Australian Carbon Pollution Reduction Scheme - analysis and briefing
I attended the Australian federal government's briefing on its "Carbon Pollution Reduction Scheme" in Brisbane yesterday.
The one-line summary .... inadequate goals (450ppm); targets that push the burden of meeting the goal onto the next government (5% by 2020) and measures unlikely to even achieve those targets.
The government chose to send someone to explain WHAT is in the CPRS, but no-one to explain WHY. He gave a clear explanation of how it works, and responded well to those questions, but was clearly not authorised to discuss why the scheme is so poor.
I've attempted to analyse the CPRS below, but please note that the actual white paper is several hundred pages long, so this is based on a fast read of the 77 page printed "summary".
Roman numbers refer to the "Foreward", other page numbers refer to the pages in the Executive Summary, and the policy numbers e.g. 2.3 come from the "Policy Decisions Summary" both of which - and the full chapters - are available here.
Firstly - the goal it sets is 450ppm, this doesn't come close to matching the science which as James Hansen has been saying shows we need to reduce the levels below the current 385ppm to around 350ppm to avoid runaway, and irreversible positive feedbacks like the melting of the arctic permafrost.
Then it sets targets (page iv) of 5% by 2020, rising to a MAXIMUM of 15% if there is international agreement, but then still expecting to hit 60% by 2050. Note that these are figures compared to 2000 rather than the internationally used dates of 1990 but there is little difference for Australia.
The table (pg 7) shows our targets of 5-15% compare to 20-30% for the EU; 26-32% for the UK and 25% by Obama.
You have to read these targets carefully - the government claims they are internationally comparable, but only if you consider them as "Per-capita" targets of 27% reduction, this is sleight of hand, other countries don't use per-capita targets, and The per-capita targets are based on a predicted population increase over the period, subject to another policy which the government keeps wanting to avoid discussing, i.e. if the policy of the government is to support a population increase (when most developed countries are close to flat) then it has an even greater responsibility to reduce emissions per-capita so that our overall share - as the worlds biggest per-capita polluter - reduces.
This is argued on the grounds of balancing economy and environment, but without the environment much of our economy is ruined - agriculture, tourism etc, and as Garnaut reported the cost of meeting higher targets early is negligible.
These targets are classic governmental short-termism, i.e. it sets a soft target for the short term, and a hard target for the next government - which will of course move the target to soften it up again, i.e. the targets set have very little chance of putting us onto a trajectory for even 450ppm, and also put Australia in a very weak position if international agreements mandate much tougher targets and Australia hasn't adjusted.
Note in particular that these targets are maximum's, if international targets get tougher Australia will not match them, it will purchase "eligible international units" which I believe means it will offset, i.e. pay someone who has reduced their emissions so that Australia can continue to pollute.
(Clause 10.11) "The Scheme cap will not be adjusted in the event that it is not aligned with international targets and, if necessary, the Government will make up any shortfall in internationally agreed targets by purchasing eligible international units"
So enough of inadequate targets - how will they be met.
The CPRS essentially is an auction of a reducing amount of permits. There are arguments as to whether this is the best method, compared to for example cap-and-trade, or a carbon tax, or Warwick McKibben's alternatives (which sounded good at the talk he gave, but I can't figure them out or find a good summary). The arguments seem pretty balanced as to what system is better, so I'm not going to get into that argument one way or other.
The big questions with auctions are:
* Who gets permits for free
* What caps are set to hold down the price and how are they implemented
* Who gets the resulting revenue.
* What gets included / excluded.
On the first question the CPRS looks reasonable, though it says it will move to 100% in the long term (9.1) I can't find the percentage of initial "free" permits in the document, I think 20% was mentioned at the meeting.
The price-caps are a problem - a maximum price of $40/tonne is set, rising 5% (real) per year (8.11 and 8.12). This level is too low to encourage significant investment in renewables, though energy efficiency, and possibly biofuels may be stimulated by it. The complimentary Renewable Energy Targets (separately announced recently at 20% by 2020) might provide the stimulus for that. Tonaka of the International Energy Agency recently said (at the Clean Energy Council conference) that a carbon price of around $180/tonne would be needed to achieve 450ppm. So essentially the primary driver for long-term investment in renewables has been capped at too low a figure.
If a price-cap of $45 is not enough to drive the investment in renewables and efficiency needed to get demand down below the emissions-cap then an unlimited supply of extra permits are available (8.10) that essentially means that there is no real emissions cap since a price of $45 equates to 4.5c/kwh which many would just pay as a tax rather than reduce emissions.
Now - what happens to the money raised ...
This scheme is a big giveaway, giving money to home-owners to cushion the blow, especially in a recession is a good idea, but this scheme gives a substantial portion (32%) of the money raised to the very industries that have caused the problem by inaction to this date - i.e. the coal-fired electricity industry (13.*), and "Emissons Intensive Trade Exposed" industries (e.g. Aluminium) (pp22-23 and 12.*). Giving an industry a handout of this size, just repays them for the lobbying they used to stop John Howard taking any action during his 12 years in office. If this money were spent on renewables, and energy efficiency it would help drive us to the targets, instead it prevents industries that need to contract from having an incentive to do so.
The worst examples of this are specific support ($250m) to coal mines with higher-than usual amounts of methane (pg31). These should be closing, or funding their own emissions abatement from their profits.
In addition - these industries can still grow (pg23), and claim more of the subsidy.
Next come all the exclusions:
Firstly Deforestation (6.27) is excluded, so all the carbon released by wood-chipping and burning tasmanian forests doesn't count.
Secondly transport, while petrol is included (6.4) the tax is being reduced (17.2 and pg4 and pg29) so that the net price-incentive to reduce fuel usage is removed.
Agriculture - one of the worst emitters - is excluded till 2015 (two governments away so likely to change).
So what about support to move Australia to a low-emissions economy, it just isn't there. There is the Climate Change Action fund, which gets 2.15bn over 5 years (5.6% of the permit revenue), but this is grants, and previous experience shows that the competitive process of getting these grants is likely to cost too much, and not provide the certainty that would allow the innovative industries Australia needs to develop.
In addition - on Wednesday the government announced the end of the Photovoltaic (solar electric) rebate, and its replacement by a RECS multiplier, that will more than triple the cost of a solar system to a customer, effectively putting a huge dampner on a rapidly growing sector of the renewables industry. Instead of sending billions to the coal industry, surely funding PV would have been a better indicator of a commitment to climate change!
In summary ....
* Goals that are too small to reverse climate change (450ppm instead of 350ppm)
* Targets that are too small to meet even those goals (5% by 2020, real cuts delayed)
* Measures that won't meet the targets - $45 price cap, and give the revenue to preserve polluter's profits rather than build green jobs.
Posted by mitra at December 19, 2008 10:34 AM
Trackback Pings
TrackBack URL for this entry:
http://www.mitra.biz/mt/mt-tb.fcgi/1082