Image Credit: Wilderness Society

Oz Opts Out?

30/06/2017

Following our blog last week on the imaginative approaches many Least Developed Countries are taking to their sustainable development strategies and NDCs, we look this week at how one of the most sophisticated economies seems to be at best sending out mixed messages on climate and at worst both backing off its Paris commitments and shooting itself in the foot economically.  


Climate Action Tracker (CAT) assesses country NDCs on a scientific basis for their fairness and ambition towards the Paris goal of limiting warming to 1.5 degrees.  It rates Australia’s performance as “inadequate”, placing it, among the worst five countries in the world on these measures.  Its assessment is pretty uncompromising (see box), concluding that Australia’s current policies  “dramatically illustrat[e] the dichotomy between climate rhetoric and climate action.”

It’s hard to disagree, though for most Australians the effects of climate change are evident, with fire and drought and flood as obvious as it is possible to get.  And their environment is a source of both pride and solace. Take a recent story about a report by Deloitte that estimates the Great Barrier Reef to be of nearly three times more value to the Australian economy than the Adani coal mine that threatens its future.  The telling point in this report is that $24 billion of the $56 billion value attached to the reef is attributable to Australians who’ve never visited it just knowing it is there – a powerful reminder of the intangible value of natural resources.

Under present policy settings, Australia’s emissions are set to substantially increase to more than 21% above 2005 levels by 2030, equivalent to an increase of around 52% above 1990 levels. The latest economic and greenhouse gas emissions data analysed by the Climate Action Tracker confirms earlier assessments by the CAT and many other analysts that Australia’s current policies will fall well short of meeting its proposed Paris Agreement target of an emissions reduction of (including LULUCF) 26–28% below 2005 levels by 2030.

The Emissions Reduction Fund (ERF)—the so called “centrepiece” of the Australian Government’s policy suite to reduce emissions—does not set Australia on a path that would meet its targets. Without accelerating climate action and additional policies, Australia will miss its 2030 target by a large margin, a conclusion supported by other analysts 

Of particular concern is the reversal of a declining trend in CO2 emissions from coal-fired power stations following the removal of the carbon pricing system, with its nascent transition towards an emissions trading scheme, and related legislation, affecting the sector in the middle of 2014. As a consequence, emissions from electricity production, which had been covered by the scheme, are rising again while the Federal Government continues to create political uncertainty on the future of renewable energy. The Federal Government has questioned the efficacy of renewable energy and called for one state (South Australia) that had recently closed its last coal-fired power station to reopen it. To meet its inadequate 2030 emissions targets, Australian emissions need to decrease by an average annual rate of 1.9% per cent until 2030; instead, with current policies, they are set to increase by an average rate of around 1.2% a year, dramatically illustrating the dichotomy between climate rhetoric and climate action. 

Australia ratified the Paris Agreement on 6 November 2016. Its Nationally Determined Contribution (NDC), includes a target of reducing GHG emissions, including land use, land use change and forestry (LULUCF), by 26–28% below 2005 levels by 2030. After accounting for LULUCF, this target is equivalent to a range of around 5% below to 5% above 1990 levels of GHG emissions excluding LULUCF in the year 2030. We rate this target “inadequate”.

So what, by contrast, to make of the actions of Australia’s government?  We’ll come onto the Emissions Reduction Fund (ERF)—as CAT calls it, “the so-called ‘centrepiece’ of the Australian Government’s policy suite to reduce emissions” in a moment.  First let’s look at where another piece of that policy suite fits – the 20 million trees’ programme.

Trees.  More (or maybe fewer) of them

In the three years leading up to the signing of the Paris Agreement, records show that one state of Australia – Queensland – cleared 750,000 hectares of native trees. That is 7,500 square kilometres. This slash and burn clearing, which was carried out with legal permits, produced 36 million tonnes of greenhouse gas emissions per annum, according to the Queensland government.  This represents 90% of the whole of Australia’s emissions from land use. Put another way, 108 million tonnes of greenhouse gases over this short 3-year period were created to clear trees in Queensland (a figure that ignores the greenhouse gas absorption foregone from those felled trees).

Again, according to the Queensland government, 91% of the cleared area was replaced by pasture, with the remainder going to crops, forestry, mining, and settlement.

The economics of this activity are pretty clear and compelling, it has to be said. You can buy an acre of scrub / treed land for about $600.  Once that land is cleared for pasture, say, its value is about $10,000. These figures are subject to location, but the relativity holds constant.

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But for Australian state governments, the economics were compelling enough, as both the NSW and Queensland governments have recently relaxed their land clearing laws. A regulatory permit is no longer required to clear land.  Instead, there are self-assessment codes to act as guides to how and what land may be cleared, of whatever.  To understand the extent of these new laws, in Queensland up to 75% of vegetation in an area may be removed without a permit, and in NSW thinning can reduce tree density to a level that is reputedly too low to support natural ecosystems.

Placed against this kind of wholesale relaxation of laws on clearing (inter alia) trees, what is the logic or efficacy of the programme to plant 20 million trees by 2020 – a programme costing, by the way, a modest $5-10 million per year?

As a farmer who has planted (unsponsored) 3,000 significant trees (hand watered during the first drought, don’t ask), I am well placed to understand the kind of schizophrenia this duality of approach can induce.  As of now, a farmer may clear trees using self-assessed criteria under state legislation, then s/he may apply to the federal government for funds to let those trees grow back. Or get money to plant more trees.  Or go to the government and apply for funds to not clear in the first place.  Or maybe take it year about to do all of these things …

In effect, the state governments’ are working against the intentions of the federal government’s NDC policies.

Emissions Reduction Fund

And what of the main plank of Australia’s strategy, the Emissions Reduction Fund (ERF), which Climate Action Tracker says “does not set Australia on a path that would meet its [Paris] targets.”

In the government’s EOY report for greenhouse gas emissions, as at June 2016, greenhouse gases had continued to rise and were up 0.08% YOY.  Notwithstanding, the government has argued that there is still time for it to meet Australia’s 2020 emissions reduction target of five per cent below 2000 levels by 2020, because of the ERF.

The Government has budgeted $2.55 billion to date to finance the Fund, with further funding to be considered in future budgets.  In effect, it pays polluters not to pollute. Or conversely, it pays others to mitigate on behalf of polluters.

The Fund has spent $1.4 billion to date buying promises of greenhouse gas abatement from the agriculture and land sector.  This is intended to abate 122 million tonnes over many decades (our emphasis).  This amount of abatement, however, contrasts with the 108 million tonnes of GHG emissions created from the slashing and burning in just one state, mentioned above, in three short years.

One basic problem with the ERF is that it appears to be completely unaligned as between the causes and the potential mitigants of emissions. A report published in November 2016 shows that 80% of greenhouse gas emissions in Australia are from energy and industry, and yet 80% of the ERF has so far gone to the rural sector. Only 4% has gone to the energy and industrial sector.

Moreover, allocations seem to have a political angle to them.  According to the Wilderness Society, the vast bulk of allocations from the ERF have been made in two states, Queensland (47.8%) and NSW (43.7% ) which just happen to be the most electorally marginal in the land. To compound the conundrum further, the vast majority of this ERF money has been paid to avoid deforestation (22.3%) and to allowing cleared vegetation to regrow (69.1%).

Indeed, the fact is that a vast amount of ERF money, over half a billion Australian dollars (USD380 million) will go to farmers and other rural residents NOT to clear land that they were highly unlikely to clear in the first place, had the Fund not existed.  And $1.660 million dollars (USD1.265 billion) will go to farmers to ALLOW regrowth of cleared land.

Draw your own conclusions from these facts:  the present Turnbull Federal Conservative party holds governing power only due to its coalition with the National Party.  Even then, in the Lower House, it holds that power by only one vote.  In the Upper House, the Senate, the coalition has 29 of 76 seats.  The National Party constituents are, according to its official website, regional Australia (for which read “rural”). To state the obvious, the Conservatives could not govern without the coalition with the National Party.

And to cap it all … What happens when you remove a carbon price

This Conservative government came to power in late 2013, albeit under a different leader, on a platform of repealing the Australian carbon price law.

The argument went, paraphrasing, that the carbon price was a tax and responsible for the lacklustre economy and that you, the ‘average punter’, small business owner etc, were paying through the nose for your power as a result.

Mid-year 2014, the new law repealing the tax received Royal assent.

Immediately, investment and employment in new energy solutions to climate change plummeted, with obvious consequences for this sector and the countries commitment to the pending Paris agreement.

Worse still have been the consequences for that poor ‘average punter’, who has seen the price of her or his energy doubled in less than 5 years, and is now forecast to get hit with another 20% rise this year. An average bill for a punter’s family is now $3,200 p.a. while, in the government’s own words, the national energy industry is “in a state of crisis”.  

As far as implementing Australia’s NDC is concerned, the government would have been better off paying every man woman and child a $1,000 bonus to plant a tree and nurture it throughout their life. Cost? About $2.45 billion dollars, or the same they have spent on the ERF, and with a lot better outcomes for the economy.

There is more in the various reports relied upon for this blog.  But the final conclusion must be that Australia has spent close to two and a half billion dollars in just a few short years, to totally fail to ameliorate greenhouse gas emissions while doing nothing to stimulate the economy meantime.

Postscript:

The Australian governments may be opting out but the regulators are opting in.

Australian Prudential Regulation Authority, responsible for the regulation of financial institutions, insurers and superannuation funds in Australia, announced that financial institutions will now need to consider climate risk as a financial risk, and stress test their operations.  And the Centre for Policy Development and the Future Business Council determined that company directors who do not disclose foreseeable climate-related risks to their company or business model could be held personally liable under the Corporations Act for breaching duty of due care and diligence responsibilities.  The risks extend to legal liability for failure to mitigate, adapt or disclose climate risks. You’ve been warned.

Read more about it here

And Australia’s 20 million trees for its NDC?  That’s nothing. It took only 1.5m people for India to plant 66 million trees in 12 hours towards its Paris NDC commitment to reforest 12% of its land.  Last year they planted 50 million.

Read more about it here

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