Australia’s greenhouse gas emissions strategy is a policy failure

As someone who has long accepted the link between human activity and global warming, I argue that Australia should reduce greenhouse gas emissions at a much faster rate.  

While Australia’s National Greenhouse Gas Inventory reported in 2019 that per capita greenhouse gas emissions had fallen 40% since 1990, given Australia is one of the few nations allowed to include  land use and forestry emissions, OECD data shows that Australia’s level of greenhouse gas emissions actually increased by 31.9% between 1990 and 2017 when excluding land use and forestry. 

Although Australia is committed to lowering emissions by 26 to 28 per cent from 2005 levels by 2030 with its land use and forestry concession, it remains one of the most carbon-intensive OECD countries with coal, oil and gas providing 93% of Australia’s overall energy mix compared to an OECD average of 80%, while renewables provided 16% of electricity generation compared to the OECD average of 25%.

But, with the recent bushfires, estimated to have emitted an additional 400 million tons of carbon dioxide, why would Australia want to merely preserve the status quo with regard to Australia’s current economic-environmental policy mix?

In response to the bushfires, Prime Minister Morrison states that climate changes was “as important now” as it was earlier this year, that the nation was on track to meet its emissions reduction commitments, that Australia is “carrying its weight”, and that he will not make “reckless” cuts to the nation's coal industry.

I, for one, prefer the logic put forward by the economist Warwick McKibbin who advocates a risk management strategy given the government’s business-as-usual scenario runs the risk of a major adjustment in the future if the global economy dramatically changes in response to major climate events which may include a dramatic drop in the value of coal-fired power stations and other fossil fuel intensive assets.

Of course, Australia should continue to profit from energy exports while it makes its own domestic transition with a 2019 estimate that Australia now provides 7% and 20% of all global and OECD energy exports (coal, oil and gas).

To put it mildly, Australia can hardly end its reliance upon energy exports immediately, especially at a time when the importance of manufacturing has declined from just under 30% of GDP in the early 1960s to 5%, along with a growing gap in earnings and profitability between Australia’s mining and non-mining industries in more recent years.

As the World Coal Association notes, despite also calling for low emission technology to help limit global warming, fossil fuels (including coal) will still make up 75% of the global energy mix in 2040  with China alone raising its coal-fired power capacity by around 4.5% in the 18 months to June 2019 despite reducing its use of coal as a proportion of total energy use from 68% in 2012 to 59% in 2018.

Australian coal exports have the added benefit of being cleaner than from many other countries which means less is needed to generate the same amount of energy, while Australia’s National Greenhouse Gas Inventory notes that Australia’s liquefied natural gas exports (worth around $50 billion in 2018-19) also save global emissions equal to around 27% of Australia’s annual domestic greenhouse gas emissions

But, government policy can make a difference on behalf of Australian liberal democracy.

Despite my previous concern that a carbon tax ran the risk of Australia losing energy-intensive industry offshore to nations with less stringent environmental standards, the IMF (and many others) continue to strongly advocate a carbon tax as being necessary to reduce carbon emissions quickly while still promoting economic growth.