Opposition resources spokesman Joel Fitzgibbon has had his proposal to bring Labor’s climate change target into line with the government’s immediately torpedoed by the party’s climate spokesman Mark Butler.
In a speech to the Sydney Institute made public ahead of its Wednesday evening delivery Fitzgibbon suggested the ALP offer “a political and policy settlement” to match the higher end of the government’s 26-28% target for reducing emissions on 2005 levels by 2030.
Labor’s controversial election policy was for an ambitious 45% reduction.
Fitzgibbon said the change he advocated would mean “the focus would then be all about actual outcomes, and the government would finally be held to account and forced to act.
“A political settlement would also restore investment confidence and for the first time in six years, we could have some downward pressure on energy prices,” Fitzgibbon said.
But Butler rejected the proposal saying the government’s target “is fundamentally inconsistent with the Paris agreement and would lead to global warming of 3℃.
“Labor remains committed to implementing the principles of the Paris Agreement, which are to keep global warming well below 2℃ and pursue efforts around 1.5℃,” he said.
“Labor’s commitment to action on climate change is unshakeable. We will have a 2050 target of net zero emissions and medium-term targets which are consistent with the agreement,” Butler said.
Despite dismissing Fitzgibbon’s idea, Butler has acknowledged that Labor’s climate change policy must be up for grabs in the party’s review of all its policies between now and the 2022 election.
But revising the climate policy will be one of its major challenges, because the party is caught between its inner city progressive constituency and its traditional blue collar voters. Its ambivalent position on the planned Adani coal mine cost it votes in Queensland at the election.
Apart from the politics, the 45% target for 2030 would be more unrealistic at the next election because emissions at the moment are increasing, meaning ground is being lost.
Fitzgibbon, who takes a more pro-coal attitude than many of his colleagues, had a big swing against him in his NSW coal seat of Hunter.
He said in his speech that a 28% reduction would be a “meaningful achievement” and could be built on later. He also pointed out bluntly that Labor couldn’t achieve anything if perpetually in opposition.
“If we could get to 28% by 2030, and also demonstrate that we could do so without destroying blue collar jobs or damaging the economy, then we would have a great foundation from which to argue the case for being more ambitious on the road to 2050,” he said.
Shadow treasurer Jim Chalmers, who is from Queensland, refused to be pinned down when pressed on Fitzgibbon’s proposal.
“My view is we can take real action on climate change without abandoning our traditional strengths, including in regional Queensland,” he said.
The Victorian minister for energy, environment and climate change, Lily D’Ambrosio, asked at the Australian Financial Review’s national energy summit about Fitzgibbon’s comments, said she wasn’t much interested in what a federal opposition did.
“We have a very strong and ambitious policy and we took that to the last state election, and we all know the result of that election, so we will continue to implement our policies and get them done,” she said.
Federal energy minister Angus Taylor pointed to the divisions in the opposition but welcomed that there were “people in Labor who are making sensible suggestions about dropping their policies from the last election.
“What we saw happen there was Labor went to the election with policies – 45% emissions reduction target, 50% renewable energy target – where they weren’t able to or willing to detail the costs and impacts of those policies,” he said.
Bill Shorten has rebuffed overtures by the Greens leader Richard Di Natale to work closely with a Labor government to promote a strong policy on climate.
Shorten accused the Greens of “trailing their coat and saying, ‘Look at me’”.
“The fact of the matter is that if we get elected we’ll be making decisions in a Labor cabinet and the decisions will be made by members of parliament of the Labor party,” Shorten said, in anticipation of Di Natale’s Wednesday address to the National Press Club.
“What we will do is we will implement the policies we’ve put forward,” Shorten said.
In fact a Labor government, which would be in a minority in the Senate, would probably have to negotiate with the Greens to get its climate policy through the Senate.
After the backlash against the formal Labor-Greens alliance under the Gillard government – in which the two parties worked in conjunction on the carbon pricing scheme – Shorten is anxious to keep maximum distance between the ALP and the minor party.
For its part the government paints Labor and the Greens as “joined at the hip”. Scott Morrison said on Wednesday: “We know who holds the chain – if it’s not the Greens it’s the militant unions”.
In his Press Club appearance Di Natale ran a double line – attacking Labor policies on climate and the environment as inadequate, while stressing the need for co-operation in government.
The Greens were “deeply concerned that Labor has taken a weaker climate policy in 2019 than what they proposed in 2016, which was weaker still than what they took to the 2013 election”.
Di Natale said he was not seeking a formal alliance between the Greens and Labor as in 2010 – rather “we want to work constructively. We want to negotiate”.
He was “not surprised to hear the response from Bill Shorten today […] we hear that time and time again in the lead-up to an election.
“But we need the Greens in the Senate working with the Labor party and other voices to ensure that the policy that’s delivered meets the science and that is up to the challenge of transitioning our economy”.
A Shorten government “will have two pathways open to them after the election, ” he said.
“They can either pursue a climate and energy policy designed to pass through a divided Coalition party room […] or they can negotiate a comprehensive response, based on science, with the Greens.
“My message to Bill Shorten is that you can’t achieve bipartisanship with the Liberals because they can’t even agree among themselves,” he said.
“The decision for Bill Shorten is whether he follows the take-it-or-leave-it approach of Kevin Rudd in 2009, or negotiates with the Greens, just like Julia Gillard did in 2011, to deliver a climate policy that gives future generations a chance”.
Di Natale would not be drawn on what approach the Greens would take if negotiating climate policy with Labor. “The key part of any negotiation is not to conduct it publicly through the media.”
The Greens leader defended his party against criticism over its refusal to support the Rudd government’s scheme, saying Rudd’s policy “would have locked in failure”.
Meanwhile a number of independent MPs and candidates have signed a statement initiated by the Australian Conservation Foundation committing, if elected, to work with each other and other parliamentarians to promote initiatives on climate.
“We recognise that to be a true servant of our communities and our national parliament, we must demonstrate and deliver strong leadership on climate change,” they say.
Among the objectives they commit to are:
opposing the development of the Adani mine
ensuring Kyoto Protocol carryover credits are not used to meet Australia’s 2030 emissions education target
developing a roadmap to power Australia from 100% renewable energy, aiming to achieve at least 50% by 2030
opposing attempts to commit public money to new or existing coal or other fossil fuel operations, including any government underwriting of coal or gas power plants.
Those signing the statement are Andrew Wilkie, member for Clark; Kerryn Phelps, member for Wentworth; Julia Banks, member for Chisholm who is running as an independent candidate in Flinders; Dr Helen Haines, independent candidate for Indi; Zali Steggall, independent candidate for Warringah; Rob Oakeshott, independent candidate for Cowper, and Oliver Yates, independent candidate for Kooyong.
A Shorten government would add about 100 high polluters to those subject to an emissions cap, and drastically slash the present cap’s level, under the opposition’s climate policy released on Monday.
Labor would aim for a new threshold under a revamp of the existing safeguards mechanism of 25,000 tonnes of direct carbon dioxide pollution annually, which would be phased in after consultation with industry.
This would be a major reduction from the current cap of 100,000 tonnes. About 140 to 160 polluters come under the existing cap.
The safeguards mechanism was established by the Coalition government to cap pollution for the biggest polluters by setting limits or “baselines” for facilities covered. But Labor says it has been ineffective.
On transport, the policy sets an ambitious target of having electric vehicles form 50% of new car sales by 2030. The government fleet would have an electric vehicle target of 50% of new purchases and leases of passenger vehicles by 2025.
The climate change policy covers industry, transport and agriculture, with the proposed measures for the electricity sector, including an in-principle commitment to a national energy guarantee (NEG) and subsidies for batteries, already announced.
The agriculture sector would not be covered by the expanded safeguards policy.
The government’s emissions reduction fund – recently allocated a further A$2 billion over a decade and renamed – would be scrapped if Labor wins the May election.
The climate policy is the third of three key policy announcements the opposition wanted to make before the election is called, likely next weekend. The others were the wages policy and the announcement of the start date – January 1 – for the proposed crackdown on negative gearing.
The opposition has committed itself to a 45% economy-wide reduction in emissions relative to 2005 levels by 2030, compared with the government’s commitment to a reduction of 26-28%.
Labor’s policy confirms that it would not use Australia’s credits from the expiring Kyoto Protocol to help meet its Paris target, saying this course is “fake action on climate change”. Bill Shorten said on Sunday: “It’s only the Australian Liberal Party and the Ukraine proposing to use these carryover credits that I am aware of.”
Labor says it would “work in partnership with business to help bring down pollution.”
“Labor’s approach isn’t about punishing polluters. It’s about partnering with industry to find real, practical solutions to cut pollution, in a way that protects and grows industry and jobs.”
“There will be no carbon tax, carbon pricing mechanism, or government revenue,” Labor says.
“Rather, Labor will reduce pollution from the biggest industrial polluters by extending the existing pollution cap implemented by Malcolm Turnbull.”
“Pollution caps will be reduced over time and Labor will make it easier for businesses to meet these caps by allowing for industrial and international offsets.”
The expanded scheme’s new threshold would capture an estimated 250 of the biggest industrial polluters – 0.01% of all businesses.
Businesses would be able to earn credits for “overachievement” – reducing pollution below their baselines. They could sell these credits or use them to meet their future cap.
“Tailored” treatment would be provided to emissions-intensive trade-exposed industries (EITEs) such as steel, aluminium and cement. There would be a A$300 million Strategic Industries Reserve Fund “to support these industries in finding solutions to cut pollution and remain competitive”.
A Shorten government would consult with industry and experts on baselines for individual entities and the timing of reduction.
It would also put in place “a well-functioning offset market and reinvigorate the land offset market”.
“Currently, a facility that emits more than its baseline must offset excess emissions by purchasing offsets, primarily from the land sector. But currently businesses cannot access international offsets, or offsets from the electricity sector.
“Labor will make it easier for covered businesses to meet any offset obligations, not only by allowing for the creation and sale of offsets if emissions fall below baselines, but also through the purchase of international offsets and potentially offsets from the electricity sector.
“We will also boost offset supply through revitalising the Carbon Farming Initiative (CFI) – including reforms to strengthen the integrity of the CFI, and increasing land and other sector abatement opportunities.
“This will include exploring the establishment of ‘premium’ land sector credits to provide substantial environmental, biodiversity and other co-benefits, establishing a Carbon Assessment Standard to boost the bankability of offset projects, and re-vitalising offset methodology research and development with an additional A$40 million in funding over four years.
“Labor’s plan will help industry reduce pollution at least cost, and give traditional owners, farmers, the forestry industry and traditional owners new opportunities to earn income.”
On transport – which accounts for nearly 20% of Australia’s emissions – Labor says Australia is now last among western countries for electric vehicle uptake.
“Setting a national target will deliver more affordable electric vehicles into the Australian market and drive the switch to electric vehicles, reducing their cost, creating thousands of jobs and cutting pollution.”
Businesses would get an upfront tax deduction to buy electric vehicles, as part of the ALP’s announced Australian Investment Guarantee.
One aspect of moving quickly to government electric vehicle fleets would be that it would develop a secondhand market, Labor says.
“Labor will also work with industry to introduce vehicle emissions standards, to save Australian motorists hundreds of dollars each year at the bowser while driving down pollution on our roads.
“Australia is now one of the only developed nations without vehicle emissions standards in place. As a result, motorists will pay as much as A$500 each year more at the bowser than they should be, as well as seeing pollution on our roads skyrocket.
“Labor will consult on the timeline and coverage of vehicle emission standards to ensure consumers are made significantly better off, and aim to phase-in standards of 105g CO₂/km for light vehicles, which is consistent with Climate Change Authority advice.”
These standards would be in line with those in the United States but less stringent than those in the European Union.
“These standards will be applied to car retailers to meet average emissions standards, rather than imposing blanket mandatory standards on manufacturers.
“This will allow retailers to meet the standards by offsetting high emissions car sales with low or zero emissions car sales – such as electric vehicles.”
The government has reacted predictably to the Labor climate plan, branding it a “new tax”, ahead of what will be a major Coalition scare campaign in the election.
Scott Morrison said the opposition leader “does not have a plan, he just has another tax.
“What we’ve got here is a ‘re-Rudd’ of a failed policy that costs jobs, that costs businesses, that will cost Australians at least $9,000 a year, with the reckless targets that Bill Shorten will make law.”
On electric cars, Morrison said Shorten needed to explain how in 10 years he would take them from 0.2% of the market to 50% – because if he didn’t achieve his “reckless target […] he has to come back and get that money off you”.
Energy Minister Angus Taylor said the Shorten policy “would be a wrecking ball in the economy.
“It would raise the price of electricity and the price of gas and the price of food and the price of cars. Labor needs to come clean on the detail – not just the mechanism, which we know is the carbon tax.”
The Business Council of Australia welcomed the further details Labor had provided but said there were unanswered questions including “what mechanism will drive and manage the transition to lower-emissions generation in the electricity sector?”
“It remains unclear how abatement will be delivered in the electricity sector and how the various announcements made today will contribute to an economy-wide emissions reduction target,” the BCA said.
It said it had strongly supported the National Energy Guarantee (NEG) and called on the ALP, if elected, “to commit to working with the states and territories to implement the scheme as a credible, market-based mechanism to drive abatement and investment in the electricity sector.”
The Labor party has supported in principle a NEG – the plan the Coalition dumped because of an internal split over it.
The Australian Conservation Foundation gave Labor’s policy a qualified tick, describing it as “a serious policy response to the existential threat of global warming that recognises pollution must be cut across all industry sectors.”
“Labor’s climate change plan does address many of the important challenges Australia has in transforming into a zero-pollution economy,” the ACF said.
But “unfortunately, sections of Labor’s policy platform contain significant wriggle room that big polluters may seek to exploit.
“If it wins government Labor must quickly harden the detail around its policies and resist attempts of industry lobby groups like the Minerals Council of Australia, the Business Council of Australia and the Australian Automobile Association to weaken climate action.”
With a commitment to cutting climate pollution by 45% on 2005 levels by 2030, compared with the Coalition’s 26-28% target, there was never a doubt that Labor’s policy agenda was going to be more ambitious than the government’s.
But what exactly does it include, how does it stack up against the scientific imperatives, and what’s missing?
By offering a broad platform, Labor has moved away from a single economy-wide policy solution to climate change, such as a carbon price or emissions trading scheme. Instead, it has opted for a sector-by-sector approach.
This is smart politics and policy. By developing a climate plan for each major sector – industry, electricity, transport, and agriculture and land – it is possible to modernise each sector in a bespoke way, thus driving more innovation and job creation while also cutting carbon pollution.
Labor has taken the politically safe option of expanding the Coalition’s “safeguard mechanism” to lower industrial greenhouse emissions. Under this scheme, big emitters are required to keep their emissions below a prescribed “baseline” level, or to buy offsets if they exceed it.
Labor has lowered the threshold for the scheme, meaning it will now cover all businesses that emit more than 25,000 tonnes of carbon dioxide per year (the cutoff is currently 100,000 tonnes). From there, all of these companies will have to lower their emissions by 45% by 2030 on 2005 levels.
Some details are still to be determined, including the precise trajectories of emissions reductions, the use of offsets (which while welcomed by industry, is considered by many people to be highly problematic), and the treatment of emissions-intensive, trade-exposed industries such as aluminium and cement. As with all complex policies, the devil will be in the detail.
Labor’s policy also includes a “Strategic Industries Reserve Fund”, which would support non-commercial technical innovations to help energy-intensive industries reduce their pollution. The world has already seen significant technical advances, from electrification of gas furnaces, to new cement blends.
But few have been developed, trialled or adopted by Australian industry, and they are not yet as cheap as deploying renewables or energy-efficiency solutions in the electricity sector. The new fund would therefore potentially help drive down emissions in the longer term by opening up access to technologies that are not yet cost-competitive.
Other commitments include plans for energy efficiency, hydrogen power, support for community energy, and establishment of a Just Transition Authority. These are worthwhile next steps, but much more needs to be done to replace Australia’s ageing coal-fired power stations with clean, renewable energy.
Labor’s transport plans offer a clear chance to deliver economic benefits alongside emissions reductions. It has pledged to introduce vehicle emissions standards equivalent to those in the United States (which are not as strict as those in the European Union).
Australia is the only OECD country that does not have vehicle emissions standards, leaving manufacturers free to dump old, gas-guzzling models on the Australian market. Labor calculates that this costs Australian households an extra A$500 per year in fuel costs, compared with other countries.
Alongside this is also a 50% target for electric vehicles (EVs), requirements for new EV charging infrastructure, and tax breaks for businesses that buy EVs. These are sensible first steps towards driving down transport emissions, which are rising rapidly. Indeed, they are the very least a government should be doing, which makes the fact that after six years in government the Coalition won’t have a plan for electric vehicles until mid-2020 very concerning.
Agriculture is the most difficult of all sectors in which to reduce emissions; it is therefore unsurprising that the lightest-touch policy approach is in this sector. Federal Labor will want to take advantage of all the departmental support it can to properly tackle this tough nut.
What it has done is commit to two main policies: strengthening the Carbon Farming Initiative, and ensuring that Queensland’s land clearing laws are applied across the country. The land clearing laws particularly will help reverse the current widespread land clearing occurring in New South Wales, in response to the state government weakening these laws. And comes in stark contrast to the federal government’s proposal to pay farmers not to chop down trees.
The final prong in Labor’s climate strategy is to rule out any creative accounting tricks. The Coalition government is proposing to use carryover Kyoto credits that are a result of the Howard government negotiating a “good deal” for Australia in 1997. Labor has ruled out using these loopholes as part of meeting Australia’s international commitments and has also promised to do more to help our Pacific neighbours. This support may be little help, however, if Labor doesn’t strengthen its support for holding global warming to 1.5℃.
What’s left out?
This package is a solid, technocratic basis for tackling Australia’s rising greenhouse emissions. Unfortunately, there remain some glaring omissions.
The biggest omission is the lack of a plan to keep fossil fuels in the ground. Fossil fuels, particularly the mining and export of coal are Australia’s biggest contribution to climate change. Yet the ALP’s policy contains only two mentions of coal, nothing on coal exports, and no mention of gas. Labor is evidently still sitting on the fence on the future of the controversial Adani coalmine, and on the question of fossil fuel subsidies more generally.
While it might be politically convenient to let the Coalition tear itself apart over coal, the scientific reality is that to have a hope of limiting warming to 1.5℃, Australia needs to rapidly move away from coal both domestically and for exports. This is not something Labor will be able to ignore for long.
The policy is also missing the human face of climate change. Labor is choosing to frame climate as an economic and environmental issue. It is both of those things, but it is also a social justice issue. Indeed, those most affected by climate change are some of Australia’s (and the world’s) most disadvantaged people. For instance, the Aboriginal community of Borroloola in the Northern Territory, who are currently fighting fracking on their land, were recently evacuated due to Cyclone Trevor.
Yesterday’s policy announcement was a missed opportunity to put Australians’ health and well-being at the centre of the climate crisis and redress historical injustices by actively supporting Aboriginal and other vulnerable communities like Borroloola to benefit from climate action.
The lack of focus on health is doubly puzzling, given that Labor already announced a Climate and Health Strategy in late 2017, and could easily have drawn attention to it here.
While there is no doubt that Labor is far ahead of the Coalition on climate change, this package is far from what the science (and schoolchildren!) are telling us is needed.
As bushfires, floods, droughts and protests are all set to continue, don’t expect this issue to go away after the federal election.
Deputy Opposition Leader Tanya Plibersek explained:
These organisations ensure that ordinary Australians have proper access to the law. We know that big corporations have deep pockets and they’re able to employ expensive legal teams but ordinary Australians – farmers, indigenous communities, ordinary citizens – should have just the same access to the law as anybody with the most expensive lawyers in the country.
With growing public interest in planning and development, including the celebrated Green Bans movement, those laws introduced new requirements for environmental impact assessment, heritage protection and public participation. They also gave everyone the right to take legal action by bringing environmental matters to court.
Even the best legislation is of little value, however, if people don’t have the means to make use of it. That is where the EDO comes in.
In 1981, shortly after the opening of the new Land and Environment Court, a group of lawyers began working to establish an organisation to empower the community to make use of these new laws to protect the environment. After four years of planning and fundraising, the NSW EDO opened with a staff of one: solicitor Judith Preston.
The idea spread. EDOs were set up in Victoria and Queensland in the early 1990s, and eventually established in all eight states and territories, with an additional office in North Queensland. The various EDOs have always remained separate, each managed by an independent board, although since 1996 they have shared advice and support through a national network.
Punching above their weight
Despite their shoestring budgets, EDO lawyers have proved effective, developing impressive programs of litigation and legal education. With grants from groups such as the Myer Foundation and, later, recurrent funding from state and federal governments, EDOs were a well established part of the Australian legal landscape by the early 2000s.
NSW, Queensland and Victoria were particularly effective in securing funding, each boasting dozens of staff at their peak in the mid-2000s. Thanks to large grants from the NSW Public Purpose Fund and the MacArthur Foundation, the NSW EDO’s staff included not just lawyers but also environmental scientists, an Indigenous solicitor working specifically on Indigenous matters, and a team working from a new regional office in Lismore.
With success, particularly against Adani, came criticism. After almost 20 years of bipartisan support, the Abbott government abruptly cut funding to EDOs in 2013 amid allegations of activist “lawfare”. Coalition governments in several states followed suit, prompting staff cuts, restructures, and an increase in fundraising efforts among the EDO network. EDO Victoria became Environmental Justice Australia, the Lismore office closed, and EDOs generally reduced the scale and scope of their work.
While EDOs are best known for their litigation – running high-profile cases on issues such as climate change, conservation and alleged water theft in the Murray-Darling Basin – their work is much broader than this. All EDOs provide free legal education and advice, both via telephone and through community workshops and seminars, many in rural and remote areas. They publish plain-language explanations of a complex range of state and federal environmental laws, a vital resource used by government departments and universities as well as members of the public. EDOs also undertake law reform work, making submissions to parliamentary inquiries and giving expert evidence.
This work remains vital. As in the 1980s, laws are only as effective as the people who enforce them. As the Productivity Commission explained in its inquiry into access to justice (see page 711 here), “The rationales for government support for environmental matters are well recognised.”
Legal education, outreach, advice and, occasionally, public interest litigation, are essential for environmental justice and should be funded accordingly.
Australia will get the biggest overhaul of its federal environment laws in two decades if a Labor government is elected next year.
Labor would establish a new Australian Environment Act and create a federal Environmental Protection Agency in its first term.
The commitments were flagged by Bill Shorten and approved by delegates at the ALP national conference, which is meeting in Adelaide.
The new legislation would replace the present Environment Protection and Biodiversity Conservation Act which was passed under the Howard government’s environment minister Robert Hill in 1999.
The new agency would oversee and enforce the revised act, conduct inquiries and advise the minister on environmental approval decisions.
Environment shadow minister Tony Burke said the current act was now twenty years old and had not been significantly reformed.
“It is time to bring it into the twenty-first century. In 2018, it is bizarre that the national environmental law does not properly factor in climate change”, Burke said.
He said the new EPA would have “the mission to protect Australia’s natural environment”.
“It will be informed by the best available scientific advice and ensure compliance with environmental law.”
It would “have the ability to conduct public inquiries on important environmental matters”.
“The new legal framework will compel the Australian government to actively protect our unique natural environment and demonstrate national leadership”
The decisions are a victory for the Labor Environment Action Network (LEAN), a group within the ALP membership that lobbies on environmental matters. LEAN got about 480 branches to sign up to its push for extensive reforms.
While LEAN did not obtain its whole agenda, it won extensive elements of what it was pressing for.
The changes were promoted by the left of the ALP.
It was reported that there was resistance from Burke to some of the LEAN demands.
Burke said Labor would establish a working group of experts including scientists, environmental lawyers and public policy thinkers to refine the detail of the changes. Stakeholders, including states and territories, Indigenous representatives, affected industries, business groups, unions and civil society would also be involved.“
“The Australian Environment Act will aim to tackle problems identified by industry, which has identified inefficiencies, delays and hurdles. The new law will protect the environment while aiming to give business more certainty”, Burke said.
The Greens said the environmental protections endorsed by Labor would “fail without proper investment and a commitment to no new coal, oil and gas”.
The Places You Love alliance of 54 environment groups said: “The ALP’s commitment to stronger laws that will help end the decline of nature and our extinction epidemic, and an independent national watchdog to enforce those laws, represents a step by a major political party towards rectifying decades of neglect of Australia’s environment”.
Labor’s reform agenda was attacked by the Minerals Council of Australia which said it would “add another layer of green bureaucracy, which will cost jobs, discourage investment and make it easier for activists to disrupt and delay projects”.
The Labor party’s energy policy platform, released last week, is politically clever and would likely be effective. It includes plans to underwrite renewable energy and storage, and other elements that would help the energy transition along. Its approach to the transition away from coal-fired power is likely to need more work, and it will need to be accompanied by good policy in other sectors of the economy where greenhouse emissions are still climbing.
The politics is quite simple for Labor: support the transition to renewable electricity which is already underway and which a large majority of Australians support, and minimise the risk that its proposed policy instruments will come under effective attack in the lead-up to the 2019 election.
The question then is what policy instruments Labor would use to facilitate the transition from coal to renewables.
The government’s abandoned National Energy Guarantee (NEG) policy is now a political asset for Labor. If the Coalition were to support it under a Labor government, the policy would effectively be immune to political attack. If the Coalition were to block it, Labor could blame many future problems in electricity on the Coalition’s refusal to endorse a policy that it originally devised.
The NEG has many warts. Some of the compromises in its design were necessary to get it through the Coalition party room. That no longer matters, and so it should be possible to make improvements. One such improvement would be to allow for an explicit carbon price in electricity under the NEG, by creating an emissions intensity obligation for electricity generators with traded certificates. This is better than the opaque model of contract obligations on electricity retailers under the original version.
But the real action under a Labor government might well come from a more direct policy approach to push the deployment of renewables. In his energy policy speech last week, Shorten foreshadowed that Labor would “invest in projects and underwrite contracts for clean power generation, as well as firming technologies like storage and gas”.
As interventionist as this sounds, it has some clear advantages over more indirect support mechanisms. First, it brings the costs of new projects down further by making cheap finance available – a tried and tested method in state-based renewables schemes. Second, it allows for a more targeted approach, supporting renewable energy generation where it makes most sense given demand and transmission lines, and prioritising storage where and when it is needed. Third, it channels government support only to new installations, rather than giving free money to wind farms and solar plants that are already in operation.
Managing coal exit
Where renewables rise, coal will fall. Labor’s approach to this issue centres on the affected workers and communities. A “just transition authority” would be created as a statutory authority, to administer redundancies, worker training, and economic diversification.
This is a good approach if it can work effectively and efficiently. But it may not be enough to manage the large and potentially rapid shifts in Australia’s power sector.
All that Labor’s policy says on the issue is that all large power plants would be required to provide three years’ notice of closure, as the Finkel Review recommended. But in practice this is unlikely to work.
Without any guiding framework, coal power plants could close very suddenly. If a major piece of equipment fails and repair is uneconomic, then the plant is out, and operators may find it opportune to run the plant right until that point. It’s like driving an old car – it runs sort of OK until the gearbox goes, and it’s off to the wreckers right then. It is unclear how a three-year rule could be enforced.
This is effectively what happened with the Hazelwood plant in Victoria. That closure caused a temporary rise in wholesale power prices, as new supply capacity gradually fills the gap.
One way to deal with this would be to draw up and implement some form of specific exit timetable for coal power plants. This would give notice to local communities, provide time to prepare investment in alternative economic activities, and allow replacement generation capacity to be brought online. Such a timetable would need a mechanism to implement it, probably a system of carrots and sticks.
Batteries, energy efficiency and the CEFC
Most public attention was given to a relatively small part of Labor’s energy policy platform: the promise to subsidise home batteries. Batteries can help reduce peak demand, and cut electricity bills for those who also have solar panels. But it is not clear whether home batteries are good value for money in the system overall. And the program would tend to benefit mostly upper middle-income earners.
Labor’s platform also foreshadows a renewed emphasis on energy efficiency, which is economically sensible.
Finally, Labor promises to double the Clean Energy Finance Corporation’s endowment with another A$10 billion, to be used for revolving loans. The CEFC is already the world’s biggest “green bank”, co-financing projects that cut emissions and deliver financial returns. Another A$5 billion is promised as a fund for upgrading transmission and distribution infrastructure. These are big numbers, and justifiably so – building our future energy system will need massive investments, and some of these will be best made by government.
Big plans for electricity, but what about the rest?
Overall, Labor’s plan is a solid blueprint to support the electricity transition, with strong ambition made possible by the tremendous technological developments of recent years.
But really it is only the start. Electricity accounts for one-third of national greenhouse emissions. Emissions from the power sector will continue to fall, but emissions from other sectors have been rising. That poses a huge challenge for the economy-wide emissions reductions that are needed not only to achieve the 2030 emissions targets, but the much deeper reductions needed in coming decades.
A national low-carbon strategy will need to look at how to get industry to shift to zero-emission electricity, how to convert road transport to electricity or hydrogen, and how to tackle the difficult question of agricultural emissions. More pre-election announcements are to come. It will be interesting to see how far Labor will be willing to go in the direction of putting a price on carbon, which remains the economically sensible but most politically charged policy option.
As difficult as electricity policy may seem based on the tumultuous politics that have surrounded it, more seismic shifts are waiting in the wings.