Australia now has a net zero emissions target and the pressure for a meaningful 2030 emissions target is growing. We can do a lot better to achieve sustained emissions cuts across the economy, with a suite of sensible policies. And it is imperative to design future climate policy in a proper process, on the basis of a proper national conversation and where the federal public service leads policy development free from heavy political constraints.
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Most other developed countries have greatly strengthened their 2030 targets they put forward to the Paris Agreement in 2015. Not so Australia, even though the updated commitment says that the existing 26-28 per cent emissions cut will be exceeded by up to 9 per cent. We could readily go much further. The Business Council of Australia has suggested a 46-50 per cent emissions cut by 2030.
The national reductions so far have come mostly from the land sector. Net emissions from land use change and forestry were 114 million tonnes of carbon dioxide equivalent lower in 2020 than they were in 2005, most of this was achieved through reduced land clearing between 2005 and 2013.
Emissions from electricity generation were 25 million tonnes lower in 2020 than in 2005, driven by the shift from coal to solar and wind power, especially since 2016.
Emissions from all other sources combined, accounting for about two thirds of national greenhouse gas emissions, increased in most years and are now 27 million tonnes higher than in 2005. This includes industry, agriculture, transport and energy use in buildings.
There are very few policies in place that constrain emissions. A huge untapped potential can be harnessed without delay. There is no need to wait for new technologies to be invented or perfected. What is needed is consistent and comprehensive policy to support deployment of existing technologies, and to ease the transition.
Policies to harvest low-hanging fruit for emissions cuts
Power supply is at the heart of near-term emissions reductions and the journey to net zero. Wind and solar have started to displace coal, and this transition could and should be accelerated. A large, very low emissions electricity sector can then power much more of our overall energy use.
To make it happen we need faster investments in infrastructure especially transmission lines and energy storage, reform in the National Electricity Market that creates greater investment confidence, and a planned exit of the remaining coal generators on a rapid schedule. That is the opposite of the current plans where discretionary deals and some proposed new market rules would be geared to keep coal plants running longer.
Then there is industry, where emissions arise from fossil fuel use, fugitive emissions especially methane from the gas production chain, and various industrial processes. Together these have increased by 12 per cent over the last 5 years and now comprise over a third of the national total.
The scope for effective input from the public service seems narrowly constrained, and the advice by the Climate Change Authority is mostly sidelined.
There is almost no effective policy in place to help constrain industry emissions. A quick way forward is to activate an existing policy instrument, namely the Safeguard Mechanism. This prescribes benchmarks for the emissions intensity of specific industrial activities. Currently the baselines are set so high that they apply to very few emitters, and there is no reward for doing better than the benchmark. Safeguards could be readily turned into a baseline-and-credit scheme where all companies covered have an effective incentive to reduce emissions, and trade emissions credits with each other. The scheme could then be expanded, baselines further tightened to cut emissions more quickly, and over time this can become the core of a comprehensive emissions trading scheme.
Australia's politics must get over its carbon pricing hang-up. Emissions trading or carbon taxes now cover over 20 per cent of total global emissions. They are highly effective at bringing out low cost options to cut emissions.
In transport, emissions have been growing steadily except during 2020 due to COVID restrictions. We need investment in charging infrastructure, and to send a clear signal to car companies that Australia is open for business on electric cars and trucks - not government plans that seem to perpetuate the reign of the internal combustion engine. We also need suitable regulatory settings to allow for vehicle-to-grid charging to make use of that enormous energy storage on wheels. We need fuel efficiency standards for conventional cars, to avoid being part of the global dumping ground for low-efficiency cars. Road taxes need to be reformed, with charges for road use and congestion for all vehicles, in addition to fuel excise.
Agricultural emissions in Australia are somewhat lower than they were in 2005. But this does not signify an underlying trend, and not much more will happen without additional policies. The Emissions Reductions Fund is only partially effective and nowhere near enough. What is needed is a broad based effort to help Australian farming become low-emissions, through R&D and extension and, incentives to shift to low-emissions practices, and encouragement to shift away from cattle and sheep production.
We need a better national policy process
The bigger picture is the need to position Australia for success in a low-carbon world economy. This will create pain for Australia as coal and gas exports will wither away over time, but it will also create large new opportunities including in renewable energy based export industries. The current way of doing climate policy federally will not allow the nation to get to grips with this. Electoral politics and party-internal squabbling has reined emissions policy at the federal level. The scope for effective input from the public service seems constrained, and the advice by the Climate Change Authority is mostly sidelined.
The net zero emissions "plan" released last week is an example of where process can be much improved. The document has a heavy political tinge to it, and it is light on analysis. The report selectively cites modelling, including important points like economic growth benefiting from a shift to net zero. But this modelling - done behind closed doors - has not been released. It is not the right way to go about long-term policy directions. The public service is traditionally highly capable and geared to provide policy advice in the national interest - it should be central to the process, and it should conduct that process openly, especially when it is about long term strategy.
The national net zero emissions goal is a perfect opportunity to start a proper national conversation about climate change policy. A conversation that brings all the main players to the table, to establish a shared understanding about the challenges, opportunities and the way forward. Such a process can also draw out the best available information and scenarios about possible future developments, including through structured input from the universities.
Net zero emissions gives the next federal government, whichever party wins, a chance for a reset not just on substance but also on process.
- Frank Jotzo is professor of environmental economics and climate change economics at the Australian National University's Crawford School of Public Policy, where he directs the Centre for Climate and Energy Policy.