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Tag Archives: Shergold report

Heaven help us before Hell becomes the inevitable destination

In May 2007, the Prime Ministerial Task Group on Emissions Trading presented John Howard with a report that had “been informed by the views of a wide range of stakeholders.” They considered 216 submissions from interested parties and held discussions with 180 groups and individuals both in Australia and overseas. Dr Peter Shergold, Chair of the Task Force, said the broad-ranging expertise of government, industry, and environmental organisations had been of significant benefit to their deliberations.

In an introductory letter to Howard, Dr Shergold said:

“We hope that this report can contribute to the development of policy which will further strengthen Australia’s considerable record of achievement in addressing climate change at the domestic and international levels. Our conclusions have been framed to position Australia to take a lead in reducing greenhouse gas emissions while maintaining economic growth and safeguarding our competitive advantage.”

The report was extensive and came to the following conclusion:

“The members of the Task Group have come to a shared conclusion: the adoption of a longer-term emissions constraint and the introduction of an Australian emissions trading scheme offers the least-cost way of reducing the output of greenhouse gases domestically and would make a substantive contribution to a comprehensive solution internationally.

The Task Group believes the key to success is to begin at once, but to proceed with care on the basis of considered and informed decisions.”

One aspect of the Coalition’s Direct Action Plan is an Emission Reduction Fund where polluters are subsidised for specific reduction projects. This possibility was examined in the report with the following observations:

  • Project-specific approaches can involve high administrative overheads for both government and project proponents.
  • Financing subsidies and specific project-based interventions also impose costs on society from their use of taxation. If these approaches were to be used extensively to achieve large-scale abatement, the economy would suffer losses in economic and administrative efficiency. In contrast, market-based approaches to emissions abatement involve the explicit pricing of emissions, allowing the market to determine the cheapest source of emissions reduction.
  • Market-based approaches have the potential to deliver least-cost abatement by providing incentives for firms to reduce emissions where this is cheapest, while allowing the continuation of emissions where they are most costly to reduce.
  • Market-based approaches also provide a strong ongoing incentive for investment in technology research, development and deployment, and in business efforts to improve energy efficiency.
  • An emissions price provides incentives for the discovery and deployment of least-cost abatement opportunities. The damage caused by a unit of emissions is the same no matter where it comes from, so a uniform carbon price across the economy can harness abatement opportunities where they are cheapest.
  • Emissions pricing provides ongoing incentives to all firms and individuals to abate. Market participants have an incentive to abate whenever a unit of abatement is cheaper than the emissions price, which leads to the efficient exploitation of all abatement opportunities.
  • The process of ‘creative destruction’, with opportunities for the emergence of new industries as new technologies and production techniques supplant existing methods, is one of the key ways in which market-based approaches bring broader benefits to society.

One of the task force’s key messages was

A desirable model for reducing emissions at least cost incorporates emissions trading with a price cap in the initial phase of a scheme – this combines the best features of a carbon tax with emissions trading.”

In other words, John Howard’s own advisers preferred the system we currently have in place. Many reports and submissions were given to the government confirming this.

“Harness the power of the market – the greatest benefit of emissions trading is the ability of the market to find the lowest cost solution. It follows from this that scheme[s] should have a minimum of rules that limit the type or level of abatement. The underlying principle should be to treat all opportunities equally based on their mitigation impact.”

Australian Plantation Products and Paper Industry Council submission to the Task Group

“Where the use of environmental goods and services is not valued properly, users of the resources have little incentive to recognise the costs of the environmental degradation they impose … Instead, the focus inappropriately shifts only to the financial growth foregone from addressing [and preventing] the environmental damage.”

Australian Government Intergenerational Report (2007, p. 71)

In July 2008 the Wilkins Review, done by the Department of Finance and Deregulation, looked at failures of direct action style schemes which had been implemented in Australia, such as the failed Greenhouse Gas Abatement Scheme, and warned “project based abatement is difficult to achieve through a grants program – further demonstrating why the ETS is a superior approach to achieving large scale abatement.”

In the seven years since the report was published the overwhelming majority of scientific research has confirmed that climate is changing and AGW is playing a significant role in that change. In fact, the only debate seems to be on the time frame and severity of the catastrophe and even that is rapidly vanishing. Consensus is, and has been for a long time, that immediate action must be taken on a global scale.

Another major strategy of the Coalition’s DAP is soil carbon sequestration. Their policy document states that

“The single largest opportunity for CO2 emissions reduction in Australia is through bio-sequestration in general and, in particular, the replenishment of our soil carbons. It is also the lowest cost CO2 emissions reduction available in Australia on a large scale.”

However the CSIRO, in a submission to the Senate inquiry into DAP said that

“Soil carbon in agricultural zones is likely to provide low levels of greenhouse gas abatement. Saturation of carbon sinks (the maturation of forests and the restoration of soil carbon levels) means that per annum abatement from the land sector will decline in the decades after project establishment.”

Perhaps this explains Tony’s desire to log our old growth forests?

Economist Professor Ross Garnaut told the inquiry that abolishing carbon pricing could cost the federal budget at least $4 billion a year within five years, if the Abbott government wants to reduce emissions in line with Australia’s international commitments.

In his submission Professor Garnaut said direct action was vague and failed public interest analysis tests and that the government’s Green Paper on the Emissions Reduction Fund aimed at replacing the Rudd-Gillard climate policies ”is a shooting of the breeze”, merely raising a few questions that it failed to answer.

”It is an unusual document, lacking any semblance of the framework of public interest analysis that is characteristic of Australian policy-related papers of modern times”

The government’s continued appointment of climate change sceptics to advisory roles shows its intention to ignore all scientific, economic and industry advice to pursue its big business agenda. They are prepared to sacrifice our future for the very short term advantage that exploiting our resources may give us. They seem determined to set the train to destruction into motion and disable the brakes.

Heaven help us before Hell becomes the inevitable destination.

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