Just when you thought the climate wars were over they have erupted again. Within hours of climate change and energy minister Chris Bowen announcing the detailed Safeguard Mechanism for the big carbon emitters the Coalition and the Greens attacked it.
Will the Coalition and the Greens sit together in the Senate to vote down the enabling bill and the disallowable regulation? They could wistfully reminisce about the day in 2009 when they combined to defeat the Rudd government’s emissions trading legislation.
After more than 13 years of political instability on climate policy that has contributed to Australia under-performing on emission reductions and to chaos for investors, the Coalition and the Greens are contemplating another whirl on the dance floor.
The keenest partner in the tango of destruction is the Coalition. Opposition climate and energy spokesman Ted O’Brien claimed the government was reintroducing a carbon tax that would hurt businesses and consumers.
“This is effectively a carbon tax three times the size of what Julia Gillard did,” Mr O’Brien said. “It’s a tax on businesses that will be passed on to households.” He added that the government’s policy would “smash the regions.”
Hardly a ringing endorsement.
But it takes two to tango. How keen are the Greens for another spin with the Coalition?
Acting Greens Leader Mehreen Faruqi said the Greens opposed access by oil and gas companies to carbon offsets to comply with their obligations under the Safeguard Mechanism.
By their nature, oil and gas projects emit carbon. If they don’t have access to carbon offsets – in the form of Australian Carbon Credit Units (ACCUs) – they can’t operate.
However, the Greens have indicated that they will negotiate with the Albanese government “in good faith.”
Reading between the bars of the sheet music, it appears more likely that when the band strikes up the Coalition will be dancing with the likes of One Nation and the United Australia Party but not with the Greens.
Nevertheless, by raging against reforms to the Liberals’ own Safeguard Mechanism that Labor took to the 2022 federal election, the Coalition is indicating that as far as it is concerned the climate wars will continue.
The Safeguard Mechanism didn’t seem such a bad idea to the Coalition when Abbott-government environment minister, Greg Hunt, legislated it in 2014. Effectively, though, it was a non-binding constraint on emissions, so generous were the allowable emissions before the mechanism could be triggered.
The Albanese government’s reforms to the Liberals’ Safeguard Mechanism are designed to help achieve Labor’s emission-reduction target of 43 per cent below 2005 levels by 2030. When the outline of the reforms was released in late-2021 it received the support of every major business organisation in Australia. That support continues.
Australian Carbon Credit Units (ACCUs) will play an important role in achieving the government’s emission-reduction targets. They will be used to offset emissions by big emitters where it is difficult or very costly to avoid emissions altogether.
A review led by former chief scientist, Ian Chubb, released on 9 January, found that ACCUs were “essentially sound”.
Critics of ACCUs, including those who previously were involved in their design, have not accepted the conclusions of the Chubb report. While there is always room for improvement to ensure ACCUs are of the highest integrity, it is implausible that Australia or any other country will achieve zero gross emissions by 2050.
Humans will have partners, children and pets – all carbon emitters. Trees and flowers will emit carbon when they die. And if we switch back to sheep to produce wool, replacing polyester made from petroleum, the inconsiderate animals will belch and fart, releasing methane, a potent greenhouse gas.
Without a Safeguard Mechanism or some other means of applying a price on carbon emissions by business, Australia will be wide open to the imposition of tariffs by other countries in the form of carbon border adjustment mechanisms – like those being developed by the European Union.
The Chubb report and the detailed Safeguard Mechanism announced by minister Bowen offer a path forward for decarbonisation and business investment.
All the professional post-election analysis points to policies on climate change as a major determinant of voting behaviour. At the 2022 election, the Coalition lost six seats to teal candidates, who ran hard on climate change, and two to the Greens.
Yet the Liberal Party’s election review mentioned climate change only once. And astonishingly, climate change did not feature at all in the review’s recommendations to deal with the rise of the teals.
If the Dutton-led Opposition is determined to return to the Abbott-era approach to climate change, it risks finding itself alone on the dance floor, alienating business and confirming its policy of net zero emissions by 2050 was a sham.
Politically, the Liberals will have conceded the eight seats they lost to the Greens and the teals as unrecoverable, while again risking up to five more leafy seats that they came so close to losing at the 2022 election.
Craig Emerson is managing director of Emerson Economics. He is director of the APEC Study Centre at RMIT University, visiting fellow at the ANU and adjunct professor at Victoria University’s College of Business.