8. Its claimed emissions intensity cuts may not be real

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Previous: 7. It’s designed to cut emissions intensity, not absolute emissions

Because any claimed emissions reductions will be defined and measured relative to business-as-usual emissions intensity instead of in absolute terms, it will be hugely problematic to ensure they would not have happened anyway. Yet surely the whole point of an Emissions Reduction Fund is to fund actions that wouldn’t have taken place otherwise (a quality called “additionality”). I do not understand how the Government would add up the emissions-intensity-reducing actions funded by the Fund to ensure they achieve an absolute emissions reduction of 5% by 2020 (let alone a more ambitious target). The target seems to be an aspirational goal, completely disconnected from the design of the policy.

The Green Paper is confusingly vague (and possibly contradictory) on how additionality will be determined. The process is likely to involve very complex calculations which would create a breeding ground for fraud and creative accounting, especially considering the rules will be negotiated with polluting companies. There are already indications that in some circumstances the Fund might pay for actions that would have happened anyway. And the expectation of the Emissions Reduction Fund may be creating a perverse incentive for businesses to postpone greenhouse-gas-reducing investments because of the potential of government support. Actions which add up to the 5% target on paper may not add up in reality.

Next: 9. It will weaken the Carbon Farming Initiative

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