New climate change policy play: @georgefwoods reports


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By Georgina Woods

17 July 2013

The announcement this week that Australia would move one year early to its emissions trading scheme – and make budget cuts to pay for it – has cleared the stage for the election to be fought on climate change, but not in the way that our political parties may be expecting.

The Government will pay for the move to float the carbon price with a combination of measures, including winding back a fossil fuel subsidy long criticised by environment groups, scaling back generous payments to coal-fired power stations, and a reduction in funds for the fledgling Biodiversity Fund and the Clean Technology Fund. There are mixed views about these steps and we can only hope that means commentators, politicians and the public will have to actually start thinking about climate change again, rather than just reacting and sloganeering.

For the last four years, political and public discussion about climate change and the action Australia should take to mitigate it has been impeded by hyperbole and polemic. There are examples of this on all “sides” of the climate change policy complex. The Greens’ described the 2009 Carbon Pollution Reduction Scheme as “worse than nothing,” despite having a very clear idea about just how bad “nothing” is when it comes to climate change mitigation. Coalition front benchers infamously joined a protest themed “axe the tax” at Parliament House in 2010, and have relentlessly misrepresented the carbon price mechanism, and its impacts, for three tortuous years. But Christine Milne’s accusation that Rudd is a “fake” for moving earlier to emissions trading can also be read as an attempt to keep the climate change picture in primary colours. The Greens have claimed the mantle of being “the only party” that is serious about climate change, and do not seem keen to relinquish it.

It is true, of course, that Australia under the current Government has not done enough to tackle climate change. The black spots in this week’s budget savings announcement from the environmental perspective are the loss of $213 million previously allocated to the Biodiversity Fund, $162 million from the Clean Technology Program and $143 million from the Carbon Farming Futures Program. In addition, the Government’s own fact sheet on the changes admits that emissions-intensive trade-exposed industries (EITES), which (for now) get generous assistance under the Clean Energy Act 2011 to prevent “carbon leakage,” will go from paying around $2 per tonne of carbon under the fixed price, to around $0.50 per tonne if the floating price were payable at the level the market is at currently. The Climate Change Minister confirmed at the Townsville press conference that these industries will be better off under the change.

Nevertheless, the two biggest contributions to the budget savings announced by Rudd, Bowen and Butler are reforms to fringe benefits tax for cars (a saving of $1.8 billion over forward estimates) and closing the Energy Security Fund two years early (saving $770 million over forward estimates). Both of these are measures that climate change advocates and environment groups have reasonably demanded for some time. Further savings are made by reducing Coal Sector Jobs package allocation next year by $186 million and deferring $200 million of funding from the Carbon Capture and Storage program. Coal mining does not, despite the best efforts of the Australian Coal Association and the Minerals Council, qualify for EITEs assistance. As a consolation prize, the Government created the Coal Sector Jobs package and committed to handing out $982 million to the industry over five years. With around $240 million of this spent, and $186 million reduced from it as per this week’s announcement, there’s still more than half a billion dollars of taxpayers money going to be thrown at the coal industry to help them “transition.”

If we think about the carbon price as Australia’s first climate change policy challenge, then the earlier launch of emissions trading means the election campaign can start to address the two next big challenges  Australia has to meet: setting an emissions reduction target of at least 25% by 2020, and tackling our biggest contribution to climate change –  our coal export industry. The Climate Change Authority is due to provide a draft recommendation for Australia’s first set of pollution caps under the ETS and our 2020 target not long after the federal election. The party or parties that win Government at this year’s election will be there when the new global climate treaty is finalised in Paris in 2015, which is also the year that global emissions need to peak if we are to prevent global warming going above two degrees. With hundreds of thousands already suffering the impacts of climate change, and in the wake of our angry summer, the polemicist posing of 2009-2012 is not acceptable from any political party or representative.


Greenpeace Report: The Point of No Return

One of the implications of moving to an emissions trading scheme is that it will require Australia to look outward at the rest of the world when it talks about climate change and greenhouse gas emissions. We will not be able to get by recycling old lies about the rest of the world’s action on climate change. It will start to matter that Europe exceeded its emissions reduction target for the first Kyoto commitment period, that emissions in the US have declined more rapidly than Europe’s since 2005,that demand for thermal coal from China is rapidly dropping, and that our two biggest markets for export coal, South Korea and Japan, are implementing climate change policies.

Finally, with a more international perspective, Australia may be moved to put in place a plan to hasten the end of our coal export industry. It is our biggest contribution to climate change, and a globally significant source of emissions. The International Energy Agency has estimated that coal demand globally must peak and decline from 2016 onward if we’re to meet the very challenging target of limiting global warming to below 2 degrees above pre-industrial levels. The Climate Commission has confirmed that 80% of fossil fuel reserves must not be exploited if we are to meet this goal. What Australia needs is action to help coal-dependent communities cope with the coal and climate shocks that are coming in the next term of Government. In the last year, according to numbers frequently cited by coal urgers, around 10,000 jobs have been lost in the coal industry. Over that same period, $240 million has been distributed to the coal industry under the “Coal Sector Jobs Package” … to save jobs?

The coal industry has increased production volumes and taken hundreds of millions of dollars from Australian tax-payers at the same time that it has been shedding jobs and its terms of trade have dramatically declined. Western Australian Premier Colin Barnett has referred to the current shocks in the coal industry as “structural decline” and Prime Minister Rudd last week acknowledged that Australia’s economy is at a cross-over point, where it needs to diversity away from energy resource exports. We are also seeing rapid changes in policy and action from China that will burst Australian coal export bubbles. The age of coal is coming to an end. The question for Australia is, will it end quickly enough to keep global warming to below two degrees, and will our coal dependent communities have the support they need to get out of coal and back into sustainable industries?

The reality is that Australia has committed to being part of keeping global warming to below two degrees, and that all political parties have endorsed this goal. We’ve delayed too long in bringing down greenhouse pollution as a country and more broadly, as a community of nations to the point where that goal will now be extraordinarily difficult to meet. After the last three years of vitriol, all of our politicians, not to mention the business community, have to stop the grandstanding and start seriously cooperating to achieve it, the Labor Party included. Every one of us, whether we’re Labor, Liberal, National, Green or apolitical, must work to make sure this is the case.

Read More:

A new Greenpeace report: Point of No Return

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  1. Malcolm Scott says

    Georgina, Thank you for a measured and restrained commentary of where we are at, the events of the recent weeks, and the imperative to somehow rise above the politics of the moment.

    You provide some cause for hope in what seems to be a hopeless choice at the next election, whether Greens, Labor or Coalition.

    If you are after a stretch target honestly held and executed quickly with an economically efficient and reliable outcome using the most effective mobilisation of community and capital, all makes it really hard to decide on ones voting preferences in the lower house and the senate. I’m certain that our representatives are not listening, nor treating the challenge seriously beyond just a political game.

    Where in this country is there great leadership around which to form in the next parliament a government for our times?

  2. Well wrItten and summaries current situation well

  3. Excellent piece. Nice to have some ammunition for the dinner table debates on this issue.

  4. David Redfearn says

    Great piece Georgina, provides a terrific analysis of the issues and where we should be heading. I have tried to share your article widely.

  5. Apart from a gratuitous sledge of the Greens which adds nothing to your discussion (Do you deny that they are in fact “the only party” that is serious about climate change?) this is a useful piece. I understand the World Bank will no longer fund coal fired power stations. That should be a great help but the death throes of the coal industry will be horrendous and probably prolonged.