The budget and climate change: getting our priorities right

May 12, 2023
Light bulb is located on soil. plants grow on stacked coins Renewable energy generation is essential for the future. Renewable energy-based green business can limit climate change and global warming.

The Government’s treatment of climate change in the 2023 Budget is a vast improvement on their conservative predecessors. That said, it continues a pattern of reluctance to face reality on the really big issues which will determine our future as a nation, notably on climate.

At a micro level, the budget has much to commend it:

The fact that climate change represents an increasing risk to Australia, fiscally, economically and socially, permeates the budget papers as never before.

Accordingly, sound investments are proposed to accelerate the clean energy transition, to develop the required transmission infrastructure and to maintain Australian international competitiveness in attracting clean capital.

Budget support for energy efficient homes will have widespread benefits, as will small business energy incentives. The various initiatives aimed at accelerating sector transition, for example in agriculture and transport, make sense, along with establishment of the National Net Zero Authority to co-ordinate the transformation overall.

The importance of creating new clean energy industries, consistent with establishing Australia as a renewable energy superpower, is recognised with investments in hydrogen, critical minerals and the commercialisation of renewable technologies, along with improvement in associated certification methods.

Historic refusal to address climate change means that the cost of unavoidable climate impacts will accelerate, so the further investment in disaster management and relief, both here and within the region, particularly the Pacific, is essential. One notable omission is any re-commitment to the UNFCCC Green Climate Fund, from which Australia withdrew in 2019.

The commitment, finally, to carry out a National Climate Risk Assessment to better understand the rapidly changing domestic risks of climate change, and thus assist adaptation, is most welcome, albeit the two year timetable is far too leisurely. This will complement the assessment recently completed by the Office of National Intelligence which focused on risks external to Australia.

The changes to the Petroleum Resource Rent Tax, to provide Australians with fairer return on their natural resources are also welcome, albeit still inadequate on any sensible international comparison.

Unfortunately, these solid steps forward are undermined by the Government’s support for the expansion of the gas and coal industries, via the Safeguard Mechanism, the increase in fossil fuel subsidies, and the Future for Gas Strategy. Climate change is a global issue and emissions from even one or two of these new export projects will largely negate the emission reductions which may result from the other budget investments – and waste a great deal of hard work by the Australian community.

Which highlights the fundamental flaw at the centre of the budget process, and indeed the Government’s entire strategy.

The ALP’s response to the climate threat was to take its 43% emission reduction by 2030 target, along with net zero emission by 2050, to the election. This represented some progress relative to the LNP, but not such that the ALP might lose that election. It has subsequently formed the basis for the new government’s climate mitigation policy, which Minister Bowen is now adamant cannot be changed. Accordingly the budget is framed around it.

Whilst this was successful politically, the laws of physics have scant regard for politics. In reality, the science has long indicated that emissions have to reduce far faster, ideally to reach zero emissions as close to 2030 as possible if the world is to stay below even the upper 20C temperature limit of the Paris Agreement. The lower 1.50C limit will be exceeded before 2030, despite the Budget papers indicating we still aim to stay below it. Net zero emissions by 2050 is a totally inadequate policy objective.

In addition, global atmospheric carbon concentrations have to be drawn down from the current 425ppm CO2 to around 350ppm, a massive task in itself never mentioned in the Australian climate debate.

This is obviously a global problem that cannot be solved by Australia in isolation, but Australia is the world’s third largest fossil fuel exporter and fifth largest carbon polluter if exports are included. What we do matters but our governments, present one included, have never accepted that climate change is the greatest threat that Australia, and the world faces, an existential threat to human civilisation as we know it.

Unfortunately global emissions continue rising at worst-case rates when, for years, they should have been reducing rapidly. The results are disastrous. Global average sea surface temperatures are at record levels, Asia is in the midst of a massive heat wave, an unbalanced Arctic jet-stream is wreaking havoc with Northern Hemisphere weather patterns, accelerating ice melt in both the Arctic and Antarctic is causing major changes to ocean circulation systems and a severe El Nino event seems likely later this year. These unprecedented extreme events are generating multiple secondary effects, not least food insecurity, health crises and large scale migration. Globally, millions of lives have already been lost and livelihoods destroyed, as we have seen in Australia on a smaller scale. But the really big impacts are about to hit us, as increasing emissions begin to trigger climate tipping points with profound irreversible implications.

The only solution is a rapid reversal of this global emission increase, in which Australia must play its part. It will not do so by expanding our fossil fuel industries, particularly gas. The world cannot afford any new fossil fuel projects, as the IPCC, the IEA, the UN and other experts continually emphasise. Trying to justify expansion on the back of technologies which have yet to be proven at scale despite decades of investment, such as carbon capture and storage, as the fossil fuel lobby are doing, is morally and ethically bankrupt.

Which makes the transition far more difficult than officially suggested. The starting point has to be a brutally honest assessment of these climate risks at a global strategic level. This, rather than politics, must define the mitigation targets to be adopted nationally, which in turn frames the assessment of domestic localised risks, thus defining our adaptation task.

Basing mitigation on politically expedient targets, as we are doing, guarantees disaster.

The wider implications are manifold, here and globally. Every nation is now faced with the same climate threat, whether China, the US, Russia or ourselves; if we want a liveable planet, overcoming the climate threat must supersede conventional geopolitics. This makes a nonsense of current sabre-rattling and the militarisation implicit in the AUKUS agreement. All additional global resources must be mobilised to co-operate in overcoming the common climate threat, rather than stirring conflict which would guarantee climate catastrophe.

Australia’s efforts must be re-focused at all levels to encourage global commitment to achieving these objectives. In particular, the urgency of the task must be factored into every policy arena; climate risk assessments, the only basis for sound policy, are required in months, not in two years as the Budget contemplates.

Australia’s economic rejuvenation should be based on accelerating the climate transition, not on spin-offs from militarisation.

In short, despite great progress in the current Budget, it is now back to the drawing board to focus on the real strategic priority we face – climate change. Inter alia, this should provide scope for some of Treasurer Jim Chalmers’ thinking on new forms of capitalism!

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