Why direct action on climate change fails

The reasons why Opposition proposals to reduce greenhouse gas emissions through Direct Action (DA) are flawed and open to abuse have been eloquently and cogently put by Malcolm Turnbull. This paper does not seek to repeat those considerations but rather look at the effectiveness of Liberal Party proposals for DA as a means of reducing greenhouse (CO2-e) gas emissions.

The DA proposal calls for “business as usual” with taxpayer funded financial rewards offered as incentives for business to voluntarily reduce CO2-e emissions. By contrast, government proposes to place a cap or limit on the level of emissions which may be made each year by the leading one thousand CO2-e emitters and imposes penalties on those who do not comply.

In each case, the outcome aimed for is that by 2020 Australia’s emissions have been reduced by 5 per cent below 2000 levels. This calls for annual reduction of 0.5 per cent of the 535 million tonnes emitted in 2000 (27 million tonnes), plus 0.5 per cent of increase in emissions (15 million tonnes) which occurred during the decade 2000-2010 (about 0.075 million tonnes) plus 100 per cent of subsequent annual emissions (estimated as 3 per cent growth or an average 18.91 million tones) occurring in 2011-12 and each year thereafter.

In summary, to achieve a 5 per cent reduction on 2000 emissions by 2020, Australia needs to reduce its emissions by an average of about 61m tonnes per annum from 2011-12 to 2019-20, a total of 550m tonnes over the period. Failure to achieve the annual target simply increases the target which must be met in future years, if the decade total is to be met. Further, it is far from clear that the DA proposal addresses the conservative 3 per cent annual growth in demand for energy.

It is unlikely in the extreme that annual targets of this magnitude could or would be met by the DA scheme at the carbon price being offered by it. That price is simply too low. To achieve a 5 per cent reduction target, industries responsible for emissions would have to be offered much higher inducement than a carbon price of $10-$15/tonne to develop and adopt alternative technology or reduce their use of fossil fuels. Even if a more realistic $25/tonne were offered in 2011-12, under the DA proposal, response of industry would be entirely voluntary since it involves no compulsion or penalties, with one exception.

The scheme provides that “Businesses that emit above their ‘business as usual’ levels will incur a financial penalty”. Neither the magnitude nor nature of the penalty to be imposed is specified in the policy statement. One is left to wonder how such a penalty might inhibit, even retard expansion of the economy or of individual businesses?

Funding of a higher inducement would be an additional impost on the taxpayer with absolutely no guarantee that it would achieve the desired result. Further, the DA proposal is based on the assumption that the price of carbon remains unchanged over the decade, whereas the Department of Climate Change predicts that it will rise to $50/tonne by 2020.

The consensus among climate scientists is that if a rise in global warming is to be kept to less than 2C by 2100, it will be necessary to reduce global CO2-e emissions by 25-40 per cent below 2000 levels and do so by 2020. If Australia, together with other major emitters, is to make a meaningful contribution to reducing the rate of global warming, it will have to achieve a reduction of at least 25 per cent below its 2000 emissions, five times the present annual target of 61m tonnes.

As global warming increases, countries not achieving internationally agreed targets may be subjected to penalties such as a carbon levy on exports, imposed by the UN or by those countries which do meet reduction targets. That would make their exports less competitive, lead to reduced production and use of less energy emitting greenhouse gases by the offending country. To avoid punitive action of this kind, Australia must adopt and implement a reliable, efficient and cost effective mechanism for reducing its emissions.

Government proposals for an ETS are well equipped to deal with an emissions reduction target five times higher than that currently aimed for. To meet a higher target, it needs to increase the annual cap on emissions, let the market place a price on carbon and provide households compensation for resulting higher energy costs. The DA proposal has no mechanism for achieving a higher level of emissions reduction and since it can not achieve a 5 per cent reduction by 2020, it will not achieve substantially higher targets.

Implementation of an ETS necessitates placing a price on carbon which penalises those responsible for CO2-e emissions. Importantly, it also stimulates development and use of technology required for efficient and cost effective production of energy involving progressively lower emissions. It encourages CO2-e emitters to adopt that technology.

The DA proposal does not involve the pricing of carbon by the market but arbitrary lower pricing by government. It therefore provides no such stimulus for technology or its use for production of low or no emission energy.

The public sector is a very large consumer of energy, so it has an important influence on Australia’s level of CO2-e emissions. Consider the level of emissions made by the defence force operating ships, aircraft, armoured and transport vehicles, powering kitchens, offices, dining, storage and other facilities. Consider the energy used by public owned businesses for public transport, postal services, port facilities, health facilities and other federal, state and local government activities.

The DA proposal makes no mention of the public sector and places no obligation on it to reduce its present level of consumption or even to curb increased consumption arising from growth. By contrast, operation of an ETS would apply to both the private and public sector without distinction.

A significant feature of the DA proposal is to sequester 85m tonnes of carbon dioxide in the soil over the next decade in the form of char, thereby abating emissions and increasing soil fertility. A well intentioned proposal, but is it practical to bury carbon at a rate of almost 10m tonnes per annum? The Department of Climate Change has called into question ability to productively sequester more than 40m tonnes by 2020.

In summary, DA on a purely voluntary basis is not a policy likely to achieve a 5 per cent reduction below 2000 emissions by 2020. It is certainly not possible for it to achieve the 25 per cent reduction required to curb global warming to less than 2C by 2100. DA is a business as usual policy which is:

• financially and administratively a very inefficient means of reducing emissions;
• open to administrative abuse since level of CO2-e reduction claimed by businesses and level of payment made are determined individually by those who may offer or accept inducements;
• unable to achieve 5 per cent reduction because it imposes no targets, no penalties, and no compulsion on emitters to make reductions;
• not able to make a reduction in excess of 5 per cent, except at much higher cost to taxpayers with no expectation of successful outcomes;
• based on an unrealistic, government determined, low price for carbon rather than a price determined by the market;
• excludes any requirement that government operations, agencies and publicly owned businesses reduce their energy consumption; and
• does not stimulate development of technology and clean energy - e.g. conversion away from coal to gas, then conversion to clean energy.

Opting for a policy with these characteristics is not surprising given that the proponents are at the very least sceptical of anthropomorphic global warming (AGW). They are seemingly influenced by Ian Plimer, Lord Monckton and other leading deniers of AGW who’s views have never been subjected to peer review, are unsupported by established science or by empirical data.

If global warming was a faster process, its effects on climate would be far more evident and alarming. At present it is a slow process, one where we talk of annual changes in temperature measuring 0.06 of a degree centigrade. Tiny! Nobody notices such a small increase and very few understand why scientists get alarmed at these “huge” increases - even when they point out that they equate to global temperatures rising over 5 degrees by 2100.

So what? The world isn’t going to end, just because it gets a bit warmer is it? Well, yes, it can mean that, certainly the world as we know it today. Why? Because it would result in catastrophic loss of life due to sea level rise, loss of fresh water sources, inability to produce sufficient food, the spread of diseases and a whole host of other disasters - outcomes which are avoidable - but not under DA proposals.

The DA scheme does provide encouragement to take action on a voluntary basis and should not be dismissed out of hand since it contains some valuable proposals. For example, construction of a direct current grid for all long distance energy transmission, significantly reducing waste, is long overdue. Likewise continued support for households seeking to reduce energy consumption by fitting insulation, solar hot water panels or photovoltaic cells is welcome.

However, these are peripheral to the central issue which is, first and foremost, to bring about reduction of CO2-e emissions which limits global warming to less than 2C by 2100, in a cost-efficient and effective way. On this the voluntary DA approach fails.

In December, 2009 Mr Turnbull wrote an article for The Times in Britain, calling Mr Abbott a ''colourfully self-confessed climate sceptic''. He warned that any policy announced by the Coalition would be ''a con, an environmental figleaf to cover a determination to do nothing''. Alas, Mr Turnbull has been proven right.