11/12/2020

(AU) Why Can’t Australia Just Trust The Market On Climate Change?

The Diplomat - 

Renewable energy technologies have become better and cheaper, but Australia’s politics haven’t embraced the energy market’s transition.

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Author
Grant Wyeth is a researcher at the Asia Institute, University of Melbourne.
Donald Trump’s presidency in the United States over the last four years has provided cover for Australia’s recalcitrance toward action on climate change.

However, the incoming administration of Joe Biden, who has plans to take the issue of climate change more seriously, will place greater pressure on Australia to do likewise. Canberra will find it difficult to avoid this state-level pressure; Australia will also face difficulties in avoiding pressure coming from the energy market itself.

Until recently, the global energy market was dominated by fossil fuels — for a long time, no other technology could produce energy in a cheaper way. However, over the past decade this reality has shifted. Renewable energy technologies have considerably improved and the cost of production and delivery has become much cheaper. In many places in the world, power generation from renewable energy sources is now cheaper than power generation from fossil fuels. 

This trajectory could be maintained — and could flourish locally in a country with geographic advantages for both solar and wind generation — if Australia’s energy industry had a stable policy framework for the market to function within. Yet the Australian government has persistently proved unable to develop such a framework.

There have been attempts. The most recent effort was the National Energy Guarantee (NEG). But these attempts continue to come against the internal politics of the Liberal Party, making them impossible to implement. The NEG led to a party revolt that removed Malcolm Turnbull from the prime ministership in 2018. 

If we are being generous to the government, there are genuine economic concerns for the regions whose economies are reliant on fossil fuel generation. But any serious plan to combat the effects of climate change will also address these regional economic effects, as the jobs created by the renewable industry may not have the same geographic distribution as the existing fossil fuel industry.

However, the Australian government has refused to confront this reality, instead deciding to just kick this problem down the road in the hope someone else will discover a solution. This isn’t helped by there being distinct electoral calculations for political parties attached to fossil fuel generating regions, especially in Queensland, where Australian elections are typically won and lost. 

Yet the Liberal Party hasn’t shown any similar concern for other industries whose decline has come via market forces. There were regions that relied heavily on the manufacturing of motor vehicles, but when the market no longer saw an advantage in manufacturing cars in Australia in 2017 the Liberal-led government did not seek to intervene. 

This remains one of the great riddles of Australian politics: Why is the party of free markets so opposed to the forces and mechanisms of the market in the energy sector? The electoral calculations are understandable as political parties will always place their ability to win votes above any philosophical consistency.

But there is also something else going on, something deeply psychological that is preventing the party from acknowledging the reality of climate change. This is driving the Liberal Party to undermine its own adherence to liberal economics by protecting industries that are rapidly losing viability. 

In an essay I wrote for Quillette in September, I argued that the pace of change over the past several decades has proved highly confronting to what British philosopher Michael Oakeshott identified as the “conservative disposition.”

My broad argument was that it has been the mechanisms of increasingly free markets driving this rapid economic and social change, and it has been conservative parties themselves who have been the primary drivers of these economic ideas and structures. The central point is that conservative parties have failed to align their political ideals to their psychological needs. 

The threats posed by climate change are also highly confronting to those who value stability and have an instinctive suspicion toward change in general. The fear for those of a conservative disposition is that human beings will need to reorganize themselves in such a dramatic fashion to mitigate the effects of climate change that people’s current comfortable existences will be upended.

Faced with this potential disruptive prospect, their reaction has instead been to simply deny the phenomenon. This has led to Australia’s conservative parties and their media allies developing a political identity built around this denialism, making it now almost impossible for the issue to now be approached as one of “economics and engineering,” as has become the common phrase used by Turnbull.  

The current trajectory toward more affordable renewable energy is a result of the energy market doing what conservative parties over the past 50 years have told us that markets do: They find solutions to problems and make these solutions cheaper and easier to access.

While these market forces do often extinguish industries and impact regions that are reliant on these industries, they also offer considerable new opportunities, and in doing so they make humanity’s ability to confront its major challenges often far less dramatic than they may otherwise be perceived to be.

Yet an obstinate government that actively seeks to hinder these market forces will prevent Australia from taking advantage of these opportunities, and increase the continued serious threats that climate change presents to the country, as well as to its more precarious neighbors. 

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