Economists and environment groups have rounded on the Abbott government’s "direct action" climate change policy after key details of its centrepiece, an emissions reduction fund, were revealed on Thursday.
Environment Minister Greg Hunt used a late afternoon press conference to unveil the long-awaited white paper explaining how his alternative to Labor’s carbon tax cum emissions trading scheme will work.
But serious questions remain over key parameters of the policy, including what price will be paid per tonne of carbon abatement, how the scheme will be policed, and even how he plans to get the scheme through a hostile Senate.
"No surprises": Environment Minister Greg Hunt. Photo: Alex Ellinghausen
Economist and climate change expert Frank Jotzo, from the Australian National University’s Crawford School of Public Policy, said the policy was economically inefficient and would slug taxpayers instead of polluters and it was “inconceivable” that it would lead to a lasting change in Australia’s emissions trajectory.
However, Mr Hunt declared there were “no surprises” in the paper, and expressed confidence that the government would “easily” achieve a promised 5 per cent cut in emissions on 2000 levels by 2020.
He said the government would spend $1.55 billion over the next three years to pay large polluters to cut their emissions, if they succeed in securing a contract through an auction process run by the Clean Energy Regulator.
Illustration: Cathy Wilcox
That figure would grow to $2.55 billion in the fourth year.
“All the signs are we will not just achieve our targets but do it easily, on the basis of early indications in the community,” Mr Hunt said.
But it remains unclear how other crucial elements of the scheme will work, given that companies which exceed carbon emission benchmarks will face no penalties before 2015 at the earliest.
The government is so far refusing to say what compliance measures it has in mind, signalling only that the biggest polluters may be subject to such measures.
Mr Hunt said the government was yet to finalise these details which would be considered over the next 12 months in consultation with business.
He said the safeguard mechanism would cover the 130 biggest emitting companies.
Mr Hunt said he would produce draft enabling legislation in coming weeks and revealed he was preparing to negotiate with hostile crossbench senators as well as Palmer United Party head Clive Palmer.
“We will not stop until we repeal the carbon tax, and we are committed and we will not stop until we've implemented the emissions reduction fund,” he said.
But Professor Jotzo said: “The bottom line is that this is an economically less efficient means of achieving emissions reductions.”
The Climate Institute said there were some positive elements in the policy but the group remained sharply critical of the model and particularly the absence of compliance mechanisms to ensure companies took part.
Mr Hunt said individual benchmarks for carbon output would be established by looking back over the last five years to find the highest point of pollution in that period.
“If they breach that then that may be the cause for discussion or activity.”
Erwin Jackson, deputy chief executive of the Climate Institute, said this was inadequate.
“There’s no guide on what penalties or compliance mechanisms will be in place to ensure companies will act in a way that support the national interest,” he said.
Labor’s environment spokesman Mark Butler said it was astonishing that four years after the Coalition announced a plan for direct action, there were still more questions about the policy than answers.
“It confirms my view that this policy is little more than a dried up slush fund to hand over taxpayer funds to big polluters,” he said.