Climate change, ideology and the role of government
In 2008 petroleum giant Shell released two scenarios – Blueprints and Scramble – that modelled the world until 2050. For decades the company had been strategising – and as early as 1982, climate change was being factored in.
Scramble is a scenario that has come about from poor regulation, politicians too fearful to take any popularity hits, and countries unwilling to curb harmful traditional means of economic growth. Global cooperation begins to break down as rich nations compete to secure and drain remaining deposits of fossil fuels. Protests and activism give rise to increased security measures. Agricultural groups begin producing biofuels, which compete with food production, and this sees increases in food prices and deforestation. Global tensions are high, climate change is kicking in, blame is being laid, the poor haven’t become rich. By 2050, whatever cards the climate deals, responding is bound to be expensive.
The Blueprints scenario starts much the same way. “It is a slow process at first, two steps forward and one step back,” Shell wrote in its report.
There is almost as much political opportunism as rational focus in early developments. Many groups try to circumvent, undermine or exploit the new regulations and incentives for alternative energy paths. In places, uncertain regulatory outlooks discourage developments. But as successful ventures emerge, halting progress develops into a larger and larger take-up of cleaner energy such as wind and solar. As more consumers and investors realise that change is not necessarily painful but can also be attractive, the fear of change is moderated and ever more substantial actions become politically possible. These actions, including taxes and incentives in relation to energy and CO2 emissions, are taken early on. The result is that although the world of Blueprints has its share of profound transitions and political turbulence, global economic activity remains vigorous and shifts significantly towards a less energy-intensive path.
Blueprints, Shell wrote, is its preferred scenario – though Shell’s vice-president, Jeremy Bentham, later said that Shell would position itself to remain profitable whatever course events took.
On the release of the two scenarios, Jeroen van der Veer, the CEO of Shell, gave a series of interviews. “People always think . . . the market will solve all of it,” he said. “That of course is nonsense.” Journalist McKenzie Funk summarised van der Veer’s argument: “Global cap-and-trade agreements were urgently needed. Efficiency standards should be imposed. All this would require government regulation.”
Where does Australia stand on these two scenarios? In which direction are we heading? More pointedly: are our governments willing and able to regulate in the public interest?
In a radio interview last December, Josh Frydenberg said that the Coalition would consider expert recommendations and look at an emissions intensity scheme (EIS) to ensure that emissions targets were met, electricity remained affordable and the “lights stay[ed] on.” An economic tool, an EIS is designed to increase the cost of electricity produced by coal and gas, and to bring down the cost of less-polluting electricity from renewable sources. This is triggered by requiring companies with levels of pollution above a set benchmark to purchase credits from cleaner energy sources. Over time the benchmark is lowered until it is at zero emissions.
There is widespread support for the EIS – among those pushing it are the Business Council of Australia, the National Farmers’ Federation, energy networks AGL and Energy Australia, and the CSIRO. Others, however, such as energy economist Bruce Mountain, have grave doubts. Mountain described the EIS as the “third act” in a sorry saga. “What a depressing and tedious play it has turned out to be,” he wrote in Renew Economy:
In Act One, an Emissions Trading Scheme took centre stage. An Emission Intensity Scheme scheme had a walk-on part in Act One, but the leading actor in Act One, Senator Wong, called it a mongrel and it was booed off the stage by all and sundry (except Senator Xenophon and later Leader of the Opposition, Malcolm Turnbull). Of Act Two – “scrap the carbon tax” – the less said the better. Now in Act Three, ten years later, the Emission Intensity Scheme has taken centre stage . . .
Mountain argued that an EIS could have two unwanted consequences – first that it will merely trigger a transition from coal to gas, and second that it will lead to an excessive and unsustainable boom in renewables that could undermine public support for a clean energy future. Whether these concerns are mechanical and an EIS could be adjusted accordingly, or they are an innate part of the EIS’s structure and unsolvable, remains to be seen. However, weighing up the pros and cons is surely part of the process? Not if you’re in the Coalition.
In thirty-six hours, after a party revolt led by Christopher Pyne and Cory Bernardi, Frydenberg was back on air saying that an EIS was not on the table after all. He told reporters, “I have a position that is very clear, that we will not be adopting an emissions intensity scheme.”
Turnbull told media he did not know why Frydenberg had originally said what he had. This was odd, considering Turnbull often refers to himself as a businessman – not only were the experts recommending an EIS, but so too were major companies and their peak bodies. Turnbull has also proclaimed his practical, pragmatic approach to climate and energy issues. But in this case he feigned ignorance: “You will have to ask Josh Frydenberg that.”
This is not to say the government was doing nothing. After the black-out in South Australia, the Coalition announced an energy policy over ten frenzied days to cover up the fact that the federal government hadn’t tried to do anything with the electricity grid – except play politics with it. Ministers were dispatched far and wide to issue statements, ping-ponging thought bubbles across the country. It was an emergency, a time for drastic measures, a self-important “We’ll fix it,” as though it wasn’t the inept and inert state of federal politics that had allowed it to break in the first place.
Having let untruths about electricity costs run uncorrected for so long, the prime minister now found himself in an unusual position. As part of the ten-day policy rush, Turnbull was forced to bring the gas industry to heel, lining up its chiefs like schoolboys as he reminded them of their social responsibility.
In fact, there is plenty of gas, but most of it is being sent offshore thanks to the new LNG plants on Curtis Island in the Great Barrier Reef. Once hooked up to the international market, gas companies did what companies do: they saw a profit to be made and jacked up domestic prices to match what they got from exports.
“It’s a neat trick, really,” Waleed Aly wrote for Fairfax. “Take a country with enough gas to supply itself ‘indefinitely,’ send the vast majority of it overseas, refuse to sell locally at a fair price, create a domestic shortage, then demand access to some of our most environmentally sensitive resources as though it’s an emergency measure.”
Malcolm Turnbull noted that two of the suppliers had given a “commitment to being net domestic gas contributors, as part of their social licence.” Pop! There goes another free-market shibboleth – that if every-one pursues their own profit, then the profit of all will be maximised.
Turnbull also reminded them, “The Commonwealth government has enormous power in this area, as you know.” This, clearly, was “strip[ping] the ideology” from Australia’s energy debate.
Earlier in the year, outlining his vision for Australia at the National Press Club, Turnbull mentioned “climate change” only once, briefly referring to the Paris treaty. Presumably this too was part of his non-ideological plan.
The problem is that climate change is both fact and ideological. In 2016, on ABC TV’s Q&A, an exchange between Naomi Klein, the Canadian writer and climate activist, and James Paterson, Liberal senator and former employee of the Institute of Public Affairs, illustrated this complexity. In discussing the IPA’s role in disseminating misleading information about global warming, Klein said to Paterson:
You’re a free-market think-tank … The reason why free-market think-tanks, who are not scientific organisations, are the ones spreading the doubt is because if it is true, your whole worldview collapses. This whole idea of pushing deregulation and privatisation and government-get-out-of-the-way falls apart because we need to manage this decline. We need to make sure that people aren’t left behind.
The left cheered. But Paterson’s reply was illuminating.
On the contrary, Naomi, I think it equally applies. If it applies to us, it applies to you. I mean, you have openly said that one of the great things about climate change is it’s a great tool for bringing down the capitalist system. And you want to undermine the capitalist system. Your whole recent book is about “this changes everything.” What changes everything? This is the opportunity to change the political debate about capitalism and free markets because climate change is a great tool to do that. That is your own view, which you’ve espoused many times.
Paterson is right. Action on climate change does require a transformation, not just of the electricity grid, but of the minds of the politicians who intend to lead these changes.
Bill Shorten is a case in point. Labor has announced a national 50 per cent renewable energy target by 2030. In a recent speech to the Bloomberg New Energy Finance forum, Shorten mentioned “climate change” eleven times. “Consider the basic question of hardware,” he continued:
Right now, three-quarters of Australia’s coal and gas-fired genera- tors are operating beyond their design life. Some are over fifty years old. Not many of us drive fifty-year-old cars or work with fifty- year-old computers or rely on fifty-year-old medical thinking when we get sick. I’m sure that none of you have, on your person, a fifty- year-old phone. We update, we modernise, we plan for the future.
It was a good speech – one I’d venture that Turnbull would like to have given. But Shorten too insisted this change was merely “practical – not ideological.” And yet without an ideology, without underlying values, his words are hollow. Hence Labor’s bind over Adani’s proposed mine. Shorten has withdrawn support for the federal billion-dollar loan, but not for the project itself – as if the average punter won’t be able to put their finger on the dissonance that is a political party ready to fight climate change and happy to open up a new coal seam.
The recent notorious commercial promoting Shorten had the Labor leader standing next to a group of mostly white Australians (an Asian woman is hidden in the background). There was a young male apprentice wearing a hi-vis t-shirt, some older tradies, women with lanyards hang- ing around their necks, and the slogan “Australians First” for jobs. The commercial went to air in Queensland – the rest of Australia wasn’t meant to see it. It was a classic two-faced bid for popularity. Turnbull and Shorten may say there is no ideology in their policies, but this can leave one wondering, what remains? A desire for power, a painted portrait in parliament, an entry in the history books? But for what? Just for the sake of it?
This is an edited extract of Anna Krien’s Quarterly Essay 66, The Long Goodbye: Coal, Coral and Australia’s Climate Deadlock