Australia’s ‘nothing to see here’ approach to climate policy

by Kate Griffiths

Published by Pursuit, Thursday 21 December

You could be forgiven for mistaking this week’s Federal Government review of climate-change policies for a Christmas special edition of Utopia.

The carefully workshopped product talks the talk and covers lots of ground, but it gives nothing away. It doesn’t critically evaluate Australia’s existing climate-change policies. It makes no recommendations. It is almost entirely descriptive.

But I guess the title Nothing to see here: Stuff that’s going on at the national level on climate change just wasn’t punchy enough.

The 50-page review by the Department of the Environment and Energy is the culmination of two years’ work on designing the policy framework for the Government’s emissions reduction targets.

The Government has chosen a sector-by-sector approach to reducing emissions, rather than an economy-wide scheme. This should surprise no one.

While an economy-wide scheme would be expected to be cheaper – because it encourages the cheapest emissions reductions first, wherever they might be – schemes like this have proven to be political suicide over the past decade. The sector-by-sector approach may be Plan D but it can still work.

Unfortunately, the review provides little reassurance that it will.

The document reaffirms Australia’s commitment to the Paris Agreement, including the five-yearly review cycle to make progressively more ambitious commitments. It also reaffirms the Government’s 2030 target to reduce emissions by 26-to-28 per cent below 2005 levels.

But there are no further promises.

The key messages can be boiled down to: we’re doing our bit and we’re on track. The evidence? Australia is a small contributor to global emissions and we’ve met targets in the past.

What’s lacking in this review is the hard stuff. For example, what does ‘doing our bit’ mean beyond 2030? And how are existing policies expected to contribute to meeting future targets?

The review rightly recognises that a suite of policies is needed, and acknowledges many existing sector-specific policies are in play. The main focus is on electricity, which is appropriate given that is the largest emitting sector, contributing 34 per cent of Australia’s emissions.

Expect to see further action in 2018 on the Government’s proposed National Energy Guarantee (NEG) – a scheme that aims to combine emissions reductions with reliability improvements. What a relief it would be to finally see an integrated climate and energy policy after so many failed attempts.

But the NEG still has a long way to go; the detail is still to be fleshed out and agreed upon.

Even if the NEG is successfully implemented, what about the other 66 per cent of emissions? Modelling of the NEG assumes that the electricity sector delivers only its share of emissions reductions – so other sectors will need to pull their weight.

The Government’s Safeguard Mechanism, which restricts the emissions of Australia’s largest businesses to historical levels, has the potential to achieve this if emissions allowances are significantly tightened. Australia’s largest businesses together account for about half of all emissions.

The Grattan Institute proposed a way to strengthen the Safeguard Mechanism in a 2016 report Climate Phoenix. The Government’s review opens up the possibility of resetting allowances, but shies away from promising to tighten them.

While there may be good reasons to increase allowances for some individual businesses, the only way this mechanism will achieve anything is if it reduces allowances overall.

It therefore remains unclear whether existing policies will be sufficient to deliver the necessary emissions reductions across the rest of the economy.

The review hints at the potential for progress beyond the electricity sector. In transport, a light vehicle fuel efficiency standard is being considered. In the built environment sector, energy performance standards for commercial buildings may be on the table.

There could also be extra funding for the Government’s flagship Emissions Reduction Fund, that provides financial incentives for individuals and organisations to reduce their emissions – although again, the review makes no promises.

These possible initiatives represent low-hanging fruit: the least-controversial options for reducing Australia’s emissions. And yet they won’t be easy to get across the line in the current political climate and in what could be a federal election year.

There is a ray of hope in the Government’s commitment to developing a long-term emissions reduction strategy for 2050 by 2020. The review confirms that work will begin on this in 2018.

The review’s ‘nothing to see here’ approach is not surprising, given how polarising the politics of climate-change policy has become. Indeed, the review’s careful navigation through this policy minefield is no doubt worthy of admiration from Yes Minister’s Sir Humphrey Appleby. But an avoidance strategy is not a long-term solution.

The review has kicked several big climate policy issues into 2018, and while these uncertainties remain, the questions will no doubt keep coming. The Government should get on the front foot in explaining the long-term ambition and the Government’s role in the transition.

The sufficiency or otherwise of existing policies will sooner or later be revealed in the emissions data. And the most recent data shows emissions are on the rise again.

Like a glossy booklet from Utopia, this review is unlikely to persuade anyone that the problem is under control.