Don’t sacrifice workers on altar of climate change

According to a recent Climate Institute survey, 54 per cent of rural Australians believe the government should do more to reduce climate change. Let’s accept the earth is warming. The institute and its survey respondents are still grappling with an illusion - in reality the Australian Government is impotent to “reduce” climate change. Even if climate trends are influenced by human activity, Australia’s carbon emissions amount to less than one per cent of the world’s total. What Australia does has little impact one way or the other.

Environmentalists like to dramatise Australia’s role in climate change by damning our relatively high carbon emissions per capita. This means little on a global scale given our small population. Many share the spurious assumption that climatic patterns on the Australian continent are driven by local emissions. If man-made carbon build-up is affecting our climate, it is due to emissions in more populous parts of the world, particularly Europe, the United States, Japan, emerging giants like China and India, and larger developing nations like Brazil and Indonesia. It is mostly sourced in the northern hemisphere.

The notion that Australia must act now to save the planet is delusional. As we are often told, climate is an interconnected, global system.

Some estimate that if we were to shut down our coal-fired power stations these emissions would be replaced by China in under 12 months. Confronted with such realities, environmentalists insist action is necessary to join and encourage a global effort to combat the problem. In other words, Australia’s contribution is essentially symbolic and suasive. Hence they support the Kyoto Protocol.

Would things be different if Australia had signed Kyoto?

The US senate declined to ratify it, major developing nations like China and India are exempt from binding targets, and most EU members have fallen short of theirs. The EU-15 won’t even get close to achieving their target of reducing emissions by 8 per cent below 1990 levels by 2012. Some argue forcefully that Kyoto is falling apart.

It is increasingly possible to be both a greenhouse-believer and a Kyoto-sceptic. In any event, Australia’s signature would have had no impact whatsoever. This is as true on a symbolic, suasive level as it is on the level of real climatic outcomes.

Following a recent spate of unseasonably hot days and bush fires, in the context of prolonged drought, Greens leader Bob Brown smugly asserted that had we listened to him, none of it would be happening. This is nonsense. But these events have induced a heightened degree of public concern, mostly of the “don’t just sit there, do something” variety.

Doing his best impersonation of a weathervane, John Howard has started squandering taxpayers’ dollars on inquiries and flashy projects.

The temptation to clutch at straws seems irresistible. Opinion polls are now showing majority support for Kyoto as a quick fix. If only it were that simple. Climate change is not a single issue but a series of complex questions: is the earth warming; how much; what is the cause; what are the consequences; can anything be done; what should be done?

Environmentalists leap blindly from the first to the last of these, without much thought for the others. Yet legitimate differences of opinion swirl around this cluster of questions.

The risk is that Green propaganda, spouted routinely by like-minded journalists, will channel public concerns towards a dangerous overreaction. Recent media coverage of the Stern Review was appalling. The ink was barely dry on Stern’s highly technical 700-page report when most commentators rushed to declare it changed everything. No need for reflection and analysis. This is of a piece with their reverential treatment of Al Gore’s film An Inconvenient Truth, hailed everywhere as something akin to a fifth gospel. Whatever you call this, it isn’t journalism.

While progressive commentators hate to concede that Australia emits less than one per cent of the world’s carbon, they love Stern’s estimate that it will cost one per cent of global GDP to avert disaster. This sounds trivial. When apportioned to individual domestic economies, however, the costs of Kyoto are substantial. Several studies assess slower growth or contraction should we adopt Kyotoesque caps, taxes and emission (or permit) trading schemes. Last July, the Australian Bureau of Agricultural and Resource Economics (ABARE) estimated that should we reduce emissions by 50 per cent below 1990 levels by 2050 - a Kyoto target - our GDP in 2050 would be 10.7 per cent lower than otherwise.

Gore’s film is devious on this score. Its all too brief treatment of the economic issues surrounding climate change dodged the 800-pound gorilla - Kyoto means economic dislocation. The Sydney Morning Herald’s economics editor, Ross Gittins, is one greenhouse believer who does not fudge the economic downside:

… depending on how you go about it, achieving a big reduction in emissions could involve significantly higher costs to consumers and losses of economic growth and jobs. The economic risks are heightened for Australia because we're such a big exporter of fossil fuels, particularly natural gas and coal, as well as that “congealed energy” known as aluminium. Were we to get tough with our energy-dependent export industries before other countries, we could simply drive them offshore.

The price for stunted growth is always paid by the same people - blue collar or unskilled and semi-skilled workers, their families and their communities. They are the expendable fodder of progressive zeal. Blue-collar workers stand to suffer across the whole economy, but damage would be concentrated in sectors like mining and power generation.

The coal industry employs 25,000 directly and many more indirectly. It contributes around $12.5 billion to our GDP per annum. Suburbs and regions living off these industries - the Hunter region of NSW for example - would face a grim future. Environmentalists get off on punishing corporations, but it is workers who cop it in the neck. Of course, Stern asserts that short-term pain is necessary to avoid long term cataclysm. But that assumes his forecasts are accurate, and that his remedies are workable and necessary. Kyoto’s record doesn’t inspire much optimism.

How magnanimous of our green-tinged elites to risk thousands of workers for a symbolic gesture.

Despite the media frenzy, there is a better way. In the real world, each country will fashion a policy framework adapted to its own needs and conditions. The common objective should be transition to a lower emitting energy sector with a minimum of socio-economic dislocation. In Australia’s case, Kyotoesque measures are tantamount to using a jackhammer to crack a walnut.

Actually, Stern’s views are more nuanced than the media coverage suggests. Speaking on ABC Radio National’s breakfast program on November 3, Stern said: “You can say that all coal-fired power stations in Australia after some date should be carbon capture and storage. You can do it by taxing, you can do it by carbon trading, you can do it by regulations and standards. But people have got to have an incentive to use these new methods or many of them would not do so.”

Regulations and standards? This raises the interesting question of why environmentalists, of all people, insist on a so-called market solution. If the virtue of markets lies in their efficient allocation of resources, emissions trading regimes achieve the opposite. Through government intervention, they distort otherwise efficient markets for non-economic ends. Stern claims global warming represents "market failure”.

So why must we address the issue with the oppressive apparatus of a phoney market? Can it be that anti-industry environmentalists are more interested in forcing a transformation of social values than cutting carbon emissions?

In one of the most sensible contributions to this debate, Robert Samuelson was spot on: “The trouble with the global warming debate is that it has become a moral crusade when it’s really an engineering problem.”

The real, as opposed to the symbolic, key to reducing carbon emissions lies in the successful approach to other forms of airborne pollution over recent decades: the development, application and diffusion of new technologies.

Gregg Easterbrook of the Brookings Institution has written extensively on climate change issues. He is a greenhouse believer who thinks the case is closed on man-made global warming. Yet he is no fan of Kyoto. “This is the Big Thought that’s missing from the global warming debate”, writes Easterbrook. “There may be an optimistic path that involves affordable reforms that do not stifle prosperity. Greenhouse gases are an air pollution problem, and all previous air pollution problems have been addressed much faster than expected, at much lower cost than projected.” In short, “the Kyoto Protocol might not have been right for the United States, but a mandatory program of greenhouse reduction is”.

As Stern concedes, governments can simply mandate the use of carbon capture and storage (CCS) and other technologies as they come on stream. The incessant cry that we can’t wait that long is meaningless when Australia’s contribution to global emissions is minuscule. True, some argue the real measure of this contribution should include emissions by foreign economies burning Australian coal. Given half the chance, they would shut down our coal industry. This all flows from the false assumption, however, that if we stopped exporting coal, those foreign markets would evaporate. In fact they will be supplied by other, less scrupulous, suppliers.

On the one hand environmentalists exaggerate Australia’s importance as an emitter, while on the other they seek to destroy what little importance we have as a solution. Any real influence Australia can exert comes from our position as the world’s largest coal supplier, accounting for 29 per cent of global exports. This is our platform for attaching conditions to the purchase of Australian coal and for promoting the dissemination of CCS and other technologies as they emerge. As Labor’s resources spokesman Martin Ferguson says, this means “more than a thousand climate change conferences”.

What is needed is a national plan, and perhaps a national body, to co-ordinate the right mixture of tax breaks, concessions and subsidies with a phased timetable for the mandatory adoption of technological improvements. Whether our prime minister, addicted as he is to short-term opportunism, can carry this off is open to question.

For its part, Labor should think again about Kyoto. Otherwise this faltering agenda will loom as large a threat to working families as the dreaded WorkChoices.