Emissions reduction auctions: Dodgy Bros or the best thing since sliced bread


When I heard Greg Hunt spruiking the first auction under the Emissions Reduction Fund (ERF) last week, he sounded like a used car salesman. He has form on cherry picking statistics and imaginative accounting, so it’s best to ignore what he said and look to other sources (please note, there is other commentary in the link, including from Tim Flannery).

In the broad we need 236 million tonnes of CO2 equivalent emissions reduction to meet a 5% target. The Government has just spent $660 million (25.9%) of the $2.55 billion fund to purchase 47 million tonnes (19.9%) of abatement.

The first question is about the 5% target. Prior to the election the LNP claimed bi-partisanship over the target. Labor’s target was actually 5 to 25%, with the higher figure coming into play if certain conditions were met. These conditions related mainly to international effort and affordability. The Climate Change Authority was tasked to make a recommendation on targets. It laboured hard and produced a 265 page report in which it considered a 15% and a 25% extension to the targets. From my post at the time:

    The Authority presents two targets for 2020 – 15 per cent and 25 per cent, with different trajectory ranges to 2030 [35 to 50 per cent and 40 to 50 per cent respectively].


    The Authority appears to favour the 25% option, which yields a smoother path. It costs only $2.7 billion pa more (0.16% of GDP). With 15% you need accelerated effort after 2020.

Consideration was given to enhancing the lower target of 15% by 4% through Kyoto carry-overs, giving a comfortable target of 19%.

The Abbott Government abandoned the extended target, settling on the 5% minimum and tried to sack the Climate Change Authority. The Climate Institute calculates that the Government has just purchased 7% of the abatement it needs to meet the 19% target, which is what the target should be at the very least.

Hunt claims the auctions have been a “stunning success” and that the abatement target will be met easily. He is depending abatement quantum to reduce. The current state of play is better understood in by looking at the emissions trend, which has wobbled in recent years. This chart was supplied by the Department of the Environment and comes courtesy of The Conversation:

image-20150424-25563-y6ghno_emissions trends

Clearly the target would be different if calculated back in 2005.

Jake Sturmer at the ABC took a look at this issue:

    It is a target that has fallen significantly in the last few years — from 1,335 million tonnes of carbon dioxide equivalent in 2008 to just 236 million tonnes in 2014-15.

Hunt says the target is “dropping all the time”. Should we be happy about this? Sturmer says:

    The projections were reduced based on lower manufacturing output due to industrial closures, worse than expected agricultural conditions due to drought, predictions of lower electricity demand, weaker growth expectations for local coal production, and better estimation methods for the National Greenhouse Gas Inventory.

Of course within “lower electricity demand” is a story about rooftop solar.

The Government may achieve its target, but in large part through economic misfortune and the de-industrialisation of the country.

And by minimising the target.

Tim Flannery says the proportion of electricity from coal has grown under this government from 72.5 to 75%. He also points out that the auction was mostly about burying carbon rather than reducing emissions. Here is how the projects break up:

image-20150424-25563-y6ghno_abatement by method

On the upside Flannery says we may learn something about carbon farming. However, just about no-one thinks the Government’s approach is scalable to a real emissions abatement program. John Connor from the Climate Institute:

    “Under the previous carbon laws, major emitters now would not only be responsible for their emissions, but they would be paying around $10 a tonne, whereas the government is paying nearly $14.”

    “It is good that projects under the Carbon Farming Initiative have come to fruition, but this kind of policy alone is not going to drive the modernisation that is required for Australia’s clunker economy, especially in the electricity sector.”

    “No bells and whistles should disguise just how far we are from any meaningful and much needed carbon pollution reduction,” said Connor.

4 thoughts on “Emissions reduction auctions: Dodgy Bros or the best thing since sliced bread”

  1. Yes it is the dodgey Brothers, alright. From what little I gather about this scam is that the farmers are contracting to not land parcels leaving vegetation to grow. Correct me if I am wrong.

    Wait for the howl when subsequent governments require the land holder to repay the contract revenue when the vegetation is burnt out by bushfire.

  2. Thanks for the link, BilB, I hadn’t seen it but caught the news elsewhere. California is one setting the pace.

    On trees growing I wonder whether we are paying for what would have happened anyway.

  3. Lenore Taylor reckons that with the landfill and waste projects, and also the tree farming, “additionality” did not have to be shown. She says a lot of these projects were begun under the previous government, and we’ll never know whether we are paying for what would have happened anyway.

    She also says that the so-called “safeguards” mechanism for big emitters within the Direct Action program could morph post 2020 into an emissions trading scheme.

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