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Mar 11 2013

Caps Review Part 7: Complementary measures

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.

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[i] ‘Carbon price tug of war’, Australia Institute, viewed 21 February 2013, https://www.tai.org.au/node/586

[ii] G Winestock & M Priest, ‘EU carbon price a hard act to follow’, Australian Financial Review, 18 February 2013, viewed 21 February 2013, http://www.afr.com/p/national/eu_carbon_price_hard_act_to_follow_Lt5XbJv3iE9iyKRMit5tUI

[iii] ‘Carbon price tug of war’, Australia Institute, viewed 21 February 2013, https://www.tai.org.au/node/586

[iv] P Hearps, ‘A carbon price won’t bring zero emissions’, The Conversation, 30 March 2011, viewed 21 February 2013, http://theconversation.edu.au/a-carbon-price-wont-bring-zero-emissions-23

[v] J Romm, ‘International Energy Agency Finds “Safe” Gas Fracking Would Destroy A Livable Climate’, Climate Progress, weblog, 30 May 2012, viewed 14 September 2012, http://thinkprogress.org/climate/2012/05/30/491970/international-energy-agency-finds-safe-gas-fracking-would-destroy-a-livable-climate/

[vi] M Atkin, ‘Clean coal “unviable for two decades”’, ABC News, 17 February 2012, viewed 21 February 2013, http://www.abc.net.au/news/2012-02-15/clean-coal-unviable-advisor-says/3828946

[vii] G Parkinson, ‘Renewables now cheaper than coal and gas in Australia’, Renew Economy, 7 February 2013, viewed 21 February 2013, http://reneweconomy.com.au/2013/renewables-now-cheaper-than-coal-and-gas-in-australia-62268

[viii] F Green & R Finighan, Laggard to Leader: How Australia can lead the world to zero carbon prosperity, Beyond Zero Emissions, 2012, viewed 9 September 2012, http://media.beyondzeroemissions.org/Laggard_Leaderv1.pdf, p. 60.

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