Guy Pearce has written a brilliant commentary on the current political confusion (deliberate or not) over Australia’s greenhouse policy direction.  If you haven’t read his insightful book on the Howard era, coal and climate change (‘High and Dry‘) then it is worth picking up a copy.

Dr Guy Pearse, February 14, 2010, The Age

IF YOU want urgent action on climate change and want to transform Australia into a low carbon economy, you won’t be able to resist our Carbon Pollution Reduction Scheme, screams Labor. Available for a limited time only, it’s the only greenhouse policy burger that caps carbon pollution in Australia, makes big polluters pay for their emissions, and leaves almost no one worse off.
Don’t touch the Coalition’s alternative, the Rudd government warns: it’s a great big con that increases rather than caps Australia’s emissions, can’t achieve ambitious targets, and lets polluters off scot-free. It can’t be funded, it doesn’t think beyond 2020, and you can’t trust a party that has backflipped on emissions trading and replaced a leader who is passionate about action on climate change with one who believes the scientific case for action is ”absolute crap”.

Try our Emissions Reduction Fund, counters the Coalition. It’s a greenhouse policy that tastes a whole lot better and costs a whole lot less. Drizzled with ”direct action” incentives, it achieves the same emissions savings as the government’s scheme but at a fraction of the price. And there’s no need to interfere with ”business-as-usual” from those emission-intensive industries that ”keep the lights on”.

Beware Kevin Rudd’s Carbon Pollution Reduction Scheme, the Coalition warns. It is no more than a vainglorious attempt to save the world from climate change by imposing a Great Big New Tax that will cost $120 billion, increase the cost of everything, cripple the economy, export emissions and jobs, and punish Australian families.

Sounds like a stark choice. But look more closely at the ingredients, brush aside the political garnish and rhetorical flavouring and the great surprise is just how similar and unhelpful the burgers really are.

The first thing you notice is that both parties’ policies hide rather than cap Australia’s carbon pollution – it’s the meat in both sandwiches. Emissions reduction targets for Australia don’t necessarily mean less carbon pollution in Australia. By 2020, our emissions are projected to rise from around 600 million tonnes a year today to 664 million tonnes. Both parties have committed to an unconditional 5 per cent cut relative to 2000 levels, which means getting ”net emissions” down by 138 million tonnes to 526 million.

Roughly speaking, ”net emissions” equals greenhouse pollution here in Australia, plus the extra CO2 we put into the atmosphere when we cut down vegetation or degrade soils, minus any offsets we can generate here or overseas by, for example, planting trees or protecting forests that might have been logged. The potential to generate vast quantities of these carbon credits means we can increase industrial greenhouse pollution while reducing our ”net emissions” and still hit our targets. In fact, it is much cheaper to hide our growing emissions behind carbon offsets than it is to cut them.

The Coalition plan is to hide 85 million tonnes of CO2 annually by 2020 by burying it in Australia’s rural soils, and another 15 million tonnes by expanding timber plantations and by displacing some fossil-fuel-based energy with energy from wood waste. This is roughly equivalent to the emissions of half of Australia’s existing coal-fired power stations.

Absurd as it seems that farmers might offset this much pollution without planting a single tree, Ross Garnaut told the Rudd government in his 2008 report on climate change that Australia’s depleted soils might store more than 300 million tonnes of CO2 annually for 20 to 50 years.

Some soil scientists say Australia’s entire annual emissions until 2050 can be offset by planting perennial pastures (which store more carbon), reducing tillage and fertiliser use, and better fire management. If that is only half true, it means that soil carbon might hide enough emissions to enable the Coalition to meet a much more ambitious emissions reduction target than 5 per cent for many years beyond 2020, even as the actual greenhouse pollution emitted in Australia marches upward.

While the Coalition is looking to Australia’s backyard to hide emissions growth to meet emission targets, Labor is looking mainly offshore. Contrary to the Rudd government’s claims that its reduction scheme caps carbon pollution in Australia, it will allow an unlimited quantity of carbon credits to be imported, meaning our targets might be met not by a cut in domestic pollution but by, say, paying to protect rainforests in Brazil.

The government could outsource all 138 million tonnes of emissions reduction needed to meet a 5 per cent target, even as actual emissions in Australia increase. To return to the junk food analogy, it’s a bit like paying the person behind you in the queue to settle for that garden salad so you can upsize your own meal. Between the two of you, the calorie intake might be 5 per cent lower, but you’re not really doing yourself any favours.

The government denies that it wants to outsource all of its emissions cuts, saying that modelling of its scheme by Treasury shows that most emissions reductions would happen in Australia. In fact, Treasury’s modelling has simply assumed this will happen.

Like the junk food contest, there’s plenty of me-tooism when it comes to hiding greenhouse pollution. Labor is quietly eyeing the soil as a cheap hiding place for industrial emissions, too. The government’s clear intention is to count soil carbon farming towards its targets by 2020.

Similarly, there is every reason to expect the Coalition to buy offshore credits to allow increased industrial pollution at home. Tony Abbott says now that all abatement required to meet the 5 per cent will occur in Australia. Mindful that Kevin Rudd is relying on 100 per cent outsourcing to meet his emissions target, Abbott knows that his down-home brand of environmental nationalism has extra electoral appeal.

But the Coalition originally championed the idea of using offshore forest protection deals as a cheap way out and these deals are likely to be available whether or not there is an emissions trading scheme or a successor agreement to the Kyoto Protocol. In the absence of a new global agreement, we’ll still see a plethora of poorly regulated bilateral carbon storage deals between countries like Australia and Indonesia. The Coalition is unlikely to ignore these opportunities.

THE second main similarity between the climate polices being dished up by the major parties is that they both pay the polluter as their emissions keep rising. Having offset 100 million tonnes of greenhouse pollution in soils and forests, the Coalition plans to use a mix of direct action incentives and penalties to deliver the remaining 38 million tonnes needed to meet a 5 per cent target. In practice, it will be all carrot and no stick, partly because the penalties will be drawn up with the ”help” of the biggest polluting industries, but mainly because they are linked to emissions intensity, not overall emissions.

In other words, businesses won’t be penalised for increasing their overall emissions. They will only face penalties if they increase their emissions per unit of output faster than expected.

Since energy efficiency is improving all the time, almost no business is increasing emissions intensity, hence the stick won’t come into play – except, says the Coalition, in ”exceptional circumstances”. However, there will be lots of carrots for companies that can show that, with the help of a taxpayer subsidy, their emissions will grow more slowly than would have been the case.

Try thinking of the big polluters as morbidly obese junk food addicts. The Coalition’s policy is like the climate equivalent of a health policy that combats chronic weight-related disease by paying such people to gain weight more slowly.

Labor’s scheme is equally ineffective but the approach is different. It is the climate equivalent of imposing a fat tax at burger joints, but letting the fattest customers eat free more than 80 per cent of the time. Other customers pay the fat tax in full at the counter, but most receive a full rebate later on – hardly a system likely to drive behavioural change.

When the government says it makes the biggest polluters pay, it means the worst polluters pay for 5 per cent of their pollution and get 95 per cent of their emissions permits free. Other big polluters will get 65 per cent of their permits for free.

The rate of assistance might fall by 1.3 per cent each year, but as Assistant Climate Change Minister Greg Combet stressed in a speech to the Minerals Council last year, ”there is no upper limit on the share of free permits being provided to emission-intensive trade-exposed industries”.

In contrast to the cap proposed in the US, he said, the share of free permits given to the worst polluters here would rise over time as those sectors grew (as would their emissions), no matter what target Australia eventually accepts.

The next big similarity between the Coalition and Labor greenhouse policy burgers is that they are covered in garnishes – highly visible greenhouse programs that have a relatively tiny impact on greenhouse pollution.

To name just a few of these, the Rudd government complements its scheme with a $6.2 billion green car plan, a 20 per cent renewable energy target, solar hot water on 400,000 homes and insulation in 2.7 million homes.

Even if the scheme allows all that outsourcing, you might think these programs would ensure that a very large quantity of greenhouse pollution is cut here in Australia. Yet, the total impact of all the programs that explicitly require emission cuts in Australia is negligible.

According to the government’s own estimates, the programs will cut projected emissions in 2020 to about 660 million tonnes from around 680 million tonnes. Just on its own, the recently announced deal to export another 40 million tonnes of coal from Queensland annually will generate five times as much CO2 as all the emissions the Rudd government is guaranteeing to cut in Australia.

The garnish on the Coalition’s greenhouse policy burger is much the same. Twenty million trees will be planted, and there are lots of small grants – a study here, a pilot project there; just enough activity to declare emissions intensive regions as ”clean energy hubs”, green-minded schools as ”solar schools”, and towns close to large untapped renewable resources as ”geothermal towns” and ”tidal towns”.

The renewable energy target doesn’t increase beyond the 20 per cent targeted by Labor, but a slice of it is set aside for larger renewable projects and specific technologies, like solar, geothermal and tidal power. Still, it sounds impressive – the Coalition says that an additional 1 million solar roofs will save 2.4 to 3 million tonnes of CO2 a year by 2020 and planting 20 million trees could reportedly save another 1.2 million tonnes a year. Yet it’s less impressive when you realise that the addition of one new steel mill would completely erase the emissions saved; that they are the emissions equivalent of suspending Australia’s coal exports for two days.

Bipartisan backing for coal is the final thing that makes the two greenhouse policy burgers so similar. There’s no concern whatsoever that coal exports are on track to double within a decade, adding another 700 million tonnes of CO2 to the atmosphere each year. The emissions count where the coal is burnt, so coal exports are not part of Australia’s ”net emissions” and are thus quarantined from our emissions targets. So long as we can find enough places to hide our emissions, and enough garnish to keep up appearances, there seems no end to the amount of coal we can squeeze into Australia’s greenhouse policy burger.

Try as they might to pitch their greenhouse policies as radically different, both parties are determined to accommodate the interests of the worst polluting industries so that smokestack and exhaust pipe emissions can keep growing in Australia.

Instead of cutting this pollution, the policy contest is reduced to choosing the best hiding place: Labor relies mainly on foreign forests, the Coalition on Australia’s backyard. Of course, there’s nothing wrong with drawing down carbon from the atmosphere any way we can, but the science says we can only get the climate back to safe territory by cutting industrial emissions too. If the developed world’s biggest-per-capita polluter does the former rather than the latter, as both major parties propose, Australia is simply helping to lock in the worst impacts of climate change.

Guy Pearse is a research fellow at the Global Change Institute, University of Queensland, and the author of High & Dry andQuarry Vision (Quarterly Essay 33).