Australia needs two emissions trading schemes, Climate Change Authority says

01 September 2016 | Markets

The Climate Change Authority has advised the Australian government to institute two emissions trading schemes and strengthen regulations in order to meet Australia’s 2030 emission reduction targets and to allow it to lift those targets in line with international climate change obligations.

The move is expected to put pressure on the new environment and energy minister, Josh Frydenberg, to strengthen Australia’s climate policies but it has received a mixed response. Some commentators are critical of the report for making recommendations on how the government can reach its existing 2030 emissions targets yet not considering how it can meet its obligations made in Paris last year to keep warming “well below” 2C.

As Guardian Australia revealed on Tuesday, two members of the authority were so outraged by the lack of ambition that they vowed to produce a dissenting “minority report”.Wendy Craik, the chair of the Climate Change Authority, said: “The authority found that one size cannot fit all of the many opportunities that exist to reduce emissions across our economy. Australia needs a set of measures – in other words, a policy toolkit – that is well calibrated to capture reductions in different sectors.”

The “special review” and associated electricity modelling report recommended an intensity-based scheme for the electricity sector, where dirtier operations are more heavily penalised. It said the baseline should be reduced over time, and reach zero “well before 2050”. Generators would have access to credits to help them stay within the baselines, making the system a type of emissions trading scheme.

The review also recommended the government strengthen its “safeguards” policy, which sets limits on how much greenhouse gas Australia’s biggest polluters can emit but is now so generous it doesn’t act to reduce emissions. It says the baselines should decline over time, “in line with Australia’s Paris commitments”, and be extended to apply to more facilities.

The review said facilities covered by the safeguards mechanism could trade carbon credits to help reduce emissions, making the system a second emissions trading scheme. “We also think that an enhanced safeguard mechanism offers a pragmatic and durable way of reducing emissions across a range of industrial, manufacturing and resource sectors,” Craik said.

For sectors not covered by those two policies, the review recommended a suite of regulations, including emissions reduction standards for light vehicles, and recommended a “cost-benefit analysis” be conducted to examine carbon dioxide standards for heavy vehicles. Energy efficiency information and regulations for buildings and homes should be continued and strengthened, the review recommended. It also called for an examination of the policies to be conducted every five years, starting in 2022.

In a media release, Craik said the report did not seek to reassess Australia’s 2030 targets, instead focusing on “policy actions that Australia should take to meet its Paris obligations”. But since Australia’s 2030 targets are widely acknowledged as inconsistent with agreements made at Paris, some people – including two members of the authority –think the organisation has not met the terms of reference for its review. The review was commissioned by the government in December 2014 to advise it as to whether Australia should institute an emissions trading scheme, and was ordered to consider any international agreements Australia has entered into.

In December 2015 Australia signed the Paris agreement, in which governments agreed to limit global warming to “well below 2C” and to aim to limit it to just 1.5C. That imposes a global carbon budget beyond which the world must move to zero net carbon emissions. The government now has a target to reduce carbon emissions to between 26% and 28% below 2005 levels by 2030 – and the authority has made recommendations on how to meet that goal.

The Climate Institute released a report last week showing if Australia stuck to that target it would need to then reduce emissions to zero within five years to stay within its carbon budget.The Greens’ climate and energy spokesman, Adam Bandt, said the government needed to listen to the authority’s call to strengthen policy, which he said it had made despite being “stacked” with Coalition appointments.

But Bandt was critical of the authority’s recommendations not being aimed at meeting Australia’s Paris obligations. “The final report of the special review backs the renewable energy target and outlines a range of potentially useful policies but they fail to add up to what the authority last year said is needed,” he said.

“Since original chair respected former RBA Governor Bernie Fraser resigned and the Abbott appointees took their position, we’ve seen less of the ‘frank and fearless’ advice expected of an independent institution.” Erwin Jackson from the Climate Institute said his initial impressions of the report were that it had some valuable recommendations. “But the package as a whole is not balanced against the need to deliver what it has signed up to in Paris,” he told Guardian Australia. “The emissions pathway that is implied in the report will use up 90% of the carbon budget by 2030,” Jackson said. “Paris has a number of objectives that the authority was required to consider. Those objectives are to limit warming to 1.5 to 2 degrees.

As scientists warn the future of the Great Barrier Reef looks even bleaker than feared, we want to see the impacts of global warming on your part of the country. “The fundamentals of climate science say that if you emit a lot in the short term, you need to emit a lot less in the long term. So if these policies are implemented as they currently stand, after 2030, to meet the Paris objectives, carbon prices would need to skyrocket, coal plants would need to be closed in a matter of years and renewables investments would need to be scaled up beyond reasonable levels.”

The review periods of five years wouldn’t be enough to help Australia ratchet up its ambitions, Jackson said, since the first review would happen in 2022, two years after the government will be expected to update its targets. Jackson was critical of the authority for “second guessing” the politics rather than producing objective advice.

Source: The Guardian