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Australia’s $234 billion climate gamble

By Dr Anthony Horton

As of last year, China and the US were first and third on the list of Australia’s trading partners. Australian trade with China was worth $152.53 billion-a total that has grown by 12.2% on average over the last 5 years. Australia’s trade with the US was worth $60.43 billion as of 2014, having grown 4% on average over the last 5 years.

In March this year, China raised a number of concerns regarding Australia’s Intended Nationally Determined Commitment (INDC) for greenhouse gas emissions in the lead up to the Paris Climate Summit in December. In particular, they queried whether replacing the planned Emissions Trading Scheme (ETS) and the Carbon Farming Initiative (CFI) with the Emissions Reduction Fund (ERF) will yield the reductions that were likely under those two. The US also queried whether the ERF will primarily replace the ETS or whether other Policies and Measures will be considered.

I discussed a number of issues regarding the ERF (the Flagship of the Australian Government Direct Action plan) and the first Auction in April this year in an earlier blog. The second Auction will be held on 4 and 5 November, which is approximately three and a half weeks prior to the Paris Summit. It is possible that news of the second Auction results will spread as widely and quickly as for the first, including to representatives of other nations attending the Summit. The representatives may be keen to quiz the Australian party on the results, particularly if the results are questioned as extensively in social media as the results of the first Auction were. This will be very interesting to watch indeed.

In the time since the first Auction, it is fair to say that a lot has transpired politically in an international and domestic context that highlights and brings into focus Australia’s stance on emissions reductions. In an international context, China and the US have progressed a deal on emissions reductions reached last November with discussions earlier this month, as a result of which many cities including Atlanta, Houston, New York, Beijing, Guangzhou and Zhenjiang have pledged new actions. A number of other nations have announced their INDCs in the lead up to Paris.

Last Friday (US time) Chinese President Xi Jinping announced a nationwide cap and trade emissions program as part of efforts to tackle climate change. Cap and trade programs cap the total emissions and sources including power stations and factories purchase and sell credits. In terms of the US, although plans for a nationwide cap and trade program were defeated in 2009, California and other north-eastern states have implemented emissions trading schemes.

Domestically, the Government has changed leadership resulting in the installation of Malcolm Turnbull as Prime Minister. Last week, in response to the announcement of China’s cap and trade program, Environment Minister Greg Hunt announced that the Government will stay the course regarding the ERF which is reported to be “the best, most effective scheme in the world”.

According to the Government, further reductions could be considered in 2017/18 as part of discussions on Australia’s 2030 target policy framework.

Given that China and the US (amongst others) have raised concerns with Australia’s commitment for Paris and have signed agreements to peak and reduce emissions respectively, I would be very surprised if they (and other nations attending the Paris Summit) would be prepared to give Australia until 2017/18 to consider further emissions reductions. I think it more likely that the US and China lead the charge in maintaining pressure on Australia to do more in the global challenge that is climate change.

Given the recent announcements by the Australian Government with respect to the state of the domestic economy and the discussions as to the exact nature of the problem, I struggle to fathom why they believe they can maintain one particular strategy and direction with respect to emissions reduction when an increasing number of countries are going in another.

If trade with China and the US continues on their current respective trajectories, by 2017, the combined figure is at approximately $233.7 billion (at a minimum)-$170.84 billion from China and $62.85 billion from the US. I don’t know if many Australians would be prepared to allow their Government to gamble such a figure on any matter-least of all emissions reduction specifically but climate change more generally, especially given the global nature of today’s economy. This is effectively what they are doing by continuing to ignore the rising tide of emissions trading.

This article was originally published on The Climate Change Guy.

rWdMeee6_pe About the author: Anthony Horton holds a PhD in Environmental Science, a Bachelor of Environmental Science with Honours and a Diploma of Carbon Management. He has a track record of delivering customised solutions in Academia, Government, the Mining Industry and Consulting based on the latest wisdom and his scientific background and experience in Climate/Atmospheric Science and Air Quality. Anthony’s work has been published in internationally recognised scientific journals and presented at international and national conferences, and he is currently on the Editorial Board of the Journal Nature Environment and Pollution Technology. Anthony also blogs on his own site, The Climate Change Guy.


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  1. Dave

    Is there anybody, anywhere that actually supports this ‘governments’, and this ‘environment ministers’ Direct Action plan? And who can give supporting evidence? And is there anywhere online that one can visit to actually compare costs, effectiveness and forecast benefits of Labors’ so called Carbon Tax, Coalitions Direct Action plan and any other International emissions reduction programs? To be bombarded with facts and figures from either ‘camp’ can be very intimidating to ‘mature’ persons and school kids interested in the subject, maybe simple comparison charts could go some way to explaining the differences, certainly I for one ‘switch off’ whenever I see/hear Mr. Hunt and others of his ilk attempting to justify his ‘plan’, especially when all they seem to do is can Labors’ Carbon Tax? Let’s see some simple, factual comparisons and forecasts.

  2. Anomander

    It’s OK, we don’t need that trade revenue. According to our new Treasurer we “don’t have a revenue problem” despite our revenue remaining firmly below 25% of GDP and the grown likely to remain around 2% for the foreseeable future.

    They will just slash expenditure while handing over public money to polluters on the promise they won’t destroy our atmosphere too much.

    By the time this lot have finished, there won’t be much left of our country to salvage.

  3. JJ

    Is your contention that China and the US will impose sanctions on Australia due to our stance on emissions reductions?
    If so, you’ll need to back up your claim with a bit more rigour and vigour.
    While I am probably in agreement with your position that, as a nation, we should be doing more; it is also important to make strong, convincing, well-supported arguments that make clear points… otherwise it is just preaching to the choir, like Newscorp.

  4. Jexpat

    “Is your contention that China and the US will impose sanctions on Australia due to our stance on emissions reductions?”

    Express and overt sanctions are certainly a possibility down the track, but in the meantime, there are also less overt economic implications that would work much the same disadvantage to Australia, including opportunity costs and inefficiencies caused by our own recalitrance and “exceptionalism.”

  5. keerti

    In addition to this with the “government’s” resistance to green power development we are falling further behind in technological development. This is already affecting jobs and will affect the economy in ways we have yet to see. On loosing office the entire ministry should at the very least be investigated with a view to criminal charges being laid.

  6. DC

    Unfortunately the Australian electorate is still infected by many a mindless Murdoch headline reading zombie that thinks the ‘carbon tax’ was a failure and an attempt at ‘socialism’. They wouldn’t even understand what the coalition is doing or what is at stake if Paris 2015 fails to secure any binding agreement like Copenhagen 2009.

    Copenhagen was supposed to be the successor to Kyoto and would have been much more effective because Kyoto did not cover developing countries and because the US refused to sign it (John Howard was the only other leader of a developed nation to refuse to sign up to Kyoto at the time, Canada pulled out later). But Copenhagen was going to put all of that to bed but there was essentially a mexican standoff between developed nations who have historically benefitted more from fossil fuels and caused the most damage) and developing nations (many of whom are now industrialising). The coal fossil fuel industry also infected Copenhagen and tried to present Coal as part of the solution without regard to peer reviewed science. In the end we got the ‘Copenhagen Accord’ which, for all its hard work is only a VOLANTARY agreement!!!

    Where is the mainstream media coverage in the lead-up to Paris 2015? Is this meeting not important news? Or do we get analysis of Paris 2015 after it has failed?

  7. LOVO

    @DaveSeptember 29, 2015 at 8:56 am asks “..And is there anywhere online that one can visit to actually compare costs, effectiveness and forecast benefits of Labors’ so called Carbon Tax, Coalitions Direct Action plan…..”.
    I too have been looking for something simple, Dave, as I ain’t the brightest or sharpest either. I still have not found ‘the simple’ but I did find this ➡
    and I came across this ➡

  8. robertvincin

    Emission trading is the only process to reverse anthropogenic climate change. The process is a $300-450Bn pa TO business NPV for Australia and meets UNFCCC 100year rule. Turnbull with his in depth business and government history is the one to lead.
    While serving as branch secretary to Hon John Howard 95-98 showing him how to win Green Group support the UN USG invited to serve on the global body 96-99 that became Kyoto Protocol.
    To Hon Tony Abbott’s credit I help write Green Corp Direct Action (Adelaide Review June 1995 he planned to make Australia the CO2 sink of global emitters engage 200,000 people. His COS stopped the process.
    PRC Government engaged me as foreign expert to help set up CBEX lecture to Law Science Agriculture Forestry Universities reverse 200million hectares of desert growing soil soil-carbon. Awaiting Pres Xi to sign off on land tenure by 2020 the will sequester a minimum 8billion tonne CO2 per annum to UNFCCC 100 year rule.
    Prime Minister Turnbull comprehends that Australia can be to CO2 sinks for global emitters can by 2020 turn over the $300-450,000,000 pa direct and serious flow-on. Equally this route will reverse the expanding deserts engage the 200.000 minimum people direct and lower a minimum8 billion tonnes CO2.
    Well planned Australia could have add-ons marketing product and service supported by UNFCCC certified verifiable CO2 offset certificate.
    The question is, will the PM listen to emotive chatter “don’t lower CO2” “forget the serious job income business” forget desert reversal”.
    Here is PRC operation
    without prejudice Robert Vincin

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