20 February 2014 — Research by carbon advisory firm RepuTex has found that Direct Action could be more effective at reducing domestic carbon emissions than the carbon tax. The key, however, is designing it appropriately.

According to RepuTex, the government’s Emission Reduction Fund is likely to result in domestic abatement of 123 million tonnes of CO2-e by 2020. This could increase to 243Mt if the ERF were to be supported by “absolute” emissions baselines, and if it were made obligatory for companies to offset emissions above historic levels, as was originally put forward in the government’s Green Paper.

The figure of 243Mt compares with estimated domestic emissions abatement of only 156Mt under the carbon price.

However, Direct Action is still expected to fall short of reaching Australia’s five per cent emissions reduction target by 188Mt. The carbon pricing mechanism, however, would meet the shortfall through the purchasing of international carbon credits.

RepuTex executive director Hugh Grossman said the creation of a secondary market where companies could trade offsets could make Direct Action much more effective.

“As a base case, we anticipate that the government’s ERF will cause domestic abatement of 123 million tonnes through to 2020, which is similar to the domestic abatement achieved under the carbon pricing mechanism, yet still well short of the 431 Mt required to achieve Australia’s 5 per cent emissions reduction target,” Mr Grossman said.

“Should the government introduce a secondary market for companies to trade offsets to maintain their emissions at required levels, Direct Action could achieve significant domestic emissions reductions, far more than the CPM.”

Shadow minister for Climate Change Mark Butler said the report exposed the difficulty Direct Action would have in achieving its goals.

He said there was complexity in setting baselines “fairly and properly” and that a secondary market had not been “canvassed in any meaningful way”.

“With only four months to go before they intend to roll this con job out, let’s hope the Government can formulate a policy which actually ensures we act to address climate change,” Mr Butler said.