On Direct Action, misplaced cuts and two-up

24 April 2014 — Looking at the mish-mash of blame, blindness and dust of the bovine variety that is passing for Federal climate, energy, environmental and innovation policies, we could probably be forgiven for thinking the brains trust of the Coalition are engaged in some kind of bizarre game of two-up. A stacked game, where the coal industry and other polluters are the ones who claim the pot.

This week those of us who returned to our desks and got back to the susty fight were confronted with a high level of contradictions. We had the announcement of massive cuts to the CSIRO’s budget while at the same time the Senate Economics Committee advertises they are taking submissions for an Inquiry into Australia’s Innovation System.

We also discovered that in the Renewable Energy Target Review, headed by anthropogenic climate change denier Dick Warbuton, the modelling will assume investors in fossil fuel generation won’t need to assume any risk due to climate policies for decades – neither a carbon price nor a requirement to invest in emissions reduction technology.

“This is an absolute stitch-up,” chief executive of the Australian Solar Council John Grimes told Guardian Australia. “They are predetermining the outcome of this modelling by the assumptions they are making… it is an unprecedented scam in policy.

“It is clear that the RET review report will protect the vested interests in the current electricity market.”

On a lighter note, we had the Duke and Duchess of Cambridge on tour, and funnily enough they went to nice places like Taronga Zoo and Uluru, and did the walkabout at the Blue Mountains speaking with bushfire victims. Did anyone mention to them that we suspect climate change had a hand in the ferocity and timing of the blazes? We doubt it.

The Royals themselves probably should have gone to the Great Barrier Reef, as they may not be able to show the little tacker that when he’s big enough for scuba diving. It simply might not be that great anymore.

Direct Action white paper released on ANZAC Day eve

Taking a page out of the PR guide to minimising scrutiny, the Direct Action White Paper was released this afternoon, just as people left work to enjoy the ANZAC day long weekend.

“Since the Green Paper, the Government has taken major decisions on the three elements to the Emissions Reduction Fund – crediting, purchasing, safeguarding,” Environment minister Greg Hunt said in a media release.

Reactions at deadline were few, but didn’t provide for a lot of hope that Direct Action could work.

Australian Industry Group chief executive Innes Willox said the White Paper brought welcome refinements, including a process to consider abatement contracts that run for longer and match better with commercial requirements, use of established emissions reduction methodologies from existing Commonwealth and State schemes and confirmation that relatively few businesses would be exposed to the proposed safeguard mechanism.

Professor Roger Jones, professorial research fellow in the Victoria Institute of Strategic Economic Studies at Victoria University, however, said the scheme was “almost totally divorced from our understanding of what is needed to properly manage changing climate risks”.

“While elements of this scheme will work, it is complex, in the sense of having to work out moving baselines for a wide range of existing activities,” he said. “These will be required for all types of bids submitted.

“How the safeguard mechanism will prevent additional emissions is unclear – broad principles are supplied but no working detail. This mechanism is designed to cause as little disruption to existing industry, which will evolve under the influence of both domestic and international pressures. It is not sufficient to drive the level of change required to decarbonise the economy.”

A small piece of good – well better – news was the inclusion of an extra billion for the fund over the forward estimates.

“In the Green Paper, the Government set out a commitment to the Emissions Reduction Fund of $300 million, $500 million and $750 million – totalling $1.55 billion – to the Emissions Reduction Fund over three years,” Mr Hunt said. “In line with the Government’s long standing policy, the forward estimates commitment to the ERF will be $2.55 billion, with further funding to be considered in future budgets.”

The release also said the White Paper detailed how barriers to aggregating emissions reductions would be removed by setting up standard arrangements for transferring rights from households and small businesses to a project aggregator. This could potentially open up the opportunity for smaller businesses, households and councils to compete with larger firms for energy efficiency funding.

But according to Australia Institute senior economist Matt Grudnoff, the White Paper would create “a welfare mentality for firms”.

The Fifth Estate spoke to Grudnoff today before the White Paper was released for an economist’s view on the whole Direct Action concept, and one of the first things he pointed out is that it is not a new policy, and when it was tried before at a state level 10-15 years ago it failed.

He explained the reasons it failed included the fact it discouraged innovation by motivating polluters to seek grants for mitigation methods they would otherwise have to undertake on their own bat.

Take from taxpayers and the vulnerable and give to the polluters

Under Direct Action, Grudnoff said, the financial burden falls back on the taxpayer instead of the polluter, describing the policy as “effectively a giant bucket of corporate welfare”. He also pointed out this is contrary to the general federal rhetoric around ending the welfare mentality.

We can’t help but wonder, how are elderly pensioners, people with disabilities and sole parents somehow more worth targeting as a drain of the public purse than megalithic polluters? It was the vulnerable who were being presented as the target for welfare cost-cutting this week, as well as the scientists (who incidentally also pay taxes), while polluters were handed a bucket of money and Tony Abbott announced a bunch of shiny new fighter jets.

The National Audit Office did a study into the effectiveness of the state direct action policies and found they in fact did not achieve any significant abatement, always cost more than expected and resulted in the cheapest (and not necessarily most effective) projects obtaining grants under the policy’s competitive grant model. And here we go again.

You can read TAI’s policy brief on Direct Action, prepared by Dr Richard Deniss and Matt Grudnoff in 2011 here.

The coal industry wants our love

The coal industry meanwhile are ramping up there “give us the love” style campaign, with social media, new front groups and a massive ad spend. One of the new lobby groups is “Reef facts” which defends the environmentally risky decision to carry out dredging to expand the Abbott Point Coal facility.

Quite aside from the risks posed by the deposit of thousands of cubic metres of silt in a vulnerable ecosystem, Professor Ove Hoegh-Guldberg, director of University of Queensland’s Global Change Institute, points out in an article published in The Conversation that expanding the coal export facilities is fundamentally an investment in continuing to generate carbon emissions and continue along the path to the reef’s ultimate demise from ocean warming, acidification and other climate change impacts.

He writes that the “world-class environmental asset [is] at serious risk from the activities of industries that line its coastal borders. As we prepare to build bigger and bigger ports, and export more and more fossil fuels, we are driving in a direction that will almost certainly eliminate the Great Barrier Reef over the next few decades.

“Given the billions of dollars in tourism and fisheries revenue that the reef generates each year, countering this trend makes good business as well as sound environmental sense.”

He concludes, “we appear to be shooting ourselves in the foot by exporting fossil fuels, which will ultimately drive the climate into a state where the Great Barrier Reef will be but just a memory.

“Surely, we should be using the same infrastructure investments to build strong tourist and manufacturing sectors along with the renewable energy infrastructure that will ensure that the ecosystem that keeps giving to the Australian economy will do so in perpetuity.

But we are not. One has to ask, then, where is the logic or economics in all of this?”

The answer is – it is neither logic, nor good economics

According to Grudnoff, proper economic thinking is absent from many aspects of the current policy landscape around energy and climate change. He pointed out that renewable energy technologies, which have had only a fraction of the support from public funds that fossil fuels receive, have well and truly demonstrated their business case.

Fossil fuels, however, were increasingly struggling to present a valid business case for some of their proposed mitigation strategies, such as carbon capture and storage, which Environment Minister Greg Hunt was last week using as an example of why we don’t have to worry about shifting out of coal.

“If you want to reduce emissions, as an economist you look for the most cost-effective solution,” Grudnoff said.

He also made the very interesting point that while the carbon tax and other climate change mitigation measures are being blamed for the increase cost of power from coal fired power stations, the increasing scarcity of coal is also a factor driving up price.

Reality check time – we are not only going to run out of coal at some point, we are already, globally, beginning to run low on coal reserves that can be economically, safely and effectively extracted for the purpose of generating electricity. We are yet, on the other hand, to reduce supplies of sun or wind and, as Grudnoff points out, as coal gets more expensive, renewable become even more cost-competitive.

The activists are organised!

The Australian Financial Review last month published an article, The anti-coal movement gathers steam, which outlined the sustained growth of anti-coal activism in Australia. It says a lot for the cohesive, articulate and organised nature of the campaign that it got their attention for a substantial amount of column centimetres. What is missing in the article, however, is any real explanation of the grounds for and validity of the anti-coal lobby’s position.

Now the Big Four banks, who are involved in the financing of many of the coal expansion projects, are in the sights of a collation of activists including 350.org, who are calling for a Divestment Day on 3 May, urging the public to withdraw their funds from those banks and shift them to financial organisations that do not back coal mining.

In another article published this morning, Fudging facts on reef leaves sour taste, the AFR claims the World Wide Fund for Nature aims to make the coal mining industry extinct globally.

Grudnoff, however, told us this is probably inevitable in any case, either through the ending of the resource, or for positive reasons.

“When climate change is taken seriously, the coal industry will disappear,” he said, pointing out that energy generation will continue to shift towards solar power and storage and other more economically and environmentally viable technologies.

Just like the old saying, when one door closes, a window opens, and our window of opportunity to quickly address climate change by changing our energy choices is definitely one with a finite horizon of possibility.

Defending our country takes many forms

Being as tomorrow is ANZAC Day, we will let 92-year-old Kokoda Veteran Bill Ryan, who was arrested at the protests against the Whitehaven Coal project in Leard State Forest in NSW at the end of last month, have the final word.

In an opinion piece in Guardian Australia, Ryan wrote:

“I’m now 92 years of age and I was a veteran of the second world war. I served in the Kokoda campaign in New Britain. I thought what we were fighting for there was proper democracy. But I’ve learned that was not the situation. The government doesn’t listen to the people, and this mine is a good example. There were over 300 submissions against the mine, and one submission for it. But it was approved.

“This is the first time in the last few years that I’ve been involved in any direct action. I’ve been reading the international scientific reports on the climate, which say there is no future for my grandchildren and great grandchild unless there is a reversal in our use of fossil fuels, and a replacement by renewables.

“The coal industry gets enormous subsidies from the government. We need to take them away from the mining industry, with their lobbyists galore in Canberra, and use that money to assist in the development of our renewable energies. We’re in a unique position in this country to use wind power, solar power, and other renewables.

Something is wrong. We’re faced with a catastrophe. I owe it to my grandchildren, and I owe it to all children. I was willing to put my life on the line in the second world war, so putting my body on the line here is a small inconvenience.”