Review defends Government's approach to climate policy
Despite international pressures for signatory countries to the Paris Agreement to increase their carbon emissions reduction targets in order to avoid catastrophic climate change, Australia's year-long review of climate policy has resulted in a document that defends the government's current limited approach to emissions control.
The review was initiated in November 2016 following Australia's ratification of the Paris climate agreement under which Australia committed to the modest emissions target for 2030 of 26-28% below 2005 levels.
Key features of the review are support for current policy settings, but a loosening of the Safeguard Mechanism withingthe current Direct Action policy to enable high emissions businesses to avoid reduction in their emissions if their production increases.
The review finds that Australia's estimated emissions reduction task over 2021 to 2030 has reduced by more than 120 Mt CO2 -e since the 2016 projections and by more than 1200 Mt CO2 -e since the 2014-15 emissions projections to 868 Mt CO2 -e for the 26 per cent below 2005 target.
Undertakings made in the review include that Government will:
“continue to improve the operation of the Emissions Reduction Fund by improving the transparency of method prioritisation and development, and by exploring new opportunities to partner with industry, business and the community;
“make the Safeguard Mechanism fairer and simpler, with future reviews in line with the review cycles under the Paris Agreement; and
support, “in principle, the use of international units. A final decision on the timing of use and appropriate quantity and quality limits (equivalent standard to Australian Carbon Credit Units (ACCUs)) will be taken by 2020.”
The Australian Industry Group welcomed the review, saying it “contains welcome steps towards the durable, national and bipartisan climate policy framework that Australia needs to underpin longer-term investment decisions and our shared prosperity”
Ai Group Chief Executive Innes Willox said the in-principle decision to allow the use of high quality international emissions offsets, credits and allowances to help meet Australia's contribution to global emission reduction was “a major advance”.
“Ai Group has been arguing the merits of allowing international credits for several years. While further examination and development of this decision remain in the pipeline, this is a critical step towards ensuring that the substantial transitions that lie ahead for Australia can be achieved at least cost. It will help enable an orderly transformation of domestic jobs, regional economies and many of our traditional industries.
"The in-principle international carbon credit decision is a victory for common sense over ideology and recognises that addressing the global problem of accumulating greenhouse gases in the earth’s atmosphere calls for global solutions. There is simply no reason to waste efforts on higher-cost domestic abatement options when credible, high-quality and less expensive alternatives are available abroad.”
However, there is mounting resistance to this approach from conservative MP's, including Tony Abbott who claims that making overseas carbon credits available to Australian companies will mean that “Aussie consumers end up shovelling our money to foreign carbon traders”.
A number of industry organisations have expressed disappointment with the outcome of the review.
Emma Herd, CEO of the Investor Group on Climate Change, said the review had failed to deliver the long term market signal that investors are looking for.
“Business is looking for a plan on how Australia is going to tackle climate change. Instead they got last year’s greatest hits album for summer.
“Australia’s greenhouse gas emissions are rising in all sectors of the economy. This is creating financial risks for investors. The 2017 Climate Change Policy Review, while noting progress in some areas, fails to deliver a comprehensive national decarbonisation plan for the Australian economy.” “
The question remains - what is the plan for tackling Australia’s rising greenhouse gas emissions?”
“The Finkel Review delivered some positive outcomes for energy and climate policy planning. The National Energy Guarantee is a work in progress with the detail yet to be revealed”.
“IGCC welcomes the proposed measures for international units as an important piece of the puzzle, but notes that the necessary mechanisms do not yet exist to support their use by Australian business.”
“Mooted changes to the Safeguard Mechanism risk further undermining the need for emission reductions in carbon intensive sections of the economy.”
“At a time when APRA is calling for responsible climate change management, investors need a climate change policy framework which addresses financial risks to the Australian economy and positions Australia for a low carbon future. There is clearly more work to be done in 2018”, Ms Herd said.
The Government has flagged the need to bring forward a planned domestic policy ‘review and refine’ process to 2025 (from 2035) to support Australia’s commitments under the Paris Agreement ‘review and ratchet’ mechanism. IGCC is calling on the Government to commence this process as early as possible to deliver investors the policy signal they need to invest.
The Shadow Minister for Climate Change and Energy Mark Butler accused the Government of dithering for three and a half years over the introduction of vehicle emissions standards recommended by the Climate Change Authority in June 2014.
“While the Climate Change Review couldn’t be clearer about the benefits of vehicle emission standards, just as the Climate Change Authority report was in June 2014, the Turnbull Government still hasn’t committed to implementing vehicle emission standards. This even though their own review states vehicle emissions standards would save motorists up to $519 per year in 2025, with a net benefit for the entire economy of $13.9 billion over 20 years.
“After a year of dithering and a yearlong Climate Change Review, we are no closer to seeing vehicle emission standards in Australia than we were a year ago.”
The 2017 Review of Climate Change Policies is available here.