Daily Archives for September 28, 2021

Agitated Nationals grapple with climate debate, as former minister Chester takes ‘a break’ from party room


Michelle Grattan, University of CanberraA tough debate is expected when a highly volatile Nationals parliamentary party meets on Monday, ahead of climate change negotiations between Prime Minister Scott Morrison and Nationals leader Barnaby Joyce to endorse a target of net zero emissions by 2050.

Joyce is under dual pressure, with his party room sharply divided over the 2050 target, and former minister Darren Chester announcing, in a weekend statement which criticised Joyce without naming him, that he is taking “some time away” from the party room.

No details of the climate plan are yet on the table, but strong positioning is underway, with negotiations between Morrison and Joyce resuming once the PM, returning on Sunday night from his American trip, is back in the country.

The Nationals meet every fortnight, remotely when parliament is not sitting.

Joyce indicated on Friday he would accept the government adopting a firm target of net zero emissions by 2050 provided the regions were not worse off. He also wants some largesse for the Nationals.

At the same time he is expressing concerns and gives the impression of being dragged reluctantly towards an agreement.



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View from The Hill: Barnaby Joyce falls (sort of) into step for the ‘net zero’ march

Morrison was pressed again while in the US about increasing Australia’s ambition on climate policy and has signalled he proposes to do so. But he has to get the minor Coalition partner on side.

Both President Joe Biden and British Prime Minister Boris Johnson have pushed Australia hard as the November Glasgow climate conference draws near.

The government’s current position is net zero “preferably” by 2050.

Interviewed by the ABC on Sunday, Joyce provided little fresh clarity. But asked whether there should be no coal jobs lost, he said, “well, not by reason of domestic policy”.

Deputy Nationals leader and agriculture minister David Littleproud, who supports the 2050 firm target with safeguards and incentives for the regions, told Sky that members of the Nationals party room were “pragmatic”. They were “looking through the lens of protecting regional Australia but making sure there’s opportunity for regional Australia to also participate in this”.

But former resources minister Matt Canavan tweeted, “I am deadset against net zero emissions. Just look at the disaster the UK is living through. They’re switching off their industry to keep their lights on, and they are struggling to feed themselves. Net zero emissions would just make us weaker.”

Resources minister Keith Pitt said: “We are yet to see the strategy, the plan, the cost, and who’s paying.

“My priority will be the 1.2 million direct and indirect jobs associated with the resources sector”.



Read more:
Grattan on Friday: After the deal on security, Scott Morrison turns to the shift on climate

Chester, who is a supporter of net zero, won’t be in the meeting to help advance the case. He said he had “decided to take a break from organised meetings, events and activities in The Nationals Federal Parliamentary party room.

“I will reassess my position when Federal Parliament resumes in October.

“To be clear, I continue to support the Coalition government but want some time away from the The Nationals Federal Parliamentary party room to reflect on a number of significant issues.

“My decision follows months of frustration with the repeated failure of the leadership to even attempt to moderate some of the more disrespectful and offensive views expressed by a minority of colleagues.”

Chester, who was dropped from the frontbench when Joyce became leader, has been highly critical of Queensland National George Christensen, whose string of provocative comments have included, most recently, accusing Victorian police of using excessive force against demonstrators, and suggesting they should be arrested.



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Josh Frydenberg prepares ground for Scott Morrison to commit to 2050 climate target

Joyce on Sunday again indicated he could not silence Christensen, who is retiring at the election, and said that anyway, there was a right of free speech.

Asked on SBS whether he thought he had the support of the majority of the Nationals to go forward on climate policy, Morrison said: “It’s not about my view. It’s about what I think Australians are clearly looking for”.

“My job is to bring my government together to focus on the plan that can achieve it.

“A plan [that] says to Australians, whether they’re up in the Hunter, or down in Bell Bay, or up in Gladstone or up in the Pilbara […] this is how we achieve net zero emissions in the future.

“Our view is that we can achieve that by keeping the costs low, keeping people in industries, ensuring we’re using transition fuels that take us from one place to the next, and we take people on the journey,” Morrison said.

The communique from the QUAD summit which Morrison attended at the end of his trip said: “We have joined forces to tackle the climate crisis, which must be addressed with the urgency it demands.

“Quad countries will work together to keep the Paris-aligned temperature limits within reach and will pursue efforts to limit it to 1.5°C above pre-industrial levels.

“To this end, Quad countries intend to update or communicate ambitious NDCs [nationally determined contributions] by COP26 and welcome those who have already done so.”

The QUAD includes the US, Australia, Japan and India.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Vital Signs: a simple way to cut carbon emissions — don’t let polluters hide


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Richard Holden, UNSWWorld leaders and about 30,000 others from assorted interest groups will converge on Glasgow in November for the United Nations’ 26th annual climate summit, COP26 (“Conference of the Parties”).

It will be five years (allowing for a one-year Tokyo 2020-style pandemic hiatus) since the Paris Agreement adopted at COP21 in 2015.

There has been plenty of cynicism about that agreement, its structure and non-binding nature. Important emitters like China were effectively exempt from making meaningful carbon-reduction commitments.

Some OECD countries (such as Canada) have paid lip service to the agreement but done little. Still others (such as Australia) have made some progress reducing emissions but have no long-term plan, relying instead on bumper-sticker slogans about “technology not taxes” and, until recently, hiding behind dodgy accounting tricks.

That aside, it’s hard to see how the world solves what amounts to — as economists put it — a “coordination problem” without global agreements.

For roughly half a century economists have been unanimous about what those agreements must involve — a price on carbon. The 2018 economics Nobel prize awarded to William Nordhaus was belated recognition of this fact.

A price on carbon — in the form of a carbon tax or emissions trading scheme — is a way to use the power of the market’s price mechanism to balance the good that comes from emitting carbon (economic development) with the bad (climate change).

Set the price of carbon at the true social cost of carbon (taking into account all the ills that come from climate change) and the invisible hand of the market will balance the pros and cons. Think of it as Friedrich von Hayek meets Greta Thunberg.

But there is another, less dramatic way to harness market forces to reduce carbon emissions: disclosure.



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Vital Signs: a global carbon price could soon be a reality – Australia should prepare

Public disclosure works

The idea starts with this: plenty of consumers want to reduce their carbon footprint and are willing to pay for it. That’s why people recycle, use green energy even when it’s more expensive, buy low-carbon clothing, and drive electric cars. A bunch of folks are willing to pay to be green.

The success of companies such as eco-friendly sneaker company Allbirds and electic vehicle maker Tesla exist is evidence of the market catering to these consumer preferences. But can we make it easier for consumers to express their environmental preferences? Can we turbocharge the market for greener products?

A working paper published this month by the National Bureau of Economic Research suggests the answer is “yes”.

Authored by Carnegie Mellon University economists Lavender Yang, Nicholas Muller and Pierre Jinghong Liang, the paper looks at the US Environmental Protectino Agency’s Greenhouse Gas Reporting Program. In effect from 2010, this has required big carbon emitters (including all power plants that produce more than 25,000 tonnes of carbon dioxide a year) to publicly disclose how much they emit.

The authors look at the effect of this disclosure program on the electric power industry, which accounts for 27% of all US emissions.

The results are striking. Plants subject to greater scrutiny reduced their carbon emissions by 7%. Plants owned by publicly listed companies reduced their emissions by 10%. Large public companies, such as those in the S&P500 stock index, cut emissions even more (11%).

Accountability increases environmental performance

Change in estimated CO2 emissions for GHGRP plants and non-GHGRP plants by year using data from the US EPA's Emissions & Generation Resource Integrated Database (eGRID).
Change in estimated CO2 emissions for GHGRP plants and non-GHGRP plants by year using data from the US EPA’s Emissions & Generation Resource Integrated Database (eGRID).
NBER Working Paper 28984

Responding to investor concerns

The reason appears to be responsiveness to investors wanting companies to be more environmentally responsible. This explains why emissions went down more for public companies, and even more for large public companies, whose shares are more likely to be held by funds with an ESG (Environment, Social and Governance) mandate.

Some of these investors have pro-social preferences and want to invest their money in more sustainable companies. Others might not care about the environment per se, but know that lots of folks do. Businesses that cater to these consumer preferences have an advantage.



Read more:
Vital Signs: a 3-point plan to reach net-zero emissions by 2050

The dark side to this is that the decline in emissions by major plants was partially offset by an increase in emissions by plants under the 25,000-tonne threshold not subject to disclosure.

In other words, companies responded to the incentives provided by disclosure requirements. Those who could “hide” their emissions did not.

The lesson is that disclosure requirements work. They force companies to own up to their customers and investors, and face the reality of their emissions behaviour. But we need to apply it to all companies, not just big ones.The Conversation

Richard Holden, Professor of Economics, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Josh Frydenberg prepares ground for Scott Morrison to commit to 2050 climate target


Michelle Grattan, University of CanberraTreasurer Josh Frydenberg will prepare the way for Scott Morrison to take a target of net zero emissions by 2050 to Glasgow, when he warns on Friday capital inflow will be at risk if Australia is seen as a climate laggard.

“Australia has a lot at stake. We cannot run the risk that markets falsely assume we are not transitioning in line with the rest of the world,” Frydenberg says in a speech to the Australian Industry Group released ahead of delivery.

“Were we to find ourselves in that position, it would increase the cost of capital and reduce its availability, be it debt or equity”.

Frydenberg says there must be investment in emissions reduction in all sectors, including agriculture, mining, and manufacturing.

He firmly rejects the claim – advanced by some critics especially in the Nationals – that the resources and agriculture sectors will face decline in the transition.

“To the contrary, many businesses in these sectors are at the cutting-edge of innovation and technological change,” he says.

The government is set to finalise its revised climate policy after the Prime Minister returns from the United States.

Morrison, who has been pressed hard on climate by President Joe Biden and Britain’s Prime Minister Boris Johnson while in the US this week, wants an unequivocal stand on the 2050 target for the November Glasgow climate conference.

The government’s present formulation is that it is committed to net zero “preferably” by 2050.

Morrison has been negotiating with Nationals leader Barnaby Joyce on a deal which will contain a major pay-off for the minor Coalition partner.

Frydenberg says in his speech that in a long term shift “markets are moving as governments, regulators, central banks and investors are preparing for a lower emissions future”. He points out 129 countries have committed to net zero by 2050.

“Markets are responding as participants make their own judgements as to what this new dynamic means for their existing portfolios and their future investment decisions.

“In particular, they are increasingly focusing on the physical risks to their investments of climate-related events and the transition risk to their investments as consumer preferences, technological and regulatory settings change.

“As a result, trillions of dollars are being mobilised globally in support of the transition.”

One of Australia’s major banks in the last year has coordinated more than 50 transactions worth $100 billion in climate finance related activities.

“Increasingly, institutional investors are themselves committing to the net zero goal, like BlackRock, Fidelity and Vanguard, three of the biggest fund managers in the world. For them, there is an alignment between the commercial opportunities and the environmental outcomes.”

Frydenberg emphasises the importance of Australian markets operating effectively, with investors able to make informed, timely decisions, and capital available at the lowest cost.

He says historically, Australia has relied heavily on imported capital, whether foreign investment or wholesale funding of the banking system. Foreign investors hold close to half the Commonwealth government bonds.

Reduced access to these capital markets would raise borrowing costs, affecting everything from the interest rates on housing and small business loans to the financial viability of big infrastructure projects, he says.

Frydenberg says Australia is addressing the challenges on two fronts.

Regulators have focused on the disclosure of material financial risks relating to climate change and promoted a best practice financial framework. And Australia is making progress in meeting its emissions reduction targets.

“To go the next step and achieve net zero will require more investment across the economy,” Frydenberg says.

“An economy-wide transition is needed, as in the words of the former Governor of the Bank of England, Mark Carney this ‘isn’t about funding only deep green activities, or blacklisting dark brown ones’”.

Frydenberg says “opportunities will abound and it will be those businesses that recognise these trends and put plans in place to adapt that will have the most promising futures”.

He says the message to Australian banks, super funds and insurers is “if you support the objective of net zero, do not walk away from the very sectors of our economy that will need investment to successfully transition.

“Climate change and its impacts are not going away.

“It represents a structural and systemic shift in our financial system, which will only gain pace over time.

“For Australia, this presents risks we must manage and opportunities we must seize.”The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.