, the sabotaging influence of the fossil fuel lobby makes it very difficult to do so, and an ETS that is anything less than perfect can actively prevent action. So I also proposed a simple alternative to avert the worst if a perfect policy still cannot be achieved: just extend the fixed price period. Unlike an ETS, a fixed carbon price places no limit on emissions cuts, cannot crash due to recession or bad policy design, cannot be compromised by external offsets, and can complement other policies like renewable energy subsidies.

I’ve long been skeptical about emissions trading, but I’ve supported an ETS out of pragmatism and limited myself to arguing against its pitfalls. But as carbon prices crash everywhere except in Australia, it’s now looking like it might be better to abandon the whole idea and continue with the fixed price.

Continue reading »]]> Australia’s carbon price, presently fixed at $23/tonne, is the subject of many political talking points. The most important (and perhaps most confusing) disagreement is over whether or not the carbon price is effective. The Labor government and the Greens, who designed the policy, claim the carbon price is already cutting emissions, pointing to reports that the Australian electricity sector’s emissions intensity (emissions per economic output) has decreased since the carbon price came into effect last July. The Liberals, who want the carbon price abolished, claim Australia’s emissions will continue to rise under the policy, pointing to government modeling showing it will merely offset emissions overseas. So who’s right?

Both arguments have some basis in reality. It is true that changes are beginning to occur in Australia’s electricity sector: renewable energy generation is increasing, electricity demand is falling, coal-fired generators are closing, and, yes, the carbon intensity of electricity decreased 7.6% between June and September 2012. But there are several caveats. Firstly, keep in mind the carbon price only applies to emissions within Australia’s borders; there are no restrictions on Australia’s fossil fuel exports, its largest and fastest-growing contribution to climate change. Secondly, reductions in emissions intensity are generally far less impressive than they sound, as emissions intensity tends to fall automatically. Between the year to September 2011 and the year to September 2012, the actual reduction in Australia’s electricity emissions was only 2.8%, and only 0.5% for total emissions. (UPDATE 15 April 2013: Newly released data show Australia’s total emissions fell 1% between July and December 2012.) Thirdly, it is unclear how much is due to the carbon price and how much to the pre-existing Renewable Energy Target (RET). Fourthly, far from being a “python squeeze” as claimed by the Liberals, the carbon price contains time bombs set to go off in 2015 when it is scheduled to become an emissions trading scheme (ETS), which will stop the present emissions reduction in its tracks and allow emissions to rise instead.

As currently designed, the ETS phase will lock in a meaningless target of a 5% emissions reduction by 2020, actively limiting emissions cuts. Any future attempt to strengthen the target could be legally challenged as an acquisition of property rights. Voluntary actions will be counted only five years after they occur, if ever. Fortunately, the Caps and Targets Review by the independent Climate Change Authority (CCA), currently getting underway and due to report in February 2014, offers an opportunity for concerned citizens to indirectly persuade the government to adopt a more ambitious target. However, the Australian Industry Group (AIG) is lobbying to bring forward the ETS transition, which would mean bypassing CCA.

Even worse, polluters will be allowed to meet this target with effectively unlimited international offsets, both from other cap-and-trade schemes like the EU ETS, and from baseline-and-credit schemes without emissions caps like the Kyoto Protocol Clean Development Mechanism (CDM). According to the latest government projections, Australia’s domestic emissions will increase 11% by 2020. Problems with international offsets include that they may not represent real emissions cuts (especially those coming from baseline-and-credit schemes), will displace domestic decarbonization, and will unfairly shift the burden of meeting Australia’s target to other countries, at a time when everybody needs to get to zero emissions as fast as possible.

This gaping loophole looks likely to be compounded by the fact that international carbon prices have crashed to levels measured in cents rather than dollars. Unless international prices recover, imported permits will cause the Australian carbon price to also crash, undermining any remaining incentive to decarbonize (and a proposed carbon floor price that could have acted as a brake has been cancelled). Even if they do recover, polluters are allowed to buy international permits now at the current price and use them later.

These time bombs are not the only problems with the carbon price. There are other flaws which are already hampering emissions cuts in the fixed price period. The carbon price, currently raising $8 billion in annual revenue, is working against $13 billion in annual fossil fuel subsidies, including $4 billion in carbon price compensation. Through complex interactions, the time bombs threaten to exacerbate these existing flaws.

The compensation arrangements include the Jobs and Competitiveness Program, handing out $3 billion per year in free carbon permits to industries defined as “emissions-intensive trade-exposed” (EITE), with the highest-polluting EITEs getting 94.5% of their permits for free, diluting the carbon price to $1.27/tonne for those companies. Note the 94.5% number actually refers to 94.5% of the industry average, so any company with emissions below its industry’s average could be overcompensated for its emissions. Low international carbon prices increase the chances of EITE companies being overcompensated. The rate at which the percentage of free permits reduces is so meaningless that the total number of free permits could actually rise over time. These absurd levels of compensation are guaranteed in law until at least 2017 with the government required to give three years’ notice of any changes.

The other main plank of the compensation is a $1-billion-per-year Energy Security Fund for coal-fired electricity generators, also mostly in the form of free permits. The only condition for a generator to receive compensation is that it continues to operate, effectively an incentive to stay open for years. This fund has actually made the generators more profitable than if there had been no carbon price, contributing to the failure of another fund intended to pay for the closure of 2,000 MW of coal-fired generation. If the Energy Security Fund continues, windfall profits to generators will reach $2-5 billion by 2016. Again, the lower the international carbon price, the higher those windfall profits will be.

Although the above analysis paints a bleak picture, the carbon price is not beyond repair. Its defects can be rectified, and must be soon if the policy is to drive decarbonization in the long term. The time bombs must be fixed before they go off, by setting much deeper emissions targets with zero international offsets allowed, and reinstating the floor price. Alternately, if it proves politically impossible to dismantle the time bombs before 2015, the fixed price period could be extended. The government should decide by 2015 to stop compensating EITE industries from 2018. The free permits for coal-fired generators and other fossil fuel subsidies should be immediately cut. New policies (eg. feed-in tariffs, an increased Renewable Energy Target, a new plan to close coal power plants) should be introduced to further accelerate decarbonization. Finally, Australia needs to broaden its attention from cutting its domestic emissions and start also phasing out its fossil fuel exports.

Continue reading »]]> Yesterday Prime Minister Julia Gillard announced her government’s latest cabinet reshuffle.

The Department of Climate Change will be merged into the Department of Industry, Innovation, Climate Change, Science, Research, and Tertiary Education – except for energy efficiency, which will be moved into the Department of Resources and Energy. Greg Combet, previously Minister for Climate Change and Energy Efficiency, will now be Minister for Climate Change, Industry, and Innovation.

In her speech announcing the reshuffle Gillard referred to the contest between the Labor Government and the Liberal/National Opposition. This framing is ironic because it was originally the Opposition’s policy to merge the Department of Climate Change with another department (in their case Environment).

Gillard denies the merger means Labor is backing away from its commitment to climate action. She claims it is “inevitable, natural, logical” that the government needs fewer staff working on climate now it’s introduced a carbon price, further reinforcing Labor’s irresponsible narrative that the carbon price precludes any need for further action. In reality, climate change remains a global emergency and Australia has yet to act on anywhere near the necessary scale.

It is also concerning that the government has chosen to associate the portfolio of climate change with innovation specifically, because it suggests Labor is moving toward the right-wing argument that we must invent new technologies to solve climate change. In reality, we have no time to wait for innovation, and we already have the technologies needed to power Australia with 100% renewable energy; we just need to deploy them.

It gets worse. It turns out I spoke too soon when I said on Friday that “the resignation of Resources and Energy Minister Martin Ferguson raises hope for some improvement on Australian energy policy”. Ferguson’s successor Gary Gray is on record as having described climate change as “pop science” and “middle-class conspiracy to frighten schoolchildren” when he was Labor’s National Secretary in the 1990s. He spoke at the launch of the climate-change-denialist Lavoisier Group in 2000, founded by Western Mining Corporation executives Hugh Morgan and Ray Evans and Gray’s father-in-law Peter Walsh (though Gray himself has never been a member). He was a Woodside Petroleum executive from 2001-2007, before entering Parliament at the 2007 election.

When interviewed by Emma Alberici on ABC TV’s Lateline last night, Gray said he has since changed his mind:

I was a vocal climate sceptic. And as national secretary of the Labor Party I said things that frankly, Emma, nowadays embarrass me when I hear it played back.

[…]

When I joined Woodside in early 2001, I was exposed to a company whose own insights into the environment in which it operated was far in advance of mine. I was fortunate to work with terrific engineers and outstanding environmental scientists who were capable, Emma, of extracting oil and gas in the most delicate marine environments. I was in awe of that work. And in getting closer and closer to those engineers and serious builders of business, I began to realise not only was I wrong, but if you get the equation right you can actually build better businesses and build a better future. I became a convert to that.

[…]

I think there’s an undeniable connection between human industrial activity and carbon pollution that we need to address, that we should address and also that we can address.

However, like Woodside’s commitment to climate action, Gray’s conversion seems to be largely rhetorical. In the same interview he openly said he would continue “business as usual” and sees little difference between himself and Ferguson. He also said: “I am not a green, Emma, and any green who thinks I am a green is mistaken.” And just as the fossil fuel lobby lamented Ferguson’s resignation, they welcomed Gray’s appointment:

Western Australia’s Chamber of Minerals and Energy (CME) had been gunning for a local, given the state’s dominance in the industry.

CME director Nicole Roocke said Mr Gray, formerly the special minister of state, had a very good understanding of WA and the sector, and his challenge would be to ensure federal politicians and bureaucrats understood the impact of their decisions on the state.

His new position would not be compromised by his former role with energy giant Woodside, she said.

“We don’t see that it will put him in a difficult situation,” Ms Roocke said.

She also urged Mr Gray to engage with the environmental portfolio, “because that is one area we are being hamstrung by government policy”.

The Greens have issued a press release asking whether Gray accepts the implication of climate change science that the vast majority of fossil fuel reserves must remain in the ground to limit global warming to below 2°C. To my knowledge, Gray has not responded.

What planet is Labor on? They don’t seem to care about Earth.

Continue reading »]]> What a week it’s been in Australian politics! Failed media regulations, a failed leadership spill, mass ministerial resignations, and more… But in today’s post I’ll focus on a piece of news that didn’t make the front page: yesterday Australia’s Climate Change Minister Greg Combet finally announced the Labor government’s response to the recommendations of last year’s Renewable Energy Target (RET) Review by the Climate Change Authority (CCA).

The government has accepted almost all of CCA’s recommendations, including the main recommendation to leave the Large-scale Renewable Energy Target (LRET) at its current level of 41,000 GWh by 2020 (projected to equal about 25% of demand in that year). The decision is fortunate insofar that the government has rejected calls to reduce the target to account for falling electricity demand (made by electricity gentailers and coal-fired generators concerned new renewables will crowd out existing fossil fuels, and comprehensively debunked by CCA). Unfortunately, the level of the RET remains inadequate considering Australia and the world urgently need to phase out fossil fuel burning to avoid dangerous climate change.

As Combet remarked yesterday, the key theme of the RET Review was “investment certainty”. Policies must remain unchanged, the argument goes, so companies can be sure about where to invest. The problem with this approach was illustrated by Combet’s lament today that the Liberal/National Coalition’s ambiguous policy is undermining investment certainty by “creating mayhem”. It was also illustrated when on Monday Origin Energy reiterated its attack on the RET, this time expanding its condemnation to the carbon price too. They are not about to give up – renewable energy threatens their business model. The reality is certainty in climate policy is unachievable because of the fossil fuel lobby’s constant attempts to sabotage it. Instead, to send the strongest possible investment signal the government must adopt ambitious policies. The LRET must be increased to incentivize investment in renewable energy.

Adherents of the investor certainty argument claim uncertainty about the RET is causing an “investment strike”. The real reason why investment has stalled is the current oversupply of LRET certificates, which will last until 2015. In other words, retailers have already met their obligations out to 2015 and thus may choose to purchase no new renewable energy before then – and that is exactly what Origin intends to do. This problem cannot be addressed by policy certainty. It can only be fixed by increasing the LRET, both the 2020 target and the interim targets for the next few years.

To its credit, Labor rejected one of CCA’s recommendations that would weaken the Small-scale Renewable Energy Scheme (SRES). However, they did accept recommendations to phase out the SRES from 2017, and give the Climate Change Minister the power to lower the price cap for SRES certificates. CCA’s recommendations on SRES came at the insistence of the Australian Industry Group (AIG), who claimed it was necessary to “contain” the “cost” of solar PV deployment. Instead of attempting to contain solar PV deployment, the government should design policies to further accelerate it.

Labor also agreed to delay the next RET Review, currently scheduled for 2014, until 2016, again in the name of investment certainty. Accelerating climate action cannot wait until 2016.

The Greens support Labor’s decisions.

The Coalition differs in that they would proceed with the 2014 review, though who would conduct the review is unclear since the Coalition would abolish CCA. Unfortunately, nothing good is likely to come out of the Coalition’s 2014 review. Liberal environment spokesperson Greg Hunt said yesterday: “Unlike the Gillard Government, the Coalition understands the importance of full consultation with the energy and resources sector.” This is a strange comment because CCA did consult with the energy and resources sector; perhaps the Coalition believes consultation consists of caving to the fossil fuel lobby? Hunt has also said the Coalition’s RET review will focus on electricity demand, a strong hint that they intend to use it as an excuse to reduce the RET, though they still officially deny that is their intention. Coalition politicians have continued to attack the RET this week. Also, there are increasing signs of a close relationship between the Coalition and Origin Energy, one example being rumors that a Coalition government might allocate climate funding for a pet project of Origin’s.

PS: In case you were wondering, the climate implications of the week’s headline events are a mixed bag. The defeat of legislation that would have restricted media ownership leaves climate change deniers like Gina Rinehart unimpeded in their attempts to take over the media. The Labor leadership spill appears to have decisively ended Kevin Rudd’s ambitions, a blow to AIG’s devious campaign to bring forward emissions trading. And the resignation of Resources and Energy Minister Martin Ferguson raises hope for some improvement on Australian energy policy.

Continue reading »]]> There is much debate in Australia, particularly in the political sphere, about who is a climate change denier. To answer that question, we first have to clarify what we mean by climate change denial. The book Climate Change Denial by Haydn Washington and John Cook helpfully distinguishes between several different stages of denial: literal, interpretative, and implicatory.

Literal denial

The most obvious form of denial is literal denial of climate change science. Science denial itself comes in multiple types: trend denial, attribution denial, and impacts denial (though the vagueness of human psychology mean the lines between these categories are blurred).

Trend deniers deny that the Earth has been warming (a fact supported by many, many independent lines of observation). Trend deniers do still exist and all their old arguments still circulate online, though in recent years they have been mostly superseded by denial that the warming trend is continuing (in reality, the Earth continues to accumulate heat despite short-term fluctuations).

Attribution deniers acknowledge the climate is changing, but deny humans are causing it (in reality, there is overwhelming evidence that the main cause is CO₂ emissions from fossil fuel burning, enough to convince 97% of climate experts). Although some environmentalists make much of the fact that the majority of Australians tell surveys they agree climate change is happening, those same surveys reveal merely 43% of Australians accept humans are causing global warming. This fact is worth repeating: Most Australians are attribution deniers. This is intolerable because it the attribution, not the trend, which is the vital piece of information. Denying human responsibility leads to the wrong conclusion that humans cannot do anything to limit global warming.

Impact deniers deny that global warming will have catastrophic effects. In reality, global warming is expected to have enormous negative consequences, and rapid global emissions cuts are urgently needed to avoid tipping points for dangerous climate change. When asked to choose between three statements on the seriousness of global warming, only 36% of Australians chose the strongest: “Global warming is a serious and pressing problem. We should begin taking steps now even if this involves significant costs.” The proportion who fully comprehend the gravity and urgency of the climate crisis must be even smaller, perhaps as few as the ~10% who vote for the Greens.

It is tempting for us few who do appreciate the reality of anthropogenic global warming to claim majority support by glossing over the widespread denial of attribution and impacts. We are certainly advocating the interests of the majority against the minority that currently controls climate policy, the fossil fuel industry. But to effectively counter the power of the industry, we need true majority support. We need to recognize the reality that most Australians are misinformed on the basic facts of climate change, and we need to change those people’s minds.

Interpretative denial

Australian politicians might superficially appear to be ahead of the public: few are literal deniers; almost all profess acceptance of climate change science. However, this is necessary but not sufficient, as there are more subtle forms of denial that do not explicitly reject scientific facts.

Interpretive denial consists of the sort of weasel words which conservative politicians like to use. For example, Liberal leader Tony Abbott says (with my emphasis): “climate change is real, humanity does make a contribution to it and we’ve got to take effective action against it”. In reality, human influences on climate now far outstrip natural ones. Or consider Abbott’s less streamlined and more revealing remarks on ABC TV’s Q&A in 2010:

This idea that the science was settled was not something that I wholly accepted. [Human activity] has a role. It plays a part. There’s no doubt about that, Tony. How big a part, well, let the scientists argue about that. In the end I’m not going to, I guess, try to challenge their scientific expertise. […] The scientist may well be right. Carbon dioxide may well be the principle villain in harmful climate change and what we should do, therefore, is take prudent and affordable precautions.

And then there’s this comment Abbott made this January:

Isn’t it bizarre that this government thinks that somehow raising the price of electricity is going to clean up our environment, stop bushfires, stop floods, stop droughts? Just think of how much hotter it might have been the other day but for the carbon tax!

I hope I don’t have to explain why that argument is so ridiculous: CO₂ emissions accumulate in the atmosphere over time.

It is hard not to conclude Abbott’s real position is what he reportedly said in 2009: the science of climate change is “complete crap” but “the politics of this are tough for us”.

When this sort of spin is stripped away, according to one blogger’s classification, at least 22 of 59 Liberal MPs, at least 8 of 12 Nationals MPs, and Bob Katter do not accept the science of anthropogenic global warming. The same goes for at least 16 of 28 Liberal Senators, all 5 Nationals Senators, the only Country Liberal Party Senator, and the only Democratic Labor Party Senator. No Labor or Greens politicians were placed in the denier category. For some politicians there was insufficient data, most notably Labor Energy and Resources Minister Martin Ferguson.

One form of interpretative denial that particularly irks me (and is apparently not counted in the numbers cited above) is to acknowledge denialist points of view but appeal to everyone to support climate action as risk management. Abbott alludes to it above, but a better example is his predecessor Malcolm Turnbull’s failed pitch to the party to support his leadership:

Now I know there are many people, including many people who are supporters of my own party, who have doubts about the science and grave reservations about it. I understand that and I respect it. But as Margaret Thatcher said, right back nearly 20 years ago in 1990, this is about risk management. Or as Rupert Murdoch said, we have to give the planet the benefit of the doubt.

It is unclear to what extent such arguments are intended as greenwash and to what extent they are (similarly to glossing over attribution denial) a well-meaning attempt to build broad political support for action without doing the hard and necessary work of changing people’s minds. (It has not escaped my attention that Turnbull also said, with my emphasis: “We cannot be seen as a party of climate sceptics.”) Whatever the intentions behind it, a “risk management” frame, though reasonable given the level of scientific understanding in 1990, is completely unjustifiable in 2013. Scientists have argued for decades about human influence on climate change and long since reached a conclusion based on overwhelming evidence. Today such a frame only gives credence to popular delusions (promoted by Murdoch’s newspapers) which fly in the face of scientific evidence, understates by far the degree of risk posed by global warming, and therefore cannot convince voters to support the scale of action required.

Those of us who are trying to educate the public about climate change must take care not to contribute to these sorts of perceptions. For that reason I am uneasy about a communication approach advocated by some, presenting the facts in a way that avoid conflicting with people’s worldviews. Any time we gloss over a key element of the reality of climate change, any time we fail to spell out implications, any time we neglect to challenge misguided assumptions, we are implicitly endorsing interpretative denial.

Implicatory denial

The above analysis superficially makes the Labor Party look good, but is not the end of the story, because there is one last type of denial which is arguably worst of all. Implicatory deniers fully accept the science of climate change, and even make grand statements about the need for action. Former Labor Prime Minister Kevin Rudd gave great speeches on climate change. Here’s a sample from a landmark 2009 speech to the Lowy Institute rightly castigating denialism in most of its guises:

Climate change deniers are small in number, but they are too dangerous to be ignored. They are well resourced and well represented by political conservatives in many, many countries.

And the danger they pose is this – by collapsing political momentum towards national and global action on climate change, they collapse global political will to act at all. They are the stick that gets stuck in the wheel, that despite its size may yet bring the train to a complete stop.

And that is what they want, because they are driven by a narrowly defined self interest of the present and are utterly contemptuous towards our children’s interest in the future.

This brigade of do-nothing climate change skeptics are dangerous because if they succeed, then it is all of us who will suffer.

Our children.

And our grandchildren.

If we fail, then it will be a failure that will echo through future generations.

Unlike the interpretative denial quotes, the above quote is one I completely agree with. Rudd sounded every bit like a genuine climate activist. It’s no wonder most climate scientists and environmentalists got behind him (I would have too if I’d been political then). But our trust was misplaced because, as Greens staffer Tim Hollo warned at the time, Rudd turned out to belong to “the most dangerous category of sceptic: those who profess to take the science seriously, seek to hold the moral and scientific high ground, and then utterly fail to take the kind of action the science requires”. Implicatory deniers are in essence greenwashers.

Hollo continued:

A child swimming at a surf beach starts waving frantically from out in the waves. […] Kevin says “this is a crisis on a grand scale. Look at all these people milling around on the beach and cravenly refusing to do anything. We have a moral obligation to act.” He starts wading in. Everyone else breathes a sigh of relief because they think Kevin’s got it under control. But Kevin never gets anywhere near the child, as he only wades in 5% of the way. The child drowns.

The Greens toned down their criticism of Labor after the 2010 election, and Rudd’s successor Julia Gillard has toned down Labor’s green rhetoric, yet Hollo’s message remains as relevant as it was in 2009.

A politician should not be hailed as a climate hero if the height of their ambition is an emissions trading scheme with a 5% target and unlimited international offsets. Gillard remains stuck in the same implicatory denial as Rudd, officially accepting the science but denying the implication that it is necessary to phase out fossil fuels or even make rapid emissions cuts generally. Both are allowing Australia to continue digging up and burning coal indefinitely, not to mention exporting it to the world. They even gave the energy department to Ferguson, a man with no clear position on climate change, who once reportedly told the launch of a denialist publication that Labor would “wait for clean coal technology to come along before doing anything to the coal industry”.

To my knowledge, there is not a single non-Greens politician in Australia who openly opposes the country’s biggest contribution to climate change, its coal exports. All deny important implications of anthropogenic global warming if not also the interpretation of the facts or the facts themselves.

In recent posts I have described the threat posed by a Liberal victory at the September election: they intend to dismantle practically every climate policy that has been achieved. But at least in doing so they are likely to create their own enemies. Labor’s greener image arguably poses an even greater danger to Australian climate politics. Turnbull may be more dangerous than Abbott for the same reason (although I mentioned Turnbull in the interpretative denial category, he probably fits better here).

It could be argued we all engage in implicatory denial to some degree, but it is particularly damaging when exhibited by those in positions of power. I should add that includes corporate “leaders” as much if not more so than political ones.

The recent book Greenwash by Guy Pearse documents how most large companies are, like governments, only pretending to act on climate change. Meanwhile, business lobby groups proclaim their support for climate action while demanding governments weaken their climate policies, the most recent example being the Australian Industry Group’s emissions trading proposal last week. Their implicatory denial is more insidious and therefore more dangerous than campaigns by right-wing groups to outright abolish climate policies.

We who want real action on climate change must make it clear we will not be placated by greenwash. We must never again be sucked in by another Kevin Rudd.

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Figure 1: Examples of extreme weather records broken during Australian summer 2012-13. (Source: Climate Commission)

Australia is recovering from its hottest summer on record, dubbed the “Angry Summer” by the Australian government’s independent Climate Commission.

Australia has been experiencing record heat since September 2012. Central Australia suffered a spate of heatwaves during spring, culminating in late November 2012 with inland temperatures more than 10°C above average. This last heatwave then moved southeast, causing on 29 November Victoria’s highest spring temperature on record (45.8°C in Ouyen), warmth in NSW rivaled only by the February 2009 heatwave (46.2°C in Pooncarie), and extreme heat in South Australia (46.0°C in Marree, with a record-breaking overnight minimum of 32.3°C in Oodnadatta). That was followed by record high overnight temperatures in Tasmania (22.1°C in Hobart) and record humidity in Victoria.

The peak of the summer was a heatwave in January 2013 that was unprecedented in degree, extent, and longevity. It began in Western Australia: in the last week of December 2012, Perth equaled its record of 7 days in a row over 37°C. As the heatwave spread, temperature records were broken across Australia. Every capital city except Brisbane and Darwin reached 40°C at least once. On 4 January, the hottest day in the southeast, Hobart suffered a record-breaking 41.8°C, also the second highest temperature ever recorded in Tasmania. Australia as a whole experienced a record hot temperature of 40.3°C on 7 January, the sixth of seven consecutive days over 39°C (compared to the previous record of four consecutive days).

Catastrophic fire warnings were issued in most of populated southeastern Australia. Fires indeed occurred in every state and territory. On 4 January up to 40 bushfires occurred in Tasmania, burning 25,000 hectares, and up to 140 in NSW on 8 January.

Figure 2: Tasmania on 7 January 2013. Red areas indicate fires. (Source: NASA)

After 8 January the eastern states cooled temporarily, but a second wave of heat swept across the continent, beginning in Western Australia which experienced its hottest temperature on record (49.0°C at Leonora on 9 January). When adjusted for the cooling effect of elevation, the highest temperature ever recorded in Australia occurred at Wiluna, Western Australia on 8 January (48.0°C at 521 metres above sea level). As the heat moved east, parts of South Australia, NSW, and Queensland suffered temperatures above 48°C, including 49.0°C in Birdsville, Queensland’s hottest January temperature. 12 January saw the hottest temperature of the summer: 49.6°C in Moomba, South Australia, the eighth hottest temperature ever recorded in Australia. On 14 January Queensland experienced its highest overnight minimum since 2006 (34.1°C in Bedourie). In a final wave of extreme heat in the southeast, Sydney experienced a record-breaking 45.8°C on 18 January. The heatwave finally ended on 19 January, the first day since 31 December on which no part of Australia reached 45°C.

Figure 3: Map of highest maximum temperatures observed in each part of Australia during 1-14 January 2013. (Source: The Conversation)

During the January heatwave, over 70% of Australia experienced extreme heat. The worst and longest-lasting heat was in central Australia, where maximum temperatures were more than 6°C above average. Birdsville had a record 31 consecutive days over 40°C, and Oodnadatta had a record 7 consecutive days over 45°C. For 5 consecutive days temperatures exceeded 48°C somewhere in South Australia. 44 weather stations set new all-time maximum temperature records (and another 15 set January records), and 7 recorded their all-time warmest night (plus 13 January records). Some stations broke records multiple times during the heatwave. Overall, January 2013 was Australia’s hottest month since records began in 1910.

The extreme heat continued in February 2013. February was unusually hot in northern and western Australia. Parts of Victoria had 20 or more consecutive days above 30°C.

Sea surface temperatures surrounding Australia were the second warmest on record in January and February. Tropical Cyclone Oswald brought extreme rainfall to the east coast in late January, breaking all-time daily rainfall records at 11 locations. Parts of southern Queensland received 700 mm in 24 hours. The Burnett catchment in Queensland and the Clarence catchment in NSW reached record flood peaks, with the former breaking its daily rainfall record by 70%. The Brisbane catchments saw a similar rainfall event to the 2011 floods, except fortunately this time the soil was dry enough to absorb it. This was followed by further intense rainfall and flooding in northern NSW in late February. However, most of Australia had a relatively dry summer: Victoria and South Australia saw their driest summers since the 1980s, and many weather stations experienced record low rainfall.

The summer continued into March 2013. Southeast Australia suffered a long heatwave from 1 to 13 March. Maximum temperatures during the first 12 days of the month were almost 7°C above average in Tasmania and Victoria, and up to 10°C above average around Mount Gambier. Mount Gambier had a record-breaking 11 consecutive days above 30°C. Melbourne had 9 consecutive days above 32°C, its longest spell above 30°C in any month since records began in 1855. Adelaide had 10 consecutive days above 32°C, rivaled only by the March 2008 heatwave. Even if the rest of the month has normal weather, it will easily break the record for Tasmania’s hottest March. Most of southeast Australia also suffered minimum temperatures 5-6°C above average. Melbourne had 7 consecutive nights with minimum temperatures above 20°C, also the longest in any month. On the morning of 13 March, Melbourne had its highest minimum temperature on record, 26.5°C. The extreme heat was combined with high relative humidity and low wind speeds which made it feel even hotter.

Australia’s summer as a whole was the hottest on record, 1.1°C above the 1961-1990 average and 0.1°C above the previous record set in 1997-98. This summer is particularly notable in that it has occurred despite neutral Southern Oscillation conditions, unlike 1997-98 and other previous hot summers which occurred during El Niño events. 97% of Australia was warmer than average, an extent that is unprecedented. Climatologists estimate the chance that natural variation caused all these records is one in 500.

The Climate Commission report says “Australia’s angry summer shows that climate change is already adversely affecting Australians.” This is because all the extreme weather that happens today is occurring in the context of a climate system warmer than it was 50 years ago. An increase in average temperature causes a dramatic increase in extreme hot weather:

Figure 4: Illustration of how increasing average temperature increases extreme high temperatures. (Source: Climate Commission)

As explained by the Climate Commission’s Tim Flannery:

If an athlete takes steroids, for example, their base line shifts. They’ll do fewer slow times and many more record-breaking fast times. The same thing is happening with our climate system. As it warms up, we’re getting fewer cold days and cold events and many more record hot events.

Australia has warmed by 0.9°C since 1910. Six of the ten hottest Australian summers have occurred this century. Record hot extremes in Australia in the last decade outnumber record cold extremes by three to one.

Figure 5: Australian summers since 1910. (Image source: The Conversation)

As well as making heatwaves worse, climate change is exacerbating fire risk. Fire risk conditions have also been increasing since 1973; the scale had to be extended upward after the Black Saturday fires of February 2009.

Climate change is also increasing intense precipitation, because there is more water vapor in the atmosphere now than there was 25 years ago:

Figure 6: Illustration of how global warming has changed the water cycle. (Source: Climate Commission)

Southern hemisphere land areas together had their 2^nd hottest summer in 2012-13. Many parts of the world have had extreme hot summers in recent years. Almost everywhere in the world there is a trend towards more frequent extreme heat.

Figure 7: Temperature anomalies by percentile around the world. (Source: US National Climatic Data Center)

The events that are occurring now are in the context of just 0.8°C of global warming. The consequences of the ~7°C by 2100 that would result from continuing of business-as-usual would be unimaginably catastrophic. Under a mid-to-high emissions scenario, this summer would become the average Australian summer by 2050.

The Climate Commission concludes:

In Australia and around the world we need to urgently invest in clean energy sources and take other measures to reduce emissions of greenhouse gases. This is the critical decade to get on with the job.

Exactly.

Continue reading »]]> This is the seventh part in a series about the Caps and Targets Review being conducted by the Australian Government’s independent Climate Change Authority (CCA) this year. Part 1 summarized the global climate crisis, Part 2 explained the importance of the review and how CCA should approach it, Part 3 outlined the role Australia should play in climate action, Part 4 debunked the economic justifications for inaction, Part 5 makes my central recommendations on emissions caps, and Part 6 makes recommendations on the design of the carbon price mechanism. This part argues for and suggests some complementary measures.

The carbon price should not be expected to do all the work. A single measure is highly vulnerable to repeal, failure, low ambition, or erosion over time, and there are many ways in which emissions trading schemes can go wrong. We need a range of climate policies operating alongside each other, so success in cutting emissions does not depend on the survival and effectiveness of any single policy.

Complementary policies are not redundant: they are a way of ensuring emissions cuts occur where it is most important instead of merely where it is cheapest (and ensuring they occur domestically, if international offsets continue to be allowed). Also, some of the required structural economic changes (eg. infrastructure) may not be driven by a price signal alone.

The carbon price should not be used as an excuse to scrap other existing climate policies or preclude new ones, and the Government should consider reinstating policies it has already scrapped. The COAG Taskforce on Regulatory and Competition Reform, due to conclude its work this month, must not cut any climate policies.

CCA should recommend the government continue to introduce new measures to assist in meeting emissions targets. Some complementary measures already exist (including the RET, CEFC, and ARENA), but they are far from sufficient in scale.

Currently annual carbon price revenue ($8 billion[i], which could fall dramatically after the shift to emissions trading[ii]) and annual renewable energy subsidies (approximately $300 million rising to $2 billion next year) are outweighed by the incentive-to-pollute provided by annual fossil fuel subsidies ($13 billion including $4 billion in free carbon permits[iii], the justifications for which are unconvincing). The net effect is to make polluting industries more profitable. These fossil fuel subsidies should be removed.

There is a risk[iv] (albeit diminishing due to the falling prices of renewables) that a too-low carbon price, instead of deploying renewables as is urgently needed, could drive investment in gas-fired electricity generation, locking in fossil fuel infrastructure with a lifetime of decades.[v] CCA should recommend the government ban new fossil-fuelled electricity generators to guard against this risk.

More government funding is needed to support deployment of existing zero-carbon technologies and zero-carbon infrastructure. Though R&D is also important, the emphasis should be on deployment as there is no time to wait for new technologies to be invented. The government should not prioritize funding for carbon capture and storage (CCS) technology, which cannot be relied upon to save the fossil fuel industry because it is unlikely to be deployed on a global scale for decades.[vi] (Having said that, some form of CCS technology may be needed later to directly remove CO₂ from the atmosphere.)

New wind power is now cheaper per megawatt-hour than new coal- or gas-fired electricity generation, but renewable energy still needs subsidies to compete with existing generators.[vii] Renewable energy subsidies are justified, especially considering the fossil fuel industry is profitable today thanks to enormous past and present subsidies and other supportive policies. New renewable energy subsidies could be funded by cutting fossil fuel subsidies, cutting carbon price compensation, and/or abandoning the unnecessary goal of a budget surplus. The biggest threat facing humanity is worth spending money on.

The RET should be increased to reach 100% as soon as possible. Funding for CEFC should be increased, and should be solely directed to zero-carbon technologies. A federal feed-in tariff should be introduced for each renewable energy technology. Most of the EU’s renewable energy has been delivered by feed-in tariffs.[viii]

The hole left by the failure of contracts-for-closure should be replaced with a new policy to close coal-fired power plants and replace them with renewable energy.

A greenhouse trigger should be added to the Environmental Protection and Biodiversity Conservation Act, and the federal government’s approval powers under the Act should not be delegated to the states.

Climate change mitigation should be one of the National Electricity Market objectives.

Mandatory energy efficiency and fuel efficiency standards should be introduced.

Most importantly, the Energy White Paper must be replaced with a new energy policy that will phase out fossil fuels, not one based on the delusion that we can afford to burn it all. Australia should declare a moratorium on new fossil fuel mining and export projects, and begin phasing out existing ones. Australia could then launch international negotiations on a global fossil fuel phaseout.

Conclusion

In this series, we’ve learned the climate crisis threatens human civilization; it is far more urgent than is widely appreciated; and solving it requires phasing out fossil fuels. We learned the Caps and Targets Review is pivotal, must consider matters beyond its scope, and must make ambitious recommendations to send a strong investment signal and counter the sabotaging influence of the fossil fuel industry. We learned unconditional unilateral ambition is required to break the international deadlock; Australia has greater responsibility for climate change than it acknowledges; and Australia should move beyond its inadequate existing targets and lead the world. We learned the economic justifications for inaction are greatly exaggerated, short-termist, and confuse fossil fuel interests with the public interest.

We learned Australia must set emissions caps that rapidly reduce toward zero to decarbonize the economy as fast as possible, enforced in a way that does not limit ambition. We learned Australia’s ETS needs fixing to ensure the emissions caps are effective; international offsets must be disallowed; and there is a case for greater restrictions on the domestic carbon market to ensure emissions cuts occur where they are most important instead of where they are cheapest. Finally, we learned Australia must support its carbon price with other new and existing policies to address domestic emissions, and start phasing out its fossil fuel exports.

Australian governments to date have acted as if our future depends on protecting the fossil fuel industry from climate policy. We must persuade the government of the reality: that our future depends on protecting our climate from the fossil fuel industry. Therefore I urge all Australians who are concerned about climate change to communicate these messages to the Caps and Targets Review.

Continue reading »]]> The new website has been up and running for a fortnight now, but I think I’ve now ironed out some of the kinks.

By coincidence, in the interim I have published a number of posts on Australian climate change politics, many of them very important. Here is a list for anyone who missed them:

• Reassessing the Greens’ pragmatic strategy (reviewing how the Greens’ pragmatic strategy has fared)
• Why 2013 will be a pivotal year for climate (examining the possible outcomes in 2013)
• Liberals’ climate policy just got stupider (looking at the Liberals’ latest climate policy revelations)
• Caps Review Part 1: The global climate crisis (summarizing the global climate crisis)
• Caps Review Part 2: Politics (explaining the importance of the review and how CCA should approach it)
• Caps Review Part 3: Australia’s role (outlining the role Australia should play in climate action)
• Caps Review Part 4: Economics (debunking the economic justifications for inaction)
• Politicians right to rebuff business lobby’s scheming (exposing the true intentions and consequences of the Australian Industry Group’s proposal that the government move immediately to an ETS)
• Caps Review Part 5: Emissions caps (making my central recommendations on emissions caps)
• Caps Review Part 6: ETS design flaws and pitfalls (making recommendations on the design of the carbon price mechanism)

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This is the sixth part in a series about the Caps and Targets Review being conducted by the Australian Government’s independent Climate Change Authority (CCA) this year. Part 1 summarized the global climate crisis, Part 2 explained the importance of the review and how CCA should approach it, Part 3 outlined the role Australia should play in climate action, Part 4 debunked the economic justifications for inaction, and Part 5 makes my central recommendations on emissions caps. This part makes recommendations on the design of the carbon price mechanism.

The collapse of overseas carbon markets is a clear warning of the pitfalls of emissions trading schemes.[1] Given the Australian government has chosen to proceed with a carbon price that will become an ETS, it is essential that the Australian ETS does not fail like the EU ETS, NZ ETS, or Kyoto offset mechanisms.

Treasury projections show present Australian climate policies will not drive a phaseout of fossil-fuelled electricity generation in Australia, nor even an absolute reduction in domestic emissions, for many decades. Domestic emissions would actually rise until the 2030s then fall back to today’s level by 2050, and fossil fuels would still provide 60% of Australia’s electricity in 2035.[2] These outcomes are completely unacceptable.

International emissions trading

Australia’s present plans and agreements for international linking and offsets raise huge concerns:

• It is difficult to determine whether international offsets represent real emissions cuts (eg. currently the most common type of Certified Emissions Reduction (CER) comes from Asian companies who produce gratuitous pollution so they can be paid to stop[3]). This criticism is based not on an irrational distrust of foreigners, but on a realistic skepticism about the difficulties of carbon accounting in developing countries with no absolute emissions caps, less regulation, and in some cases a less accountable government. (Linking to a scheme with an absolute emissions cap like the EU ETS is comparatively credible but still has the other problems outlined below.)
• International linking and offsets hinder domestic decarbonization at a time when all countries need to decarbonize as quickly as possible.
• International linking allows distinct emissions trading schemes to contaminate each other with their flaws (eg. the EU ETS has already achieved its 2020 emissions target eight years ahead of schedule[4], thus no longer provides any incentive to cut emissions, and so far Poland has vetoed all attempts to fix the scheme[5]). Difficulties may also arise from linking schemes with different accounting rules.
• Australia’s carbon price would be largely determined by policy decisions made in other countries. Australia would likely be flooded by cheap international permits, causing the Australian carbon price to crash like its international counterparts. This is especially a concern considering the present rock-bottom carbon prices in the EU ETS and other international carbon markets. According to CCA modeling cited by the Australian Financial Review, the Australian carbon price could fall to $10/tonne in 2015.[6]
• International offsets are unfair because they shift the burden of cutting emissions from Australia to other countries which are often poorer and less carbon-intensive. Although it is important for Australia to finance climate action in other countries, it should be supplementary to domestic action, not as an offset for domestic emissions.
• The Australian public and other countries expect Australia to cut its own emissions.

The 50% “limit” on international offsets is meaningless because it allows companies to pollute up to twice the level of the Australian emissions cap.[7] Even the more recently added 12.5% limit on CERs (a step in the right direction) still allows companies to emit in excess of the cap by a very significant amount. It is unclear whether there will be any limit on importation of European permits.

South Korea and California will allow zero international permits in their emissions trading schemes.[8] Australia should do the same. The Australian government should not proceed with its intention to link to the EU ETS, Kyoto offset mechanisms, or any other international emissions trading scheme or offset mechanism.

Domestic emissions trading

There are also reasons for concern about the effectiveness of domestic emissions trading (particularly the intention to allow unlimited offsets from the domestic Carbon Farming Initiative).

Not all tonnes of CO₂e are equivalent. A given amount of CO₂e abated today in one way (eg. closing a coal mine) and the same amount of CO₂e abated today in another way (eg. preserving a forest), although they may look the same on paper in the short term, may not be equally important in the long term. This is because different types and sources of greenhouse gases result from different economic processes and play different roles in the climate system. Although all emissions are important, it is of particular importance and urgency to phase out fossil fuel CO₂ emissions because they are the largest and longest-lived cause of anthropogenic global warming (as opposed to land carbon or other greenhouse gases). If the world fails to phase out fossil fuels in a reasonable timeframe, all other efforts to mitigate climate change will matter little.

Policymakers must understand the basic facts of the carbon cycle. On human timescales carbon easily moves between the atmosphere, ocean, and land. It is only over geological timescales that these “surface reservoirs” exchange carbon with deeper, larger reservoirs. The most important thing humans are doing is mining and burning fossil carbon that has been buried for millions of years, thus emitting carbon at a pace many orders of magnitude greater than the rate of the processes which remove carbon from surface reservoirs. While storing more carbon in the land is a necessary part of climate action, it is far from sufficient and not nearly as urgent as eliminating fossil fuel emissions. Even if forest cover was returned to preindustrial levels, the carbon cycle would still be overwhelmed by fossil fuel emissions. A proportion of the fossil carbon will stay aboveground for millennia, and the land is a climate feedback so cannot store carbon permanently. Finally, from a practical perspective, land carbon is harder to measure.

Short-lived climate pollutants like methane, soot, ozone, and hydrofluorocarbons are more powerful at trapping heat than CO₂ but do not linger in the atmosphere for as long. While it is very important to cut emissions of short-lived climate pollutants to prevent rapid near-term warming, this also should not be considered a substitute for phasing out fossil fuel CO₂ emissions to limit long-term warming.

Other factors affecting the relative significance of different types of abatement which may not be accounted for by the carbon market (or by cost-benefit analysis) include: whether it locks in or prevents lock-in of fossil fuel infrastructure, whether it changes relative technology prices, whether the emissions reductions are permanent, and whether the emissions reductions will continue beyond the start year; in broad terms, its long-term contribution to systemic decarbonization of the economy.

The Productivity Commission, which is often referred to on whether climate policies are cost-effective, is not a credible source. It has published an inaccurate estimate of the cost of emissions cuts from solar PV[9], which it continues to cite[10] despite it having quietly debunked by the Productivity Commission itself.[11] Neither analysis accounted for technology price reductions.

An ETS is supposed to ensure emissions cuts occur where it is cheapest, but I am concerned the carbon market is unlikely to deem the most important places to cut emissions as the cheapest. If it does not, it will instead prevent the most urgently needed transition, away from fossil fuels (in which case it would merely limit the cost for the fossil fuel industry). This is especially a concern considering the free permits handed out to large polluters, which in at least some cases are making them more profitable.[12] [13] [14]

An alternative approach might be to compartmentalize the ETS by sector and/or greenhouse gas to ensure action on all fronts. Instead of a single catch-all commodity called “carbon” that equates many different things, there could be several commodities (eg. “fossil carbon”, “land carbon”, “chlorofluorocarbon”, etc), each with its own separate emissions caps and market. Companies would be allowed to exchange apples for apples, but not apples for oranges. Greatest priority (strongest cap, highest floor price) would be given to cutting the commodity with the most important role in climate change: fossil carbon. This compartmentalized emissions trading would allow each type of emissions to be reduced at the lowest credible cost.

Miscellaneous issues

Australia has delayed application of the latest science on the relative heat-trapping potential of greenhouse gases until 2017-18.[15] It should be applied immediately so that present policy is based on the best available information.

Present measurement and accounting of fugitive emissions of methane from unconventional gas extraction is inadequate. Full measurement and accounting of these emissions should be mandated. There is evidence to suggest gas-fired electricity generation may actually be worse than coal-fired generation on a 20-year timescale when fugitive emissions are taken into account.[16]

The floor price should be reinstated (preferably at a higher level than the original $15/tonne) to help prevent the carbon price from crashing. The ceiling price should be removed because it limits the penalty for pollution.

Current rules allow liable companies to bank present carbon permits to use in the future, and borrow future permits to use in the present. This is unwise as it creates uncertainty in Australia’s emissions trajectory, and could result in a surplus of permits.

Emissions are counted on a facility-by-facility basis rather than company-by-company. I am concerned companies could avoid paying the carbon price by setting up a large number of small facilities each with small emissions.

It is often argued climate policy requires a choice between market mechanisms and regulatory ones, but that is a false dichotomy. A mix of markets and regulations are needed; indeed the carbon price already has both market-based and regulatory aspects. I am advocating a greater regulatory aspect to ensure the market aspect delivers an effective outcome. It would be unwise to leave too many greenhouse gas decisions to markets, because a market failure is driving the problem in the first place. On that basis, a climate policy is more likely to be effective the more limited its market aspects and the more restrictive its regulatory aspects. If markets are badly designed by governments then they will make the wrong investment decisions.

In the final part, I will argue for and suggest some complementary measures.