Frustration at the nonsense purveyed on Madonna King’s program inspired me to send her an email, stating the main features of the Clean Energy Future (CEF) package in three simple points. In this post I give an expanded version so you can check and let me know if I’ve got it right. The scheme does seem to me to have an elegant simplicity about it together with a flexibility that bespeaks careful design.
First, the government is selling permits to pollute, not imposing a tax. About 500 of the biggest polluters will have to buy permits to dump their waste carbon into the atmosphere. Annabel Crabb quotes Gillard as saying:
“Around 500 big polluters will pay for every tonne of carbon pollution THEY put into OUR atmosphere.”
As Crabb says:
WE are getting those polluters to pay for what THEY do to US.
You have to get your head around this aspect if you want to understand what’s going on.
Second, as the scheme proceeds each year there will be fewer permits available. That’s why pollution is sure to decrease. It WILL WORK.
Third, the 80% target by 2050 says that we are serious about climate change and want to go where the rest of the world is going. It is important, not an “empty gesture” as stated by Bernard Keane. 80% is becoming an international norm. Investors in power stations need to consider a 40-year time frame. They won’t build new coal-fired stations under these circumstances unless they are completely daft.
Those are the three points I made to Madonna King. To those I’d add a fourth: institutional arrangements have been set up to take the politics out of the scheme, to give it the scientific/economic/technical inputs it needs, and to adjust it as we proceed.
Back in this post I said that Garnaut saw these as the most important feature he would look for when the scheme was announced. He identified three – one to administer the scheme, one to decide on compensation and one to review targets periodically as we go.
To administer the scheme we have the Clean Energy Regulator. The Productivity Commission will decide on compensation after the initial period. The Climate Change Authority will decide on targets and caps, the government having to justify itself if the Authority’s recommendations are not accepted.
Garnaut was well-pleased with the outcome:
This is a strong climate change policy package. It will allow Australia to do its fair share in an effective global effort to reduce the risks of climate change, and to do so at reasonable cost.
I congratulate the Prime Minister and her colleagues in the Multi-Party Climate Change Committee for the sound process and on the good outcome for Australia and the international community.
That to me is the broad outline. Even if you grasp the first two – we are selling permits to dump waste carbon and over time the number of these permits will reduce – you will be ahead of 98% of people, including, unfortunately, many of the scheme’s advocates.
Of course, there are many other important features. Going beyond compensation of households affected, I’d briefly nominate four.
First, the clean energy initiatives. From 2013-14 there will be a Clean Energy Finance Corporation to invest $10 billion over five years in renewables and low emissions technologies (but not CCS). Any dividends from this will be added to the $3.2b renewable energy fund overseen by the Australian Renewable Energy Agency (ARENA).
Second, decommissioning dirty energy and providing for energy security. An Energy Security Fund will pay for the closure of up to 2000MW of dirty power generation capacity by 2020, and provide $5.5 billion in free permits and cash to the sector to 2016-17 through an Energy Security Council. (From Crikey.)
Third, international trading will be introduced after 2015, when entities will be able to purchase up to 50% of permits internationally. I understand this will limit costs, deepen the market and provide a bridge into international trading.
Fourth, the land use scheme, of which Garnaut says:
The treatment of the land sector will encourage new forms of carbon sequestration that create important opportunities for rural Australia. Here our pioneering role in measuring and rewarding sequestration in soils, pastures, woodlands and forests is likely to have international influence.
Ben Eltham at New Matilda rates Gillard’s achievement very highly seeing it as “the defining accomplishment of Gillard’s political career” and “every bit as significant in Australian terms as the passage of health reform was for Barack Obama and the Democrats in the United States last year.”
Abbott, on the other hand, will become a bit of historical detritus, even if he does become prime minister for a time, unless he succeeds in unpicking the package. Then he will be remembered as an opportunistic destroyer.
In Australia for a conference, German leading climate scientist Hans Joachim Schellnhuber has his eye on us. We need stronger targets (Germany is aiming at complete decarbonisation by 2050) and a greater focus on renewables. Australia has influence beyond its size internationally but in closed ministerial meetings “Australia seems to be less progressive than the world needs it to be.”
Malte Meinshausen says Australia’s had the snooze button on until now. But, he says Australia is now:
sending a very powerful message with the carbon pricing. That signal is going to be a very positive one for the internal US debate and could have a huge knock on effect in terms of emission reductions worldwide.
Well done us. At least it is a beginning.