After the carbon price, what?

We are now more or less back where we started in 2007. Except, luckily, for the RET, the CEFC and one or two other quite useful acronyms. [22 July 2014 | Peter Boyer]

Greg Hunt and Tony Abbott at a Parliament House press conference following the repeal of the carbon tax legislation. PHOTO AAP/Lukas Coch

Greg Hunt and Tony Abbott at a Parliament House press conference following the repeal of the carbon tax legislation. PHOTO AAP/Lukas Coch

So this is it. A decade of effort by thousands of Australians based on the best scientific and economic advice the world can offer has come to nought: no carbon price, no “direct action”, no climate policy. A big round zero.

This is a first-order political failure. Tony Abbott got the numbers and declared a win, but it’s a pyrrhic victory won at his nation’s cost. We’re all losers.

Some will greet this assessment with derision. Belittling the science and economics behind human-induced climate change and the carbon price has been one of the characteristics of Australia’s endless debate over climate policy, with Abbott’s true believers leading the charge.

But their posturing does nothing to change reality. On the same day as the senate delivered the last rites to Australia’s carbon pricing scheme, the US National Oceanic and Atmospheric Administration released its 24th annual “State of the Climate” report.

There’s nothing surprising in the NOAA report, meaning only that global warming continues unabated. In 2013, one of the six warmest years ever recorded and Australia’s warmest on record, sea level continued to rise while carbon dioxide concentrations reached historic highs.

I’d be willing to bet that no-one voting for the repeal of the carbon price paid any heed to such information. Politics is the order of the day when politicians come together, not science. What counts is who’s on top.

Tony Abbott was definitely on top when he fronted media soon after the vote with environment minister Greg Hunt. He’d just slain the dragon, the “useless, destructive tax which damaged jobs [and] hurt families’ cost of living”. What’s more, he said, it did nothing for the environment.

Actually, it did, though you need to look for the signs. Studies I’ve discussed in recent months have found many signals that the carbon price was changing the energy landscape in Australia, giving a lift to renewables while bringing down electricity consumption and cutting emissions. To those assessments can be added a study by the Australian National University’s Centre for Climate Economics and Policy, just concluded, of the impact of carbon pricing on the National Electricity Market.

Using conservative parameters, the study found that the price on carbon had caused a decline in electricity demand of between 1.3 and 2.3 per cent of the NEM, with a reduction in emissions of 11 million to 17 million tonnes of carbon dioxide. The study found that by allowing renewable alternatives to compete with coal, the carbon tax had caused coal-power operators across Australia to switch off a significant amount of generating capacity. The end of the tax will be the nod for those idle generators to be fired up again.

The ANU study was released on the day of the senate vote. Like the NOAA report, it was too late to change minds. A parliamentary train in motion rarely changes course.

Interviewed that evening by ABC Lateline’s Tony Jones, Hunt said he’d seen the ANU study but preferred Australian Energy Market Operator data that indicated the Renewable Energy Target was mainly responsible for declining emissions, not market forces shaped by a carbon price.

Hunt’s dismissive response to an independent expert analysis, highly relevant to climate policy, follows a pattern. Since his leader staked his career on a complete rejection of carbon pricing, Hunt has been very selective about what information he takes on board and what he rejects.

The Coalition has taken upon itself to determine what should be done about the totally unprecedented policy dilemma of climate change while rejecting the vast bulk of professional research that points to an alternative path. That is a very risky course.

Now the Coalition will be forced to test that risk, first by getting a majority in the senate to support its $2.5 billion Emissions Reduction Fund in August, and if that gets through then getting the scheme to work within its strictly limited budget. Both are dubious propositions.

Unfortunately, the ERF’s effectiveness will be nullified completely if the government can’t stop big polluters abandoning all emission limits. It has still not produced “baseline” compliance measures to prevent such behaviour, and they’re now unlikely to appear before next year.

We’re lucky that we still have an effective Renewable Energy Target, but for how much longer is anyone’s guess. Climate sceptic Dick Warburton, Abbott’s hand-picked chairman of a review panel, is soon to hand down a verdict on its future. Lower power usage makes the basic RET (20 per cent of renewable energy by 2020) a real doddle. That stays, Greg Hunt said last week, but he didn’t mention a 2011 addition that gave the RET more bite, 41,000 gigawatt-hours of renewable energy a year by 2020. That’s the bit that bothers Abbott.

We’re also lucky that the Clean Energy Finance Corporation, the Australian Renewable Energy Agency and the Climate Change Authority, all Labor-Green carbon price agencies, still exist. The Abbott-Hunt climate plan was to get rid of them, but the senate crossbench voted that down.

The survival of the Climate Change Authority must really rankle with Abbott. It has advised that (consistent with the ANU study) Australia would easily achieve the bipartisan 2020 target of 5 per cent emissions reduction and should aim for a stiffer 19 per cent target. But that advice was given when we had a carbon price.

Now, with the strict spending limits Abbott has placed on the ERF, we’re unlikely to reach even the 5 per cent target. The most conservative independent ERF analysis says this will cost nearly double the amount budgeted.

I hope that in the wake of the senate vote the government enjoyed its moment in fading sunshine. Now we should all get ready for a long, hard night ahead.

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