November 10, 2021

Issues and policies

Can we ever hope for a new Clean Energy Act?

By Russell Marks

Australian Greens senator Christine Milne and leader Bob Brown, independent MPs Rob Oakeshott and Tony Windsor, and Climate Change Minister Greg Combet listen to Prime Minister Julia Gillard announcing a carbon price on February 24, 2011. Image © Alan Porritt / AAP Image 

Ten years after the high-water mark of cooperation between Labor and the Greens, why haven’t the “progressive” parties worked together since then?

This week marks the 10th anniversary of the passage of the Clean Energy Act, which created Australia’s first – and to date only – mandatory carbon pricing scheme. While it operated, industrial facilities that directly emitted more than 25,000 tonnes of carbon dioxide each year – excluding agriculture and transport – paid $23 for each tonne of CO2 they released into the atmosphere. The scheme was sound enough, and seemed to at least halt emissions growth. But the political landscape around it was on fire. Two years later, it was gone.

A decade on, the current Australian government has belatedly committed to achieving “net-zero” status – whereby our CO2 emissions are either eliminated or entirely offset – by the year 2050. Yet as a chorus of critics has pointed out, there’s no plan to get us there. As the 26th United Nations Climate Change Conference winds up in Glasgow, one might be forgiven for getting a little sentimental for the little policy that couldn’t – because it was never allowed to.

Carbon dioxide emissions exemplify the “tragedy of the commons” – an economic problem caused when individuals can realise short-term benefits from an activity that will eventually harm everyone. For centuries, companies that have profited from industry haven’t had to pay for the CO2 they release into the atmosphere. In the late 19th century, some scientists began suggesting that CO2 could have a warming effect. By 1988 this was the scientific consensus. The billions of tonnes of CO2 our industrial processes release each year will eventually generate a cost too great to bear: the earth will warm, the polar ice caps will melt, the seas will rise.

As far as tragedies of the commons go, this is about the worst one imaginable, and much worse than the original example – proposed in 1833 by the economist William Forster Lloyd – of overgrazing on public land. Democratic governments, which represent their populations, have a responsibility to rectify or alleviate the effects of market failures. Governments can regulate and prohibit emissions directly. Pricing CO2 emissions privatises their externalities, and creates an incentive for all energy users – from industries to individuals – to switch to energy that’s less carbon-intensive. Most economists, though, favour an emissions trading scheme (ETS), which creates property rights in priced CO2­ emissions that can then be traded while governments set the overall “cap”, which would reduce over time.

At the first UN Earth Summit in Rio de Janeiro in mid 1992, the Keating government signed Australia up to the UN Framework Convention on Climate Change. Its objective is “to stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”. It now has 197 signatories. While the convention didn’t set targets, it did create a framework for negotiating them periodically via “protocols”.

Governments in English-speaking countries were initially reluctant to commit to CO2 reduction. After Nicholas Stern told the British government in 2006 that climate change would generate economic damage, John Howard – before the 2007 election – belatedly promised “the world’s most comprehensive emissions trading scheme”, to commence within five years. But even as he promised climate action, Howard steadfastly refused to commit Australia to the Kyoto Protocol despite engineering a generous target that would have allowed us an 8 per cent increase on our 1990 levels of carbon emissions. He was never serious about climate change. Howard lost his seat in parliament, and he lost the prime ministership to Labor’s Kevin Rudd, who’d risen to the leadership via Sunrise and who in March that year had told the National Climate Summit that climate change posed “the great moral challenge of our generation”. Rudd and his deputy, Julia Gillard, had weaponised Howard’s famous climate recalcitrance and wielded it against him. Rudd’s ETS would begin in 2010, two years earlier than Howard’s.

But the great moral challenge became a squib. Forced because of Senate numbers to negotiate with Malcolm Turnbull’s Liberals, Rudd began capitulating to the fossil-fuel industry’s demands. In August 2009, the Greens – who thought Rudd’s industry assistance package was too generous – voted with the Coalition to defeat Labor’s Carbon Pollution Reduction Scheme Bill in the Senate. They did so again in December after Rudd refused to adopt amendments the environmental party had proposed. Rudd returned from the United Nations’ climate conference in Copenhagen that month a broken man. He declined a double dissolution election. Howard’s old attack dog, Tony Abbott, re-weaponised climate recalcitrance and burned through Turnbull’s leadership, destroying any chance of bipartisanship. By April 2010, Rudd had abandoned his ETS entirely, a fact his environment minister, Peter Garrett, learnt from reading a newspaper. Two months later Rudd resigned the prime ministership before a partyroom leadership spill he was doomed to lose, and Labor limped out of the 2010 election in a minority government led by Gillard.

Australians aren’t accustomed to minority governments. We were told repeatedly, by journalists and by Abbott, that we hated them. And yet the 2010 election created the political conditions that made the Clean Energy Act possible. Political circumstances forced Gillard into partnership with the Greens, who shared the balance of power in the House of Representatives and held it in their own right in the Senate from July 2011. With the Greens and independents Rob Oakeshott and Tony Windsor, Gillard formed a “climate change committee”. Its members fronted a press conference in February and announced a three-year fixed carbon price from mid 2012. The fixed price would then transition to an ETS.

But it never got a chance to do so. Despite the fact that the world was moving to emissions reduction through carbon trading, Abbott – incensed that he hadn’t been asked to form government, and backed unequivocally by News Corp – blew apart both carbon pricing and the Gillard government. Five days before the election, Gillard told Channel 10: “There will be no carbon tax under the government I lead.” The day before the election she said she wasn’t ruling out a market-based CO2 reduction scheme, but Abbott and the News Corp shock jocks played and re-played her earlier “no carbon tax” promise. Abbott created the impression that Gillard had told a gigantic lie, and had whacked “a giant new tax on everything”. He stormed back onto the ministry benches in September 2013 hell-bent on destruction. The repeal bills passed the Senate as soon as he had the numbers to ram them through.

Abbott’s own lies were revealed in the 2014 budget, and he didn’t survive. Before he left he created his own, much less effective, voluntary carbon-pricing scheme, in which the government’s Clean Energy Regulator selects from a range of tendered emissions-reduction proposals and pays the “winners” to emit less CO2. The Emissions Reduction Fund is clunky, bureaucratic, and largely a waste of time and money. Turnbull ran it down while he was PM before Scott Morrison rebooted it in 2019. Its voluntary nature is keeping the price of carbon artificially low compared with the world’s other carbon markets.

Ten years after the Clean Energy Act, much has changed. News Corp, forced by its advertisers, is now supporting net-zero. More and more Australian businesses – especially those that are trade-exposed – are demanding a plan. Morrison is even willing to fund electric vehicle charging stations just two years after declaring the “end of the weekend” when Labor made them policy. And Matthias Corman, who in 2011 described Gillard’s carbon price as “a very expensive hoax”, is urging greater integration of carbon markets in his new role as head of the OECD. As that happens over the next decade, and as the market for Australia’s coal exports dries up, we’ll see that our climate recalcitrance has measurable economic costs, to say nothing of the environmental ones.

Do these changes mean we can hope for a revived Clean Energy Act? The conditions that produced it last time – a minority government with the Greens sharing the balance of power – are unlikely to be reproduced. The Greens do have the balance of power in the Senate, but as recently as this weekend Chris Bowen ruled out “an emissions trading scheme or carbon price under a Labor government”. And Labor still seems obsessed with the fact that the Greens didn’t support Rudd’s carbon pollution reduction scheme, forgetting that the parties worked together just months later on the Clean Energy Act.

This is 20th-century politics as usual, and it won’t do. This problem needs courageous political leaders who are prepared to take short-term risks, and to cooperate in the long-term interest of the nation and the planet. New Zealand and the ACT are proof it can be done. But Albanese, Bowen and Morrison are too busy scratching around in the political weeds.

To get to net-zero, Morrison wants to rely on imaginary technologies that don’t yet – and may never – exist. “I will not tax our way to 2050,” he told the National Press Club in February. It’s not clear where he thinks the $2 billion he poured into the Emissions Reduction Fund comes from. What he meant, of course, is that he was ruling out a mandatory, tradeable carbon pricing scheme such as the one Australia had between 2012 and 2014. Unlike Morrison’s technologies, that really did exist. But so, apparently, does Tony Abbott’s ghost, at least as far as Coalition and Labor policy goes.

Russell Marks

Russell Marks is a lawyer and an honorary research associate at La Trobe University. He is the author of Crime and Punishment: Offenders and Victims in a Broken Justice System (Black Inc., 2015). 

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