The Hon Greg Hunt MP gave a keynote address on the Government’s approach to address greenhouse gas emissions in Australia. The Minister opened noting his childhood dream to finally play at the MCG!
The Minister noted the common purpose in the room to reduce emissions in Australia in the most efficient way. He also stressed agreement on the targets, science and using a market mechanism. The difference is on the type of mechanism.
In terms of choosing the mechanism, the Minister noted international stress on electricity prices, especially in the UK. This had informed him that any mechanism must be socially sustainable.
Therefore, the Government has chosen an approach to repeal the carbon price and replace it with an Emissions Reduction Fund, a carbon purchasing scheme, by 1 July 2014. The Fund intends to buy abatement in auctions by moving up the cost curve for the cost bids of various types of carbon abatement. Existing infrastructure of CFI and the Clean Energy Regulator will be used. Further methodologies, including from the Clean Development Mechanism, can be imported to bring more diversity to projects. The Minister noted that other countries, such as Norway and Japan, had adopted carbon purchasing schemes (although they have other policies too!)
The Minister did offer a couple of bones for Aboriginal carbon farmers. First, the Minister made positive comments around the loss of Indigenous jobs through the decision of Rio Tinto to suspend the Gove alumina refinery. Second, the Minister remained committed to purchasing domestic abatement, which will come at a higher price than international abatement. If the price dropped to $6 or below (the current international price), Australian projects will find it difficult to compete.
Was there a bit less chutzpah in the Minister’s Direct Action charm offensive? Maybe. For one thing, he didn’t offer any justification as to why it would be more effective than a carbon price, just that it was a socially sustainable choice.