Business Needs To Get Real On Climate

AFR - Craig Emerson

Craig Emerson is managing director of Craig Emerson Economics, a distinguished fellow at the ANU and an adjunct professor at Victoria University's College of Business.

The looming election will determine the course our nation takes on an issue of vital importance not only for humankind, but for Australian businesses as well. If business organisations such as the Business Council of Australia (BCA) persist with their support for the Morrison government's carbon-emissions target of a 26 per cent reduction on 2005 levels by 2030, they will position their members as being opposed to meaningful action on climate change.
A pattern has already emerged. The BCA backed an emissions-trading scheme – but not the Rudd government's emissions-trading scheme. It continued to mouth support for an emissions-trading scheme after the election of the Gillard government – just not the carbon price, which after three years was legislated to morph into an emissions-trading scheme anyway. Now the BCA is backing the National Energy Guarantee (NEG) that the Morrison government has abandoned but which remains Labor policy – just not one with a 45 per cent emissions-reduction target for electricity generation.
Instead, the BCA describes the 45 per cent target for electricity as "economy wrecking", supporting only a 26 per cent reduction. Modelling by the Energy Security Board forecasts a 24 per cent reduction in emissions from the electricity sector on 2005 levels by 2021-22. This would leave only a 2 per cent reduction to be done from 2022 to 2030 if a 26 per cent target were adopted. During the 2020s, two or more ageing coal-fired power stations will be retired regardless. In other words, the BCA supports the NEG as long as it doesn't do anything.

Earlier droughts underscored the danger of a perfect storm to John Howard.  Glenn Campbell

Existing policy settings
The BCA's support for a do-nothing target for electricity generation fails to recognise that the cost of installing and transmitting large-scale renewable energy has fallen so rapidly that increasing renewable energy in the system now drives electricity prices lower.
Prime Minister Morrison has declared Australia will reach its Paris commitment "in a canter" under existing policy settings. That is untrue. Our Paris commitment is a 26 per cent reduction in emissions for the whole economy, not just for electricity generation. Official government projections released, conveniently, just before Christmas are for Australia's total emissions to rise between 2020 and 2030, for an overall reduction on 2005 levels of just 7 per cent – a long way from a 26 per cent reduction. If the Morrison government is re-elected Australia will miss its Paris target by a country mile.
Fortunately some of the BCA's more-enlightened members are supporting the transition to a low-carbon future, installing renewable and low-emissions energy capacity and refusing to buckle to Coalition pressure to keep open coal-fired generators beyond their economic lives. Householders, too, are installing rooftop solar panels at unprecedented rates.
The Coalition's conservative faction, urged on by its backers on shock-jock radio and Sky After Dark, continues to propagate the conspiracy theory that climate change is an elaborate hoax. They are supremely confident that, given a choice between lower electricity prices and emissions reductions, voters will follow the money every time.
There are two problems with this short-term, cynical analysis.
First, voters don't believe they should be required to make a choice; they support lower electricity prices and action on climate change.

The Andrews government's renewable-energy policy went over a treat in the Victorian state election.  Supplied

Second, this polling is getting old. When John Howard later reflected on his own announcement of an emissions-trading scheme ahead of the 2007 election, he described the political environment at the time as "a perfect storm". Ironically, chief contributor to the "perfect storm" was the prolonged drought. Voters were constantly reminded of global warming by water restrictions in the cities and horrible images of devastation in the bush.

In for a big shock
History is now repeating. Much of Australia is in the grips of another severe drought. Concern about climate change is firmly back in the public's consciousness. As the Morrison government moves towards the election, musing about the underwriting of new coal-fired power stations and boasting about doing nothing on climate change, it is in for a big shock.
The Andrews government's renewable-energy policy went over a treat in the Victorian state election. Just ask voters in blue-ribbon Liberal seats, several of which fell to Labor and which make up the federal electorates of several staunch Liberal conservatives.
If Labor wins the coming federal election it will try to get an NEG with a 45 per cent emissions-reduction target through a Senate in which conservatives are likely to have a majority. If Labor fails in that endeavour, it will move to contracting for generating capacity consistent with the 45 per cent target and an integrated system plan that addresses and manages reliability and grid stability.
As the BCA and others campaign against that target and in favour of a do-nothing target, they will isolate themselves, forfeiting any influence on government policy and will end up, again, on the wrong side of history.

Links

• Business backs NSW plea for action on federal energy policy paralysis
• Australia on track to miss Paris emissions targets by huge margin
• Climate Change: Focusing On How Individuals Can Help Is Very Convenient For Corporations
• Lightbulb Group Shows Way On Climate Change
• Is Corporate Australia Facing A 'Tipping Point' On Climate Change?
• Australian Businesses Must Do More To Disclose Climate Change Risks To Investors, ASIC Says
• Investors With $26 Trillion In Assets Urge G7 Leaders To Act On Climate Change
• Corporations To Lead Charge Into Wind, Solar And Storage
• Powerful Investors Push Big Companies To Plan For Climate Change
• Lloyd's Of London To Divest From Coal Over Climate Change
• Why We Can’t Rely On Corporations To Save Us From Climate Change
• Australian Business Is Waking Up To Climate Risks