At various times I have ranted about the politics of climate change in Australia
And I am not alone. Many are tearing out what remains of their hair.
So I thought I would bring to your attention the latest from the current direct action policy option in place in Australia. This is the policy setting that hopes to achieve emission reduction targets through the purchase of greenhouse gas abatement at auctions.
At the end of 2016 the vehicle for this, the Emission Reduction Fund, had paid for 177 million tCO2e of abatement purchased across four auctions at an average price of $12 per tCO2e.
Yes, you read it right. Close to $2 billion, that is $2,000,000,000 or roughly enough to pay the annual salary of 100 cabinet ministers for over 50 years, has been spent to purchase roughly the amount of abatement needed to meet the emission reduction target Australia presented in Paris… for one year.
Let’s make this clear. Emitters of carbon are not paying for this abatement, the taxpayer is.
Now you could be generous and say that the taxpayer is really the economy, so the economy is footing the bill, but that is a very long bow. Industries that were previously under the carbon price and reducing their emissions to save money are not anymore. Instead, various activities from other players in the economy are offered to reduce emissions or to capture carbon into vegetation and the CO2e tonnage presented for sale.
The concept of ‘polluter pays’ that has been so successful in a host of situations, from cleaning up rivers to closing the hole in ozone layer, is not in play here. Polluters carry on polluting as they merrily pass on the externality to the taxpayer.
This is neither good policy nor good governance.
There is no incentive to reduce emissions across the economy only an opportunity for a few to make a fast buck if they have access to some abatement.
At current prices, $2 billion will buy you 400 million tCO2e of offset credit on the international markets, nearly 2.5 times the local option. So not only does the policy fail to incentivise prudence, it pays way over the top for mitigation.
You cannot help think that a few people are laughing all the way to the bank.