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Wednesday, 29 October 2014

Direct Action: Coalition secures $2.5bn plan amid fears over emissions target

Direct Action: Coalition secures $2.5bn plan amid fears over emissions target



Direct Action: Coalition secures $2.5bn plan amid fears over emissions target








clive palmer

PUP leader Clive Palmer and environment minister Greg Hunt at Parliament House in Canberra on 29 October 2014.
Photograph: Mike Bowers/Mike Bowers








The Coalition will get its $2.5bn Direct Action climate policy
through the Senate after agreeing to investigate the emissions trading
policy it has vowed never to introduce, leaving analysts sceptical
Australia can achieve its 2020 emission reduction target or deeper
long-term cuts.



Environment minister Greg Hunt agreed to an investigation of
emissions trading schemes and Australia’s future greenhouse targets as a
“gesture of good faith” to win the votes of the Palmer United party,
even though he insisted the coalition would never, ever support an
emissions trading scheme or a carbon tax.



Despite this, and despite the fact that his party voted to repeal the
emissions trading scheme Australia already had in July, PUP leader
Clive Palmer said his deal with Hunt had “kept alive the hope of the
ETS”, releasing a press release proclaiming “Palmer Saves Emissions
Trading Scheme”.



Hunt said the deal was “a tremendous outcome for the government ... a
fundamental success”, but Labor, the Greens and environment groups
slammed the outcome.



Labor’s environment spokesman Mark Butler said it was “a terrible
deal for Australia’s future … leaving Australia with no meaningful way
to reduce carbon pollution.”



“I don’t know what Jedi mind trick Greg Hunt just played on Clive
Palmer … we don’t need another inquiry. We need action,” he said.



Greens leader senator Christine Milne said: “What we have here is no
contribution to bringing down emissions, no modelling to backup the
claims, by a government and Clive Palmer which tore down an emissions
trading scheme which was bringing down emissions.”



The government has also agreed to a demand by independent senator Nick Xenophon
to move quickly to set up a “safeguards” scheme to stop companies
increasing their greenhouse emissions – but has not committed to any
detail, and Hunt insisted Xenophon had not won any concessions that were
not already coalition policy.



He rejected Xenophon’s push to allow the government to purchase international carbon permits, something the prime minister once described as sending
“money … offshore into dodgy carbon farms in Equatorial Guinea and
Kazakhstan”, even though this would have made it easier and cheaper to
reach Australia’s agreed emissions reduction target. It is understood
Tony Abbott remained strongly opposed to this idea, despite its strong
backing from the business community.



The government has also agreed to retain the Climate Change Authority – which it was once committed to abolish – to undertake the investigation into an ETS and future reduction targets, and provide reports to parliament.


Under Direct Action the government will commit $2.5bn over four years
to an “emissions reduction fund” for competitive grants to companies or
organisations that volunteer to reduce their emissions.



The “safeguards” mechanism is supposed to impose some upper limit on
emissions across the board – including on companies or sectors not
bidding in its auction – so that their increasing emissions do not
cancel out the decreases in emissions purchased through the government
fund.



But Hunt insisted there would be no revenue raised as a result of the “safeguards”.


As revealed by Guardian Australia in August,
former Australian Conservation Foundation head Don Henry and co-chair
of Greg Hunt’s own expert committee on Direct Action, Danny Price, have
been involved in months of backroom talks to win the backing of PUP,
Xenophon and DLP senator John Madigan during the three months since the
government succeeded in repealing the former government’s carbon pricing
scheme.



Deep concerns about the adequacy of the policy remain. The government
has not modelled whether the fund has enough money to meet Australia’s
minimum 2020 target to reduce emissions by 5%, with Abbott saying during
the election campaign he preferred to just “have a crack”.



CCA chairman Bernie Fraser, who attended the press conference to
announce the deal with Hunt and Palmer, referred to the authority’s
previous work when asked whether Australia could meet its target, and
what that target should be.



In February, the authority reported that Australia would have to
treble its 2020 target to 15% to remain internationally credible, and
without a carbon price or other “effective” policies, emissions will
grow to 17% above 2000 levels by 2020. That, it said, would leave an
“improbably large task for future Australians to make a fair
contribution to global efforts” to constrain global warming to 2C.



Market analysis firm Reputex said their projections showed the
emissions reduction fund would only be able to buy 20 to 30% of the
greenhouse gas abatement needed to meet the 5% target. The firm says
that if the “safeguards mechanism” did become a proper baseline and
credit emissions trading scheme, it could help the government make up
this shortfall.



Separate modelling by Sinclair Knight Merz/MMA and Monash University’s Centre of Policy Studies, commissioned by the Climate Institute,
which used assumptions more generous to the Coalition, found it would
need at least another $4bn. Abbott has said if Direct Action falls short
he will not allocate any more money.



Hunt would not reveal what advice he had to substantiate his “hope,
belief and expectation” that the target would be achieved, but said
Australia would be helped by the fact that the decline of manufacturing
was reducing electricity emissions and that abatement might be purchased
more cheaply than he had originally anticipated.



The government must reveal by early next year what post-2020 target
it is willing to adopt, and is under strong international pressure to
agree to much deeper cuts, but few observers believe the “direct action”
policy could achieve them.



The terms of reference for the CCA review show the report could embarrass the government just as this pressure is intensifying.


Coalition frontbencher Malcolm Turnbull once warned its costs could
become prohibitive when Australia has to cut its emissions even further
after 2020, especially without the option of buying cheaper offshore
carbon permits.



In a 2010 speech after he was deposed as leader, Turnbull said
direct-action style schemes were “a recipe for fiscal recklessness on a
grand scale” and “schemes where bureaucrats and politicians pick
technologies and winners, doling out billions of taxpayers’ dollars,
neither are economically efficient nor will be environmentally
effective”.



And the “blue book” prepared by the Treasury for a possible incoming Coalition government in 2010 said
“a market mechanism can achieve the necessary abatement at a cost per
tonne of emissions that is far lower than alternative direct-action
policies”.



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