Direct Action

CFI Summit 2014: Minister Greg Hunt

True to faithful form, the Minister for the Environment, the Hon Greg Hunt MP, fronted the CMI Emissions Reduction Summit and Marketplace in Melbourne 5-6 May 2014. Whatever you might say, the Minister turns up!

Did the Minister have anything new to say? Not really.

The Minister gave his pitch on innovation with incentives to transform our economy, rather than the carbon price approach.

The Minister attempted to put his approach in an historical perspective. In the 1850s London was threatened by typhoid and cholera. Later, around 1900, city streets were clogged by horse manure. Later still, in the 1980s, the ozone hole threatened turn Australia into a barbecue. Technology and innovation overcame these problems. And so the Emissions Reduction Fund aims to catalyse technology and innovation to reduce emissions.

The Minister then summarised his approach thus: we will keep the CFI, keep the Clean Energy Regulator and keep NGERS (the national carbon accounting system). He will add $2.5b of incentives, stir and the pick up the pipeline of the cheapest abatement. As for big business, the Minister said that safeguards (read penalties) will apply to 130 emitters from 2015 but that no revenue had been budgeted (doesn’t sound too tough).

One telling question was asked: given the ERF is not an effective market scheme, how can it be scaled up for the longer term task? With no backward steps, the Minister asserted that the ERF is a market system that can be scaled. We will look in 2015 at the targets for beyond 2020. Staying on the front foot, he noted EU Emissions Trading Scheme had not worked with reductions only coming from economic collapse.

This is true enough, but if the absolute measure of the EU ETS is meeting targets, then it has 100% succeeded. And we know from recent price hikes in Australia, that pricing electricity results in emissions drops.

The Minister turns up.


Coalition's Plan to Tackle Climate Change

At last week's meeting with the Carbon Market Institute, The Hon Greg Hunt MP released the Coalition's Plan to Tackle Climate Change

At last some flesh on the terms of reference for the Emissions Reduction Fund!

The paper makes a case for removal of the carbon price and replacement with a more modest Direct Action policy: the carbon price is the "wrong market mechanism" for this problem because electricity is an "inelastic good". Electricity Bill take note! But it seems to me electricity use might be relatively inelastic, but how electricity is sourced need not be. Electricity emissions are falling.

A more expansive paper is welcome ahead of future green and white papers, but there are some worrying signals. 

The paper accounts that the task of meeting a 5% reduction target by 2020 has reduced from 750 million tonnes to 440 million tonnes, but no reason is given why the ERF will be more effective than the carbon price at reducing emissions. Given past similar programs like the Greenhouse Gas Abatement Program were not that effective, it would be good to see some stronger reasons.

To ensure environmental integrity, the paper notes projects must be additional to "business-as-usual". It would be useful to clarify whether this is shorthand for the current additionality test - which ensures that projects which are "common practice" are excluded - or a softening of the test to be more inclusive of more kinds of projects. "Business-as-usual" might mean reductions below current emissions, when in fact "business-as-usual" emissions are falling anyway. Other comments about "keen to unlock abatement opportunities across the Australian economy" suggest it could be a softening which would undermine the integrity of the CFI.

The paper also talks about buying "lowest cost abatement" and "buying up the abatement cost curve". While this is good for the budget bottom line, it might not be the best approach for encouraging abatement across different sectors. We certainly know that energy efficiency projects could be cost negative and that Aboriginal land projects have a few capacity and remoteness humps to get over to deliver.

Keeping the CFI is a good thing. But there are few cracks of light in this paper for Aboriginal carbon farmers. If you want abatement on remote lands and Aboriginal people in jobs, we will need some enablers.

Our submission will be tackling some of these issues.  Still thinking.