We have failed the 1.5C challenge, an aspirational global warming target suggested in 2008 by vulnerable countries in the Alliance of Small Island States and subsequently adopted by the 2015 Paris agreement. What hope do we have now? In the words of Ross Garnaut, a distinguished Australian Economist, “the best that we can hope for is holding global increases to around 1.75C” and even that will only be attainable “if the world moves decisively towards zero net emissions by the middle of the century”. While he believes Australia is well placed to reap the rewards from immersion into a zero-carbon world it will need a different policy framework. (The Conversation, November 5, 2019)
The two key cost-effective mitigation (avoiding emissions) strategies are:
1. Carbon tax
2. Emissions trading
Both of them are a form of carbon pricing. With a carbon tax, the price is set and the market is left to determine the level of emissions. In the second one, government sets the magnitude of emissions and the market determines the price. William Nordhaus, Yale Economist and Nobel Prize winner, introduced carbon pricing as a cost-effective tool to stabilise global climate back in 1977.
Carbon emissions have a social cost that is not reflected in the market price for energy. For an efficient allocation of resources all costs need to be considered. The social cost of carbon emissions is the marginal increase in the present value of future economic damages (such as floods, rising sea levels, heatwaves, damage to crops, poor health and altered ecosystem services) resulting from a marginal increase (usually 1 tonne) in carbon emissions. (Tietenberg and Lewis, 2018, p.54)
The World Bank reports that today there are around 40 countries and 20 cities, states and provinces that have adopted carbon pricing mechanisms. Combined, these carbon pricing schemes cover about half of their emissions, representing 13 % of annual global greenhouse gas emissions.
Despite a general global consensus that carbon pricing is the single most effective mitigation instrument, Australia got rid of theirs after trying it for only two consecutive years. The Clean Energy Act 2011, introduced by the Gillard Labor Government, created an emissions trading scheme covering about 60% of Australia’s carbon emissions. It was administered by the Clean Energy Regulator for the 2012-13 and 2013-14 financial years and subsequently repealed, a victim of politics. The Abbot Liberal Government replaced it with an Emissions Reduction Fund in 2014.
Today, as bush fires ravage the eastern coastline of Australia with unprecedented fury, the inertia and confusions of the Morrison Liberal Government toward climate change do not bode well for an effective policy being introduced anytime soon. Carbon pricing remains a contentious issue in Australia. After all we are the world’s biggest exporter of coal.
So what is Australia’s Climate Policy? We are now left with a dizzying array of schemes.
The centrepiece of Australia’s climate change policies is the Emissions Reduction Fund (ERF) which provides incentives for eligible emissions reduction activities. Individuals and organisations taking part can earn Australian carbon credit units (ACCUs). For each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project, one ACCU is earned. ACCUs can be sold to generate income, either to the Government through a carbon abatement contract, or on the secondary market. With more than 12 million ACCUs generated in the 2016–17 financial year, the Fund is one of the world’s largest domestic carbon offset markets.
We also have a Renewable Energy Target (RET) scheme designed to reduce emissions of greenhouse gases in the electricity sector and encourage electricity generation from sustainable and renewable sources. The scheme encourages investment in new large-scale renewable power stations and the installation of new small-scale systems, such as solar photovoltaic and hot water systems in households.
RET and ERF are administered by the Clean Energy Regulator (CER) which also takes responsibility for the National Greenhouse and Energy Reporting Scheme and the Australian National Registry of Emissions Units. The CER has recently launched Australia’s inaugural Quarterly Carbon Market Report (Quarter 3, 2019) boasting the substantial contribution that RET and ERF schemes make to reducing emissions in Australia. In 2019 at least 50 million tonnes of carbon dioxide equivalent (tCO2-e) abatement was delivered, compared to 12 million tonnes in 2011. In Quarter 3 of 2019 alone these carbon markets accounted for over 13 million tCO2 -e of carbon abatement.
The National Energy Productivity Plan (NEPP) agreed by The Council of Australian Governments (COAG) Energy Council consists of a package of measures designed to improve Australia’s energy productivity by 40% between 2015 and 2030. As an example of the types of measures, in the NEPP for businesses and transport sectors voluntary action is facilitated by providing information on websites and finance from grant programs, the ERF and the Clean Energy Finance Corporation (CEFC). The NEPP 2018 annual report acknowledged that this facilitation approach has not provided sufficient incentive to reach the full potential for cost effective-energy productivity in these sectors.
Research and development grants, demonstration and deployment for clean energy innovation are available from the Australian Renewable Energy Agency (ARENA) whose purpose is to accelerate the transition to renewable energy that’s affordable and reliable. Seed funding for emerging technology is provided by CEFC and ARENA. Renewable energy storage projects to help stabilise a renewables-powered grid (such as batteries and pumped hydro) were among the technologies supported by ARENA in 2017-18.
If an organisation, product, service, event, precinct or building can meet all the requirements of the National Carbon Offset Standard, they can be certified as carbon neutral. Some of the benefits of certification include energy and cost savings and an enhanced image of corporate social responsibility which could give them a competitive edge as a leader in the move towards a low carbon economy.
The Solar Communities program provides funding up to $12,000 for community organisations in selected regions to install rooftop solar panels, solar hot water and solar-connected battery systems for community-owned buildings. In consultation with the Department of Environment and Energy, the $5 million program is being delivered by AusIndustry Grants Hub
You can avail yourself of these various incentive programs (if you can find them on the websites of the relevant government departments). The choice is up to you, but you’ll have to be determined to find the one best suited to your household, business or community before the funding runs out. The Liberal Government has replaced the “stick” of carbon pricing with the “carrot” of incentives. The burden of climate policy implementation is left to the people.
Unbearable heat, vicious fires, relentless droughts and super-charged cyclones are already impacting our way of life and well-being. While Government deliberates on its climate policy framework, adaptation strategies must now go hand in hand with mitigation.
References
Nordhaus, W.D. (1977) Economic Growth and Climate: The Carbon Dioxide Problem, American Economic Review 67 (1), 341-346.
Tietenberg, T. & Lewis, L. (2018) Environmental and Natural Resource Economics, 11th ed. New York: Routledge
Ross Garnaut, The Conversation, Nov 5, 2019
https://theconversation.com/australia-could-fall-apart-under-climate-change-but-theres-a-way-to-avoid-it-126341
Ross Garnaut conducted the 2008 and 2011 climate reviews for the Rudd and Gillard governments. His book Superpower – Australia’s Low-Carbon Opportunity is now published by BlackInc with La Trobe University Press.
Resources:
Australian Government Department of the Environment and Energy, Funding
https://www.environment.gov.au/about-us/grants-funding
National Energy Productivity Plan
https://www.energy.gov.au/government-priorities/energy-productivity-and-energy-efficiency/national-energy-productivity-plan
Quarterly Carbon Market Report
http://www.cleanenergyregulator.gov.au/DocumentAssets/Documents/Quarterly%20Carbon%20Market%20Report%20%E2%80%93%20September%20Quarter%202019.pdf
Australian Renewable Energy Agency, Annual Report
https://arena.gov.au/assets/2018/10/annual-report-17-18.pdf
ABC NEWS, 2030
https://www.abc.net.au/news/2019-04-01/is-australia-on-track-to-meet-its-paris-emissions-targets/10920500 Video by Four Corners, “Are we doing enough” can be accessed from this site.
Queensland Government initiatives
https://www.qld.gov.au/environment/climate/climate-change/response/initiatives-actions
Counting Down 