Australia’s Climate Follies

Australia’s longest-running tragedy is starting a new season with a new cast but the same familiar follies. Of course I am talking about Australian climate policy.

Before Julia Gillard was deposed she had announced that Australia’s carbon price, which had been implemented as a tax (following her pre-election promise not to institute a tax), would be linked with Europe's emissions trading scheme by 2015, cutting almost $20 from the per-tonne price of carbon that had been so hard won, leaving it in the low single digits.

Prime Minister Abbott, who had campaigned on getting rid of the remaining price on carbon, takes office with the Senate and its balance of power resting with Labor and the Greens, and thus standing in his way. He has threatened to call a double-dissolution election if the Senate does not go along with what he sees as a strong electoral mandate to get rid of the carbon price.

With Abbott leading the Coalition and Bill Shorten now leading Labor, the new players are acting out a familiar script. Here I run through some numbers updating my 2011 analysis of Australian climate policy and I conclude that despite the new cast, Australian climate policy remains more farce than tragedy. Australia remains a bellwether of international climate politics. Consequently, its climate policy debates have significance far beyond the nation’s borders, so I will try to place the Australian experience into such a larger context.

Apparently, Prime Minister Abbott accepts both the conclusions of the Intergovernmental Panel on Climate Change and the previous government’s commitment to a 5% reduction in greenhouse gas emissions (from a 2000 baseline) by 2020. He has proposed what remains an ill defined 'direct action plan,' the details of which are apparently now being worked out.

The mathematics of Australia’s emissions is not terribly complicated. To achieve a reduction in carbon dioxide emissions of 5% from 2000 levels would require a rate of decarbonization of the Australian economy (measured as a reduction in the amount of carbon dioxide emissions per A$1000 of GDP) of greater than 5% per year from 2013 to 2020. This is consistent with my earlier analysis that looked at data through 2006. For comparison, Australia averaged a 2.9% annual rate of decarbonization from 2007 to 2012. (NB: As in my 2011 paper and in The Climate Fix, here I focus on carbon dioxide, while the Australian target refers to greenhouse gases. Data on GHG emissions comes from BP 2013 and GDP figures from the UN and DFAT).

What does such a rate of decarbonization imply in terms of carbon-free energy?

In 2012 about 5.4% of total Australian energy consumption came from carbon-free sources (Data: BP 2013), specifically hydropower, wind, solar, and biomass burning. The good news is that at 5.4%, the carbon-free portion of consumption is at its highest level since 1976 (see graph), due largely to a 63% increase in hydropower from 2009 to 2012. The bad news is that Australia lags far behind the 2012 overall global proportion of about 13% carbon-free energy, as well as Canada (34.1%), New Zealand (36.4%), China (9.1%), the EU-15 (23.6%) and the US (13.5%).

The even worse news is that to reach its 5% reduction target Australia would need to get more than 17% of its total energy consumption from carbon-free sources by 2020, assuming (a) no change in total energy consumption from 2012 to 2020 and (b) that the new carbon-free energy sources replace an equivalent amount of coal power.

Another way to get a sense of the magnitude of carbon-free energy needed is to look at the equivalent number of nuclear power plants. About 11 such plants would do the job if they replaced an equivalent amount of coal generation (about one-third of the 2012 total coal consumption). The numbers might also be expressed in wind turbine- or solar panel-equivalents for those who don’t like nuclear power stations. Of course, no matter which units are used, the magnitude of the task remains the same.

Published reports suggest that the centerpiece of the Coalition’s 'direct action plan' will be a carbon-offset scheme that will pay for emissions credits related to farming and those below a projected business-as-usual baseline for businesses. While a more in-depth critique will have to await formal announcement of the details of the Coalition’s proposal, it should be obvious that any program with offsets as its centerpiece is going to do nothing to increase the proportion of Australia’s carbon-free energy consumption to anywhere near the 17% that would be necessary to hit that 5% emissions reduction target.

Before supporters of Labor get too excited about the doomed-to-fail nature of the Prime Minister’s proposed climate policy, they should recognize that their own favored policy, a carbon price tied to the EU ETS, would also be doomed to fail. You don’t have to believe me, but rather the work of the now-defunct Australian Climate Commission, which calculated that hitting the 5% target would require — in addition to the price on carbon — implementation of a 'carbon farming initiative' (which sure sounds a lot like the Coalition’s 'direct action plan') and the purchase of carbon offsets in the international market equivalent to about 25% (!) of total Australian carbon dioxide emissions in 2012.

While I’ve had some fun here at Australia’s expense, I must point out that the multi-party, doomed-to-fail nature of Australia’s climate policies does not set it apart from anywhere else, including the US, Europe, China, or elsewhere. As I said earlier, Australia remains a bellwether of the larger debate.

Until we start discussing options for increasing the proportion of energy consumption from carbon-free sources – ultimately to more than 90% globally by 2050 – while simultaneously increasing global energy supply by a factor of two, three or more to address deep inequities in global energy access, then, like Australia’s experiences, international climate policy will continue to look like a television series that we have seen before. Isn’t that show getting old?

This post first appeared on The Interpreter blog of the Lowy Institute of International Policy.