Climate for change
By July 2008
Kevin Rudd wasn't the only one licking his lips on election night last year. For millions of Australians, an end to John Howard's lamentable response to climate change couldn't come soon enough. Unlike Howard, Rudd harboured no doubt about the seriousness of global warming. He also knew that making deep cuts to Australia's greenhouse-gas emissions by the middle of the century didn't mean "crashing the economy" - every serious analysis showed it would take just a few years longer to treble GDP and double real wages. Without hesitation, he would ratify the Kyoto Protocol, commit to a 60% cut in emissions by 2050, and bring in an emissions-trading scheme to help meet that target.
Once in power, Rudd created a new climate-change ministry, and his government's first official act was to begin Kyoto ratification. Environment ministers usually handle the annual UN climate-change conference, but Rudd wasn't going to miss an opportunity to tell the world that Australia was coming in from the cold. He got the standing ovation he deserved at the Bali meeting, and hopes - overseas, as well as at home - were high. But ratifying Kyoto was the easy part: emissions were spiralling, and all the real work lay ahead.
Much of that work had been assigned to Ross Garnaut's Climate Change Review. While this delayed action, there were undoubtedly many matters that warranted careful deliberation: whether a 60% cut by 2050 was adequate, what short-term targets were needed, and the all-important design of a trading scheme. Garnaut's review insulated the government from some messy negotiations and extended Rudd's climate-change honeymoon. Garnaut's own public comments helped, too. Many expected him to temper Rudd's greenhouse-policy ambitions; instead, he hinted at deeper emission cuts, and his interim report showed a laudable lack of attachment to Howard-era policy. All emission permits should be auctioned, he proposed; none should be given to generators to compensate for the effects of emissions trading on the value of coal-fired power stations.
So refreshing was the rhetoric that many thought the self-described greenhouse mafia - the fossil-fuel lobby - had been defeated, and the nation had moved on. Yet the devil was in the detail. In his discussion paper on emissions trading, Garnaut enthusiastically backed the use of trading-scheme revenue to subsidise "clean coal" projects, and perhaps compensate coal-fired power generators. Without saying which industries should qualify, he also recommended compensating trade-exposed energy-intensive sectors: an emissions subsidy that might last decades. These industries might be "participants" in the scheme, but they would avoid the economic impact - and, even according to the Australian Bureau of Agricultural and Resource Economics, this doubles the carbon price paid by other sectors and households. Abandoning the principle that carbon credits generated offshore should be "supplementary" to domestic action, Garnaut proposed no meaningful limit on them. And the interest he showed in financing forest protection in Indonesia and Papua New Guinea seemed motivated by the carbon credits this might generate. The Europeans have banned these dubious credits until at least 2020, but the more carbon Australia hides in nearby tropical rainforests, the less it needs to cut emissions at home.
Garnaut suggested that the trading scheme begin in 2010, and that five years' notice be given before Australia move to a more ambitious emissions target. In short, Australia should stay on the Howard track until at least 2015, the worst polluters should get off the hook courtesy of lesser polluters and the public, and there should be the option of meeting international obligations through unrestricted use of offshore carbon credits. Australia could achieve deep cuts on paper by being a donor to the global clean-energy transition, rather than a participant in it. Ross Garnaut was being treated like the Elliot Ness of climate change, when in fact he had endorsed much of the greenhouse mafia's new agenda.
In Canberra it was business as usual for the fossil-fuel lobby. One former Industry Department bureaucrat replaced another as chief executive of the Australian Industry Greenhouse Network. Both had worked as consultants for the big greenhouse emitters dominating ACIL Tasman's client list. The local office of the other main fossil-fuel-friendly consultant, CRA International, was re-branded as Concept Economics: same staff, address, clientele; same arguments. The Australian remained as helpful as ever, promoting its special brand of greenhouse scepticism. All that had changed was the strategy: now the aim was to shift the cost of greenhouse action by Australia.
In government, Industry Minister Martin Ferguson took up the role of fossil-fuel spruiker within the cabinet. Treasury would co-ordinate the modelling required for the Garnaut Review, but the Australian Bureau of Agricultural and Resource Economics and Warwick McKibbin - the same modellers Howard had called on when characterising Kyoto as economic armageddon - would still do much of the actual work. ABARE, whose work a senior Rudd cabinet member told me not so long ago was "self-serving crapola", remained at the core of the policy process. The external-fundraising requirement that had enabled fossil-fuel money to contaminate some of the bureau's economic work, and some of the CSIRO's scientific work, also remained. And none of this would be affected by Rudd's new Register of Lobbyists. Meanwhile, the clout large fossil-fuel producers enjoyed in state capitals increased as commodity prices rose and royalties rolled in.
There were other worrying signs. Kevin Rudd seemed as bullish as Ross Garnaut about funding rainforest preservation in developing countries for the carbon credits it could buy Australia. In March, NASA's James Hansen, arguably the world's leading climate scientist, wrote to Kevin Rudd saying that Australia should exit the coal trade. A month later, Rudd was in China promoting coal's clean future. Back home, Martin Ferguson endorsed liquefied coal as the answer to energy security, even though this cannot cut greenhouse emissions from transport. Then there was the 2020 Summit: Woodstock for Ruddites. The sanitised outcomes of the climate-change sessions included a push to empower individuals to reduce their carbon footprint. When it came to the carbon footprint of big emitters, consensus was harder to reach. The summiteers couldn't even agree that new coal-fired power stations (each the greenhouse equivalent of a million cars or more) should only proceed where the emissions are captured.
The federal budget, in May, provided more cause for concern. No more was allocated for climate change than John Howard spent on the Iraq war, and $2.3 billion over four years paled alongside tax breaks worth billions that would continue encouraging fossil-fuel use. The impact of the solar-rebate decision on a booming industry was sudden and severe; too many companies had based their entire business model on a government subsidy. And while households with incomes over $100,000 were considered too wealthy for a solar-panel rebate, corporate households were treated differently. Multinationals responsible for much of Australia's emissions in the mining, oil and gas, electricity-generation and motor-vehicle industries would receive large subsidies in spite of their much greater incomes.
The coal industry, for its part, would get another half billion to spend on research into clean coal, even though (as John Birmingham discusses elsewhere in this issue) there seems no prospect that carbon capture and storage will ever be technically or commercially feasible in the time and on the scale required. As the main exporter in the global coal trade, with plans to double exports by 2030, Australia is making it harder and harder for some of the world's largest coal users to break their carbon addiction. Yet the budget focus was on expanding infrastructure without any serious reference to the greenhouse consequences: that is, get as much coal dug up, trafficked abroad and burned as soon as possible.
When it came to transport measures, the situation was also underwhelming. The new green-car fund, worth half a billion dollars, kicked off with a $35-million payment for Toyota to produce a hybrid Camry that the company reportedly planned to assemble here anyway. The clean-tech componentry (hybrid engines and batteries) would be imported from Japan and the cars would be obsolete by 2010; but hybrids should be rolling off an Australian production line in time for the next election. Kevin Rudd could have done something to encourage vehicles that already get better mileage than a hybrid Camry: he might have introduced a self-funding system of ‘feebates', for example, an upfront discount or levy on the sale price of cars that depends on the number of litres used per kilometre. He could have made a serious investment in public transport, for that matter: it would have made much more sense than taxing luxury cars, many of which are among the most climate-friendly.
Brendan Nelson's senseless proposal to combat rising oil prices with a five-cents-a-litre excise cut showed that the Coalition has yet to grasp the mistakes of the Howard era. The cut would cost more than twice the annual federal climate-change budget, sending precisely the wrong message to consumers about rising petrol and carbon prices, and Rudd should have dismissed the idea outright. His response, though, was surprisingly equivocal, even skittish.
Throughout this period, while most Australians gave Rudd the benefit of the doubt, many environmentalists were suspicious. However, the green leadership was complacent, compliant and worryingly quiet on many of the issues that mattered most. Some contentedly defended the climate-change budget, saying, "$2.3 billion over four years is not to be sniffed at." No major organisation showed any serious concern about the fine print of Garnaut's proposals. The Australian Conservation Foundation even circulated a generous media profile of Garnaut to its members, urging them to get behind his recommendations. Between the more collegial political atmosphere and the genuine desire to believe things had changed, too few noticed how little was actually changing. The Climate Institute and WWF Australia even formed an alliance with the coal industry, so that Australia might have the equivalent of one large "clean coal" power station by 2020. In so doing, they inadvertently blessed coal exports in ever greater quantities to countries with no serious plans to use it cleanly.
In the next 18 months we will see whether Labor will tackle climate change. When Ross Garnaut's work is done, Kevin Rudd, Penny Wong and Peter Garrett will face furious lobbying and a critical choice. While Australia can and should aid clean-energy development, climate-change adaptation and forest protection internationally, Labor's top priority must be cutting emissions here - deeply and fairly, and swiftly. The alternative puts polluter expectations first and relies on accounting tricks that enable Australia to save emissions on paper. Just as land-clearing cuts enabled John Howard to be on track with the Kyoto target even as Australia's emissions spiralled, so outsourcing our post-Kyoto obligations offshore would enable Kevin Rudd to do something similar, only on a much grander scale.
To do so would be to betray public expectations, double the carbon price ultimately paid by "working families", and leave a much tougher task for future generations. Rudd has the mandate to make the right choices. We must hope that he makes them, and is justly rewarded by the electorate and by history. Sure, it would be interesting to see Peter Garrett finally explode, cross the floor and join the Greens - but it needn't come to that.