28/04/2021

(AU ABC) Scott Morrison's Climate Change Policy Is Being Left Behind By Corporate Action

ABC Business - Ian Verrender

Scott Morrison addressed the climate summit last week. (Reuters)
It's no easy task, attempting to make a virtue out of inaction.

So spare a thought for Prime Minister Scott Morrison in his address to US President Joe Biden's virtual climate conference with global leaders late last week.

Despite being at odds with the bulk of those present, many of whom upped already ambitious targets to hit net zero carbon emissions by a particular date, Mr Morrison was upbeat, confident and a man who sounded in command of his country's destiny.

Australia would focus on delivering the goods rather than making promises on the timing to a net zero carbon future, he declared. We are all about the how rather than the when, he said.

With the slimmest of majorities and a looming election, the Prime Minister's reticence to commit to anything concrete is understandable from a domestic political perspective. Climate policy has been a career killer for much of this century, with at least three Prime Ministers seen off by point-scoring rivals.

But there was one statement from the Prime Minister that hit the mark.

Our push to slash emissions, he said, would be driven by technology, innovation and our dynamic private sector.

It's difficult to disagree. Since 2005, the shambolic approach from Canberra — abrupt policy reversals, leadership vacuums, indecision and broken promises – has meant any progress Australia has made on climate policy has been driven almost entirely by a frustrated private sector increasingly alarmed about the prospect of being isolated by global investors.

Even so, despite boasting one of the greatest penetrations of rooftop solar in the world, and as ageing coal-fired generators are retired early in favour of renewables, our carbon emissions have fallen at a much slower clip than the US and Europe.

How bad is Australia when it comes to global warming?

Here is how we stand in terms of our output. This graph and the one below it measure our carbon emissions on a per capita basis, or as individuals.


Australia was near the top globally when it came to emissions per capita a couple of years ago.

As you can see, we are right up there, vying for Olympic gold.

And here is how we've gone on reducing those emissions.

We're still a world leader in CO2 emissions despite a reduction.

While our emissions have fallen, we are still world leaders on a per capita basis. And that's despite running a mass immigration policy that should have made our per capita numbers look much better.

Even China, where emissions grew strongly in the decade-and-a-half from the turn of the century, has begun to level off at less than half ours.

When it comes to overall emissions as a nation, however, China is the clear leader after it became the world's factory during the new millennium. But we still rank alongside the United Kingdom, despite our much smaller population. In fact, we're now level pegging with the Old Dart when it comes to carbon emissions.

The annual CO2 emissions of China, the US, European Union, Australia and the United Kingdom.
What price the future?

It was the Prime Minister's refusal to put a firm date on a carbon reduction target at the summit that attracted the most criticism.

It wasn't just the when, however, missing from the Prime Minister's address last week.

PM says Australia backs technology, not taxes, to tackle climate change

We certainly had the who; business and households. But despite his assurances on the direction, we didn't get much detail on the how.

There was a plan to spend $539 million on new clean energy projects including "hydrogen hubs". Still, apart from the trifling amount, it wasn't the strategy Mr Morrison's global peers were looking for.

But if they want to hear talk of carbon pricing, they may have to wait.

Traditionally, the Liberal Party has tended to rely upon free market mechanisms to achieve an economic end. Reducing red tape, cutting government spending, eliminating subsidies and individual choice have always been part of the mantra.

The Australian Labor Party, by contrast, is always accused of overspending and direct intervention with subsidies and government-funded programs.

When it comes to climate, however, those preconceptions have been turned on their ear.

Is green hydrogen the fuel of the future?

The Rudd Labor government committed itself to a carbon price and the succeeding Gillard Labor government introduced a carbon tax, that was to convert to a carbon price. The free market would determine our energy and climate future.

But the program was junked by the incoming Abbott government, which instead replaced the market mechanism with a subsidy, the Emissions Reduction Fund. That since has handed out close to $3 billion in taxpayer funds to polluters to encourage them to change their practices.

Malcolm Turnbull attempted to reintroduce a carbon price via his National Energy Guarantee, through a secondary trading mechanism between power companies. It was enough to tip the balance of power within the party — Mr Turnbull departed and Mr Morrison was installed as leader.

Not surprisingly, he last week was adamant that there would be no carbon tax, and no carbon pricing and, again, reverted to a direct government handout.

While we have no qualms about taxing the life out of tobacco, in a direct attempt to raise cash to cover the health costs associated with the drug and to send a price signal to deter Australians from smoking, a price on carbon is as far away as ever.

No carbon tax here — but maybe we'll pay anyway

More than 29 countries – including many in Europe, as well as Canada and parts of the United States – have a carbon price or tax in place, designed to send a signal to energy companies, polluters and consumers about how to invest in energy generation and industrial output.

Despite the policy vacuum, Australian households have become the world's greatest adopters of rooftop solar and our power companies now have accelerated their programs to retire the ageing fleet of coal-fired power generators, with Victoria's Yallourn the next to be axed early.

It's not difficult to understand why. Renewable energy is cheaper to install, and the economics of renewables with backup – either battery, stored hydro or gas – has now undercut coal. They are cheaper to build, operate and are far more flexible.

Even so, when it comes to electricity generation, a recent OECD report singled out our reliance on coal as a major source of concern.

Australia's reliance on coal is in the spotlight.

Without political leadership, Australian businesses risk being stranded by a global community that has embraced a carbon free future.

Longer term, thermal coal faces enormous challenges and even Liquefied Natural Gas – of which Australia recently has become one of the world's biggest exporters – now is being called into question as a fuel for the future.

AGL's recent decision to carve out its coal-fired generators into a separate unit, so that investors can choose between green energy unencumbered by its legacy power stations, is a sign of things to come.

More broadly, the European Union recently called for a carbon border tax – a penalty on goods imported from countries that do not have a carbon price.

While some of our leaders still debate climate change and energy policy as an ideological issue, the world is moving on. Australian businesses long ago realised it was an economic issue.

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