Tax furore hides much furious agreement

July 3, 2012 by  
Filed under Blog

Lost in a gale in the cult film Withnail and I, Paul McGann asks the driver “Are we there?”

“No”, comes the reply from Richard E. Grant, “we’re here”.

In the storm of words around the introduction of the carbon tax, Australians would be forgiven for being a little lost too.

You might think the major parties don’t agree on anything when it comes to climate change. But they do. In fact, they agree on a lot (though they might not admit it).

For starters, both parties argue that climate change is real, and that Australians need to act. The same cannot be said for many voters of both persuasions.

Crucially, both parties have made an unconditional commitment to reduce Australia’s emissions by the same amount (5 per cent of 2000 levels by 2020).

This is significant in two ways: firstly, they agree on the scale of emissions reductions that Australia should undertake (at least at a minimum); secondly they agree that there is a degree of climate change action that Australia should take, irrespective of what happens elsewhere.

Moreover, while you could live under a rock and still know that the Coalition opposes the government’s carbon pricing mechanism, few people realise that both parties share their support for particular approaches to reducing emissions.

The Coalition will likely release more details closer to an election, but based on its direct action plan and public statements, and the government’s public record, we can build a picture of what is likely to survive regardless of the colour of the government.

Let’s start with renewable energy. Again, both sides are in furious agreement that Australia should encourage the development of the sector through promoting a renewable energy target. They even agree on the amount: 20 per cent of Australia’s energy supply should come from renewable sources by 2020.

Of course, there is some nuance, with the Coalition seeking to carve out a special role for larger projects. But this is a relatively minor difference.

Energy efficiency is another area that is likely to remain a key priority whoever wins the next election. It’s a no-brainer: reducing energy bills and reducing emissions at the same time. This is particularly so in the building sector. After the initial capital investment, many energy efficiency projects become cash-positive within the first few years of operation. It’s a win for owners, a win for tenants and win for the construction industry – oh, and the climate.

Speaking of common ground, land management is another area where both the big parties can be seen shuffling uncomfortably next to each other. Estimates of the mitigation potential of reducing emissions from farming and forestry vary, but may be very significant, and both parties are supportive of efforts in this space. The Coalition estimates that soil carbon measures could represent 85 million tonnes of annual CO2 abatement potential; the government’s carbon farming initiative has been one of the more popular components of its Clean Energy Future package.

Under its ”contracts for closure” program, the government is seeking to support the closure of inefficient power stations. The Coalition’s proposed ”emissions reductions fund” has a provision to do precisely the same thing. The list goes on.

This is a good thing. A recent study by Mercer identified climate policy uncertainty (both international and national) as a significant source of risk for investors over the next 20 years. There is not going to be any certainty over carbon pricing for a while yet – but there is likely to be policy continuity in other areas.

So although the fight over carbon pricing will dominate the airwaves over the next few weeks, it is important to remember that there is a lot more to Australian climate change policy than carbon pricing.

A lot of bathwater will be thrown around in the next few days, but there is good reason to believe that, no matter where this all ends up, there will still be a baby – of sorts – sitting in the bathtub, wondering what on earth just happened.

Published in The Sydney Morning Herald, 3 July 2012.

By Andrew Ure.