RenewEconomy - Ian Dunlop*
“Fiduciary: a person to whom power is entrusted for the benefit of another”
“Power is reposed in members of
Parliament by the public for exercise in the interests of the public and
not primarily for the interests of members or the parties to which they
belong. The cry ‘whatever it takes’ is not consistent with the
performance of fiduciary duty”
Sir Gerard Brennan AC, KBE, QC
Part 1.
After three decades of global inaction, none more so than in Australia, human-induced climate change is now an
existential risk to humanity.
That is, a risk posing large negative consequences which will be
irreversible, resulting inter alia in major reductions in global and
national population, species extinction, disruption of economies and
social chaos, unless carbon emissions are reduced on an emergency basis.
The risk is immediate in that it is being locked in today by our
insistence on expanding the use of fossil fuels when the carbon budget
to stay below sensible temperature increase limits is already exhausted.
As one of the countries most exposed to climate impact, and in the
top half dozen carbon polluters worldwide when exports are included, as
they must be, this should be of major concern to Australia.
Instead, politicians and bureaucrats urge massive fossil fuel
expansion to supply domestic and Asian markets, the latter justified on
the grounds of poverty alleviation and the drug peddlers argument that: “
if we don’t supply it, others will”. Blind to the fact that fossil fuels are now creating far more poverty than they are alleviating.
In so doing Australia would be complicit in destroying the conditions
which make human life possible. There is no greater crime against
humanity.
Regulators now
recognise that climate risk far outweighs the financial risks which
triggered the 2008 Global Financial Crisis, and demand action. Company
directors have a fiduciary responsibility to understand, assess and act
upon climate risk.
Overseas, directors are already facing legal action, and personal
liability, for having refused to do so, or for misrepresenting that
risk. Compensation is being sought from carbon polluters for damage
incurred from climate impact. Similar action will be taken here.
But what of our politicians and bureacrats and their contribution to this crime?
The last few years have seen an unprecendented stream of lies and
disinformation emanating from our official bodies around climate and
energy policy, in blatant disregard of the facts, with seemingly no end
to distortions designed to achieve short-term political advantage.
What fiduciary responsibility do they have to the community they are supposed to serve?
Ministers repeatedly remind us that the first responsibility of
government is the security of the people. On any balanced assessment of
the science and evidence, climate change is now the
greatest threat to that security and to our future prosperity.
Australia signed and ratified the 2015 Paris Climate Agreement,
presumably with the intent of meeting its objectives to limit global
average temperature increase to
“well below 20C above pre-industrial levels and to pursue efforts to limit the increase to 1.50C”,
and
“to reach global peaking of greenhouse gas emissions as soon as possible —– in accordance with best available science”, recognising that “climate change represents an urgent and potentially irreversible threat to human societies and the planet”.
The voluntary Intended Nationally Determined Contributions (INDCs) made by Paris participants, if implemented, would
not meet the objectives, leading to a global temperature increase in the 3-4
0C range, a world incompatible with an organised global community.
The Australian commitment, of a 26-28% emission reduction by 2030 on
2005 levels is derisory on any fair international comparison.
Regional temperature variations would be far greater than these
global averages, rendering many parts of the world uninhabitable even at
2
0C, beyond the capacity of human physiology to function effectively. This may well be the case across much of Australia.
Since Paris, our Federal Government has ignored the Agreement, brushing off the increasingly urgent warnings of “
the best available science” and ramping up fossil fuel expansion, whilst placing every possible obstacle in the way of low-carbon energy alternatives.
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Treasurer Scott Morrison Credit: AAP Image
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The fact that many Ministers and parliamentarians are climate deniers
for ideological or party political reasons, does not absolve them of
the fiduciary responsibility to set aside their personal prejudices and
to act in the public interest with integrity, fairness and
accountability.
This requires them to understand the latest climate science and to
act accordingly. It is not acceptable for those in positions of public
trust to dismiss these warnings in the cavalier manner which has
typified the last few years. Particularly when the risk is existential.
The Prime Minister failed this test recently by implying the
disastrous Tathra bushfires had nothing to do with climate change.
Every extreme weather event today has some element of climate change
involved; it is irresponsible to imply otherwise.
Ministers justify their approach by misrepresenting international
studies to support their fossil fuel expansion ambitions. Notably by
citing the work of the International Energy Agency (IEA).
The IEA sets out its perspective on the energy sector over the next
25 years in its annual World Energy Outlook (WEO), exploring the
implications of alternative climate and energy scenarios.
Key scenarios are: current policies (CP) which assumes business-as-usual (4-5
0C temperature increase), new policies (NP) which extends CP with policy committed to but not yet implemented (3.5-4
0C temperature increase), and sustainable development (SDS) which is the pathway to meet various sustainable development goals.
SDS claims to keep global average temperature increase below 2
0C,
but only with a 50% chance of success by relying on massive investment
in sequestration technologies which have yet to be invented.
In reality, SDS would result in temperature increase substantially above 2
0C. There is no scenario which realistically achieves the Paris objectives.
The IEA is no paragon of virtue regarding
climate change.
It downplays both climate impact, and the potential of alternative
energy sources, as a result of strong pressure politically from its
developed country membership, and from vested interests who make up its
advisory bodies such as the IEA Energy Business Council and the Coal
Industry Advisory Board.
Consequently their scenarios are seized upon to justify further
fossil fuel investment. For Australia, Asia Pacific coal demand is a key factor, this being our major export market.
In the
November 2017 WEO,
under NP assumptions annual coal demand increases by 12% or 480 million
tonnes by 2040, but under SDS assumptions it declines by 47% or 1880
million tonnes.
The IEA takes NP as their central scenario as this is where we are headed if governments implement their current commitments.
However, in the fine print the IEA make it clear that NP is not a
sustainable future. In the 2017 WEO, Executive Director Fatih Birol
says: “
Decision-makers also need to know where they would like to get to. — This is the point of the SDS scenario” – even though SDS does not meet the Paris objectives.
Having ratified Paris, presumably this is at least where Australia wants to get to. Not so our Ministers.
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| Resource Minister Canavan |
At his National Press Club
address on 28
thMarch
2018, Resource Minister Canavan insisted on using the IEA NP Asia
Pacific 480 million tonnes annual demand increase by 2040 to justify
expansion of our coal industry, ignoring the SDS 1880 million tonnes
decline.
The latter is the minimum transition to approach a sustainable
future; many existing operations become stranded assets before the end
of their working life, and certainly no new coal investment. Ministers
Frydenberg and Ciobo similarily insist on using NP estimates and ignore
the SDS.
Canavan then assured the Press Club that in the first 40 years of
this century, the world will use more coal than in the entire previous
history of the coal industry.
The IEA repeatedly emphasise that their scenarios are not forecasts.
They are designed to give decision-makers an understanding of the
implications of their actions, and they only cover part of the story.
If the NP pathway is followed, there will be no market for export
coal as Asia Pacific economies will shrink rapidly under the weight of
climate impact. If more coal is used by 2040 than in previous history,
humanity will become extinct. These are consequences the IEA does not
discuss.
Such ministerial naivety is laughable, but it highlights a serious
governance failure. As with company directors, it is incumbent upon
ministers to understand these issues, in particular the risks to which
the Australian community is exposed by their decisions.
The only possible justification for Minister Canavan’s view is that
he does not believe climate change is even a problem, let alone accept
the need to rapidly reduce emissions. Further, he has no understanding
of the implications of his proposed action.
Whatever the Minister’s personal position, or the views of those who
voted for him, given the overwhelming science and evidence confirming
the urgency to address climate change, such ignorance is unacceptable
and a fundamental breach of his fiduciary responsibility to the nation.
Part 2.
At the
National Press Club,
Matt Canavan reacted angrily to a suggestion that the coal industry
will phase out, objecting strongly to any thought of planning a
transition. The mining industry will undoubtedly remain an essential
part of the Australian economy, but markets for commodities come and go.
Irrespective of political preferences, absent some unlikely
technological breakthrough to sequester its emissions, coal will phase
out, not instantaneously but relatively rapidly. Coal has been through
many transitions in the past.
The lesson from these disruptions is the need for thorough planning,
retraining and support to avoid many people being badly hurt. Even more
will be hurt, with massive climate impact, social and economic chaos, if
the coal industry is expanded. It is irresponsible for the Minister to
leave communities unprepared for these realities.
Minister Canavan then turned on “
well funded” environmental groups “
abusing” our “
robust environmental laws” to prevent or slow down major projects, such as the Adani coal mine in Queensland’s Galilee Basin.
Australia’s environmental laws were developed when human impact on
the environment was far less than today. As that impact has grown, far
from being robust, these laws are no longer “
fit for purpose”.
In particular, being domestically focused, they do not take account
of the greatest environmental risk of all, which is climate
change. Under current UNFCCC rules, emissions from fossil fuel exports
such as coal or gas are accounted for in the consuming country and are
ignored by Australian courts and institutions in granting approvals for
projects such as Adani.
However carbon emissions have global impact; coal exports from the
Galilee Basin, would have major climate and environmental implications
in Australia, as well as in consuming countries such as India. Our laws
must be reframed accordingly if they are to be meaningful.
As for “
well funded”? Vested interests pour vastly more
money into supporting fossil fuel expansion than has ever been available
to environmental groups.
Parliamentarians, particularly ministers seem to have lost sight of
the fact that they have a fiduciary responsibility to the public, which
imposes upon them a public duty and a public trust.
Sir Gerard Brennan again: “
all decisions and exercises of power
should be taken in the interests of the public, and that duty cannot be
subordinated to, or qualified by, the interests of the
(parliamentarian/minister)”.
It is entirely appropriate, when the legal system fails, for affected
parties to take action to correct such failure, as with Adani, and with
CSG projects in many parts of the country. In fact these are the only
groups who are genuinely acting in the public interest.
That the Federal government is now trying to muzzle them indirectly
via the proposed Foreign Donations Bill is a further breach of its
fiduciary responsibility.
The public has the right to expect that Minister Canavan take an
holistic view of the Adani project and the many other fossil fuel
developments he is promoting, including an honest appraisal of their
climate implications for the community. That is not happening.
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| Environment and Energy Minister Frydenberg and Prime Minister Turnbull. AAP Image/Mick Tsikas |
Similarily with Environment and Energy Minister Frydenberg, who
should be proactive in changing environmental laws to include the
climate impact of fossil fuel exports on Australia, rather than
advocating that Adani proceed on the grounds it has met current
inadequate environmental approvals.
Minister Frydenberg, and the government generally, breach their
fiduciary duty by promoting poor climate and energy policy as
represented by the National Energy Guarantee, whatever that ultimately
means.
This lowest common denominator solution is only being considered
because of the fiduciary irresponsibility of a minority group of right
wing parliamentarians, inappropriately identified as the Monash Forum,
who put their own self-serving ideological agenda ahead of the public
interest.
To claim, as the Minister did in his National Press Club
speech on 11
thApril 2018, that:
“the future of energy policy must be determined by the proper consideration of the public’s best interest not ideologically-driven predisposition”
just adds insult to injury given that the Coalition is, and has been
for two decades, in total ideological denial on climate which largely
explains our current policy shambles.
The cost to Australia of this self-indulgence is enormous.
The Minister also misrepresents IEA analysis of
Australia’s energy policies. The IEA conducts a periodic review of individual member countries policies.
The latest IEA Australian review in February 2018 was presented by Minister Frydenberg as “
backing the government’s energy policies — commending Australia’s commitment to affordable, secure and clean energy”.
The report itself did no such thing, being highly critical in many
areas, including Australia’s continuing failure to comply with IEA
membership oil stockholding obligations of 90 days net imports.
We hold less than half that, thus rendering Australia incapable of
contributing to IEA collective action in the event of an international
oil crisis; a further major security threat to the Australia community
which has not been addressed despite repeated representations over many
years.
In the light of these ingrained fiduciary failings, what of the bureaucracy, historically reverred for providing “
frank and fearless advice”
to the political class? It seems that analogy no longer applies. In
recent policy reviews, the refusal to accept and articulate the
implications of climate change on Australia shines through.
The December 2017
Review of Climate Change Policy was one of the most dishonest reports ever published by government in the climate arena.
What purported to be a comprehensive review of the climate change
challenge, and responses to it, is nothing more than a re-iteration of
Australia’s wholly inadequate and inconsistent policies.
No discussion of the latest climate science and its implications, no
preparedness to face up to the real action required. In short little
more than political whitewash for public consumption, pretending to do
something whilst doing little.
The 2017
Foreign Policy White Paper acknowledged that climate change will be an important influence on international affairs, particularly in our region.
It then anticipated: “
buoyant demand for our exports of high-quality coal and LNG —”
based on the IEA NP scenario referred to above, around which policy is
presumably centred, despite the fact that demand under this scenario
would be decimated by climate impact.
This should be unacceptable to DFAT as our lead Paris negotiator, as it is totally inconsistent with meeting Paris objectives.
The 2016
Defence White Paper for
the first time did mention climate change in passing in one of its six
key strategic drivers of Australia’s security environment to 2035 and it
is understood the Department of Defence have since extended their
planning to prepare for its impacts as a “threat multiplier”.
This is encouraging, but far behind action being taken by the military overseas.
The overriding impression is that the Federal bureaucracy, with some
notable exceptions, are not treating climate change with anywhere near
the urgency it demands; whether because of political pressure to
downplay the issue, or because of personal convictions, is not clear.
Either way, fiduciary responsibility arises again.
The
Australian Public Service Impartiality Value requires advice given to government to be: “
apolitical, frank, honest, timely and based on the best available evidence”.
Further, it must be:
“objective and non-partisan; relevant comprehensive and
unaffected by fear of consquences, not withholding important facts or
bad news; mindful of the context in which policy is to be implemented,
the broader policy direction set by government and its implications for
the longer term”.
Henceforth, climate change will determine policy across the spectrum,
encompassing national security, defence, energy, health, migration,
water, agriculture, transport, urban design and much more.
Given continued urgent warnings from scientists, including the
government’s own experts, on the need for far more rapid action, the
parlous state of our climate and energy debate and the shortcomings in
policy formulation, the Federal bureaucracy is hardly meeting its own
standards of fiduciary responsibility to the community.
So what can be done?
Many argue that current failures are the nature of politics and we
should expect little else. But when the key issues are existential, that
is to consign democracy to the dustbin of history and to accept
increasing social chaos.
In contrast to earlier eras, the concepts of fiduciary
responsibility, public interest and public trust, are clearly not
understood by the incumbency, from the Prime Minister down. This has to
be corrected.
A Federal Parliament with any degree of such responsibility, would
recognise that climate change poses an unprecedented threat to
Australia’s future prosperity, requiring emergency action.
To those prepared to honour this obligation, there is ample information before parliament to warrant that conclusion.
In the public interest, parliamentarians would set aside party
political differences, adopting a bipartisan approach to structuring
such action, with the bureaucracy in full support.
That is highly unlikely, so there remains legal action. Around the
world the seriousness of the climate threat, and the inaction of
governments, is prompting communities to take this step, with increasing
success. The same will happen in Australia, absent an outburst of
commonsense within the political class.
*Ian Dunlop was formerly an international oil, gas and coal
industry executive, chair of the Australian Coal Association and CEO of
the Australian Institute of Company Directors. He is a Member of the
Club of Rome
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