Is government irrelevant to climate success?

The “safeguard mechanism” is based on the belief that emissions targets can be reached with minimal government input. [8 September 2015 | Peter Boyer]

The biggest test of the federal government’s climate policy was always going to be its “safeguard mechanism”, aimed at preventing Australia’s carbon pollution from getting out of hand.

Nick Xenophon. PHOTO ABC

Nick Xenophon. PHOTO ABC

If what was revealed last week turns out to be the final product, it’s a failure. The scheme as announced can do nothing to reduce greenhouse emissions or the carbon intensity of our economy.

Significantly, it failed to get strong support from a business community that’s had to endure persistent uncertainty about where Australia’s energy economy is headed since carbon pricing was killed off in June last year.

Under the safeguard scheme, from July next year, Australia’s 140 highest-emitting companies will have to ensure their annual emissions don’t exceed the highest annual level previously reached in the five years from 2009-10 to 2013-14.

Given the recent downward trend in emissions, that shouldn’t be a problem for most companies. But those in danger of exceeding their limit can apply to have that cap lifted on grounds of expanding capacity, company restructuring or some other unforeseen development.

Even if companies go over their limit they will be able to avoid a financial penalty (maximum $1.8 million) if they decrease emissions in future years. In fact, the government says it wants to avoid hurting business and isn’t counting on collecting any revenue from the scheme.

The scheme was branded ineffectual by the market analyst Reputex (which calculated that it could cause emissions to rise by 20 per cent by 2030) and the Climate Institute. But the most damaging criticism came from the South Australian independent senator, Nick Xenophon.

Xenophon, a persistent critic of the old carbon pricing scheme, had supported the government’s “Direct Action” policy, including its controversial Emissions Reduction Fund, so long as effective measures were put in place to control industrial emissions.

In the wake of last week’s announcement Xenophon told the ABC’s Fran Kelly that failure of the safeguard scheme would ensure that climate policy was a major election issue next year. In such a scenario the government is a certain loser.

An ineffectual penalty scheme, said Xenophon, would ensure that $2.5 billion – the amount the government plans to spend on the Emissions Reduction Fund – would be money down the drain.

Ever since Tony Abbott came to power two years ago, Xenophon has been in the ear of environment minister Greg Hunt about the need for strong safeguards. He’s a key to public acceptance of the government’s climate policies, but last week’s announcement clearly rocked him.

He still thinks Hunt supports strong measures, but said that some government MPs, including some in cabinet, wanted the scheme to be “as weak as possible”. That would fit with Tasmanian Liberals voting at their weekend state conference to give up on cutting emissions and focus on adapting.

In that debate, delegates warmly approved the sentiment that “international hysteria” and “green propaganda” were driving mitigation efforts. They even suggested in a motion that CSIRO climate science was driven by ideology, but that was dropped in the final vote.

The environment minister seems to believe that we’ll get away with doing very little. On Friday he said that lower electricity demand, less coal power, more renewables, transport fuel efficiency and land sector changes would take us a long way to achieving emissions targets.

That ignores the government’s promotion of coal power and its attacks on renewables, but it does raise the question of whether government matters at all. In a protracted economic downturn it’s possible that Australia could achieve its modest 2020 target without strong government measures.

But it’s fantasy to think that a hands-off policy will work beyond that. With tougher targets ahead, the government must eventually make decisions that will have an impact out in the community.

And what does that attitude say about our commitment to global climate action? How will our non-policy go down in Paris in December, where the world will try to nail down commitments for the next two decades? Or don’t we care about any of that?

“Direct Action” is looking more and more like a cover for inaction. If that’s what the government wants it should come out and say so, then we’ll know where we stand.

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