Pearls and Irritations

The Morrison government’s proposed response to the threat of climate change tries to reconcile different interests by deceiving them both.

A decade ago, the then Liberal leader Tony Abbott pronounced that “climate change is crap”. Ever since, the Liberal Party has torn itself apart over climate change. In addition, they must also satisfy their recalcitrant partners in the National Party.

In the 2019 election Scott Morrison successfully handled this dilemma by diverting public attention with his allegations about how Labor’s proposed cuts to carbon emissions would destroy the economy and how electric vehicles would “end the weekend”. That way the Coalition’s policies, or lack of policies, avoided scrutiny.

Since then, however, Australian opinion has moved on and the polls now report a solid majority of voters want to take the necessary action to reduce carbon emissions. Morrison understands this switch in public opinion, but he still has to continue to satisfy his nay-sayers.

Morrison’s solution is first, to tell us that the new target of zero emissions by 2050 means that his government will take the necessary action to avoid catastrophic climate change. But second, he reassures the other audience that there will be no threats to any jobs, nor will the government introduce mandates or prices and taxes that inhibit people from doing what they want to do.

In effect, Morrison is trying to pretend that we can have our cake and eat it too. But this fantasy has necessarily had to be built around a series of deliberate attempts to mislead which are discussed below.

The target of net zero by 2050

The government’s target of net zero carbon emissions by 2050 will be unlegislated and therefore is no more than a statement of intent. Nevertheless, Morrison would have us believe that this is sufficient to constrain global warming to an acceptable extent — commonly considered to be an increase in temperatures of significantly less than 2 degrees Celsius compared to pre-industrial temperatures.

However, nothing could be further from the truth. To achieve that goal of limiting global warming to less than 2C, we must have an ambitious target for cuts in emissions by 2030 instead of the government’s leisurely linear progress towards net zero.

All the other advanced market economies have understood this point and have increased their target emissions cuts by 2030 in the lead-up to Glasgow climate summit. Australia is the sole exception.

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Under pressure Morrison has responded to this criticism, and thanks mainly to the efforts by State governments, he is now able to project that Australia’s carbon emissions will fall by 35 per cent by 2030. This is an advance on the government’s previous target of a cut between 26–28 per cent proposed back in 2015, but it is nowhere near enough.

First, this new projection means that in the 25 years between 2005 and 2030, carbon emissions in Australia are expected to fall by only 35 per cent. By contrast, Morrison is telling us that in the following 20 years from 2030 to 2050, net carbon emissions will have to fall by another 65 per cent — or almost twice as fast after 2030 — to achieve the target of no net emissions by 2050.

In other words, Morrison is deliberately leaving all the heavy lifting to a future government, but it should be the other way around.

And that leads on to Morrison’s second deception, which is that Morrison is asking us to ignore all expert opinion about how quickly we need to achieve lower carbon emissions. The experts are almost unanimous that if we don’t achieve at least a 50 per cent emissions cut by 2030, we have no hope achieving the most critical target which is to constrain global warming to significantly less than a 2C increase in temperatures.

Can we believe the plan?

The next set of deceptions relate to the government’s so-called “plan” which purports to outline how the reduction to net zero emissions will be achieved.

As the government puts it: it is essentially relying on new technologies to reduce carbon emissions in future. The favoured technologies are:

• Clean hydrogen;
• Ultra low-cost solar;
• Energy storage;
• Low emissions steel and aluminium;
• Carbon capture and storage; and
• Soil carbon.

Apart from carbon capture and storage and soil carbon, where the economics are so far not good, these technologies make sense. But as many commentators have complained, the lack of detail means that it is again misleading to call the government’s latest statement a “plan”. It is more a statement of hopes.

Most of the necessary technologies already exist, but there is nothing in the plan that tells us about the rate of take up and adaptation to these technologies. Here again this Plan is asking us to trust the government.

Already the cost of renewable energy is lower than the cost of energy derived from coal or gas, but what will accelerate the rate of switching over. In particular, much of the necessary action will be at the discretion of private households and businesses, and we need to know how and why they will become more incentivised to make the necessary changes.

First, setting an ambitious target for carbon reduction by 2030 would have helped. It would provide the necessary signal to business that it could invest with confidence, and now.

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Instead, the government’s plan envisages that the government will invest more than $20 billion in low emissions technology to 2030, and it is hoped that this investment will leverage more than another $80 billion from government and private sector over this period.

Certainly, these subsidies will help accelerate the rate of take up of the necessary new technologies, but almost all economists, including the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF), insist that the most effective way to achieve this necessary acceleration would be to price carbon emissions. And unfortunately, this is precisely what our government will not do.

Furthermore, the government’s plan relies upon international and domestic offsets for 10–20 per cent of Australia’s carbon reductions. It is particularly difficult to see how this can work without creating a market for carbon emissions and thus effectively pricing them — although the government won’t admit it.

Another element of deception in this plan is the repetition of the government’s slogan — “technology not taxes”. However, the more than $20 billion that the government is promising to spend over the next eight years, has to be paid for, and that requires taxes.

The promises on jobs

Morrison says that the government’s plan “will not shut down our coal or gas production or exports. It will not cost jobs, not in farming, mining or gas.”

This statement is clearly aimed at reassuring his “other audience” who fear action to reduce climate change will cost them their jobs and their businesses. Thus, Morrison is encouraging workers and owners in these industries to believe that under a Morrison government their futures will be secure.

Nevertheless, even if Morrison’s policies do not directly lead to a loss of jobs, markets will, and Morrison’s policies are influencing those market changes.

For example, in a market where the price of electricity is set by competition from solar power, John Quiggin (Pearls & Irritations, October 31) has calculated that the electricity revenue generated by a tonne of coal will soon be only $30–45/tonne. That revenue must cover the costs of maintaining and operating an ageing coal-power plant, as well as the cost of mining and shipping the coal.

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On the other hand, at present thermal coal costs in excess of $US180 per tonne. Even if the present price of coal is unusually high, it is hard to see that coal has a future if the government genuinely pursues a switch to renewable energy. The difference between revenue based on $30–45/tonne and costs based on $US180 per tonne is far too great.

Furthermore, coal exports are equally doomed. The International Energy Agency expects that a global move to net zero emissions by 2050 would result in global coal demand falling from more than $US400 billion today to less than $US50 billion by 2050.

In other words, there is little that any government can do to save existing jobs in coal and gas mining, and Morrison is deceiving people when he implies that their jobs can continue while global carbon emissions are successfully reduced.

Equally, if the government tries to ignore climate change in order to save these jobs, their exports are likely to be subject to carbon tariffs levied by other governments which will then render these export uncompetitive, and also cost jobs.

What the government really should be doing is taking advantage of the opportunities Australia has as a producer of low-cost renewable energy to develop alternative jobs, especially in the regions. But this will only happen if Morrison is more honest with the people who are likely to be affected, so that they can prepare, including through retraining.

In sum, Morrison cannot be trusted when it comes to handling climate change. His policy presentation is based on deceiving the public and is therefore unlikely to succeed.