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Analysis: Australian Labor Goverment Carbon Price-ETS scheme fails & entrenches climate change inaction

by : Dr Gideon Polya
Saturday July 16, 2011 - 10:40

The Australian Gillard Labor Government has proposed a Carbon Tax-Emissions Trading Scheme (ETS)-Ignore Agriculture (CTETSIA) that has produced considerable public debate. Careful analysis of this Carbon Price plan reveals that, contrary to Labor Government propaganda, it will only reduce Australia’s disproportionately huge annual Domestic greenhouse gas (GHG) pollution rate by 8.5% by 2020 and by 53.2% by 2050. Labor’s plan must be exposed as deceitfully entrenching climate change inaction while pretending to “tackle climate change”.

1. Labor’s Carbon Price failure revealed by Treasury Analysis.

Australian PM Julia Gillard in announcing her Government’s Carbon Pricing plan, Carbon Tax-ETS plan stated that “By 2020 this will cut carbon pollution by 160 million tonnes a year” and that “Our economy is the envy of the world. We have world-leading renewable technology, a coal industry determined to cut pollution among the world’s richest reserves of natural gas. And we are a confident, creative people. I see a great clean energy future for our great country” (PM Julia Gillard, “Transcript of Address to the Nation”, 10 July 2011: http://www.pm.gov.au/press-office/t... ).

Unfortunately PM Gillard did not specify the units of the 160 million tonnes i.e. whether carbon (C ), carbon dioxide ( CO2) or CO2-equivalent (CO2-e, including other GHGs, notably methane,CH4, and nitrous oxide, N2O). However the Australian Government Treasury has released a detailed document that models the effect of the proposed Carbon Price and which makes it quite clear that the PM should have been referring to 160 million tones of CO2-e. However 2 further serious errors in PM Gillard’s speech are that coal, even cleaner coal, and gas are not clean energy sources – they produce the GHG CO2 on combustion and are, accordingly, dirty energy sources GHG-wise (Australian Government, Treasury, “Strong Growth, Low Pollution. Modelling a Carbon Price”, 2011: http://cache.treasury.gov.au/treasu... ).

The Forward to the Treasury Analysis provided by Wayne Swan (Deputy PM and Treasurer) and Greg Combet (Minister for Climate Change and Energy Efficiency) commences thus: “The science of climate change is compelling, the threat is real and the economic and environmental benefits are tangible. The need for action to prevent climate change is clear. This Government has put forward a comprehensive plan to introduce a carbon price for Australia”.

Unfortunately, as set out in the Treasury Analysis, the Gillard Labor Government Carbon Price scheme fails to reduce either Australia’s Domestic GHG pollution or Domestic plus Exported GHG pollution by 2020, relative to either the 2009 level or to the 2000 level.

Both the Labor Government and the Coalition have a policy that Australia’s greenhouse gas (GHG) pollution will be “5% off the 2000 value in 2020”. Australia’s Domestic GHG pollution was 490 Mt CO2-e in 2000 and 600 Mt CO2-e in 2009 (see Australian National Greenhouse Accounts, “National Inventory Report 2009”, p27: http://www.climatechange.gov.au/~/m... ).

Accordingly, the Australia target for 2020 Domestic GHG pollution is 0.95 x 490 Mt CO2-e = 465.5 Mt CO2-e . The Treasury Analysis reveals that under the Core Policy Scenario it will actually reach 621 Mt CO2-e in 2020 and that to reach the promised 465.5 Mt CO2-e will require a further 621.0 – 465.5 = 155.5 Mt CO2-e which must be sourced from “Internationally-sourced abatement”.

However the Treasury Analysis reveals that The Business As Usual GHG pollution in 2020 will be about 679 Mt CO2-e (p72) and accordingly the Carbon Savings in 2020 will be 679-621 = 58 Mt CO2-e. A further 94 Mt CO2-e from “Internationally-sourced abatememt”: (e.g. tropical forest-related carbon credits) would bring the 2020 Domestic GHG down to 527 Mt CO2-e (Chart 5.2, p77).

The Treasury Analysis states (p77) that “Pricing carbon results in deep cuts in domestic greenhouse gas emissions. In the core policy scenario, the carbon price produces: around 58 Mt CO2-e of domestic abatement and 94 Mt CO2-e of international abatement in 2020; and 463 Mt CO2-e of domestic abatement and 434 Mt CO2-e of international abatement in 2050”.

The 2050 savings (including Internationally-sourced abatement) amount to 897 Mt CO2-e for a net pollution of 990 – 897 = 93 Mt CO2-e as compared to the promised 80% reduction on the 2000 level to 0.2 x 465.5 = 93.1 Mt CO2-e. However the Domestic savings within Australia amount to a mere 53.2% reduction on the Business As Usual GHG pollution rate in 2050.

Thus the claim of PM Gillard in praise of carbon pricing that “By 2020 this will cut carbon pollution by 160 million tonnes a year” is utterly false – in fact, according to the Treasury Analysis Australia’s Domestic GHG pollution will actually increase in 2020 to be 127% of 2000 GHG pollution , instead of being 95% of the 2000 GHG pollution, and can only be reduced towards the promised target by (pick your number) “Internationally-sourced abatement” or off-shore carbon credits. Similarly, the Treasury Analysis reveals that “80% off 2000 value by 2050” can only be attained by the artifice of 50% of the reduction coming from “Internationally-sourced abatement”.

2. Labor’s plan ignores Australia’s huge Exported GHG pollution.

Australia is a world leader in annual per capita greenhouse gas pollution, coal exports and liquid natural gas (LNG exports). Yet in addition to proposing a grossly ineffective Carbon Price scheme to reduce Domestic GHG pollution, the Labor Government enthusiastically supports rapid expansion of Australia’s already huge exports of coal and natural gas

Australian PM Julia Gillard told Australian Fairfax Radio that coal jobs would increase under her Carbon Tax-ETS (July 2011): "There will be growth in jobs in coal. The demand for coal will continue very strong. In terms of the impact of carbon pricing on coal mining the average impact is $1.40 per tonne. This is in the situation where coal prices have more than doubled, so we will see continued growth in coal mining" (according to industry estimates, about 40,000 people work in Australian coal mines and a further 100,000 indirectly) (see “Gillard says future bright of coal”, Sydney Morning Herald, 11 July 2011: http://news.smh.com.au/breaking-new... ).

Australian PM Julia Gillard in an interview with The Australian in Seoul as she continued her visit to Japan, South Korea and China (April 2011): "Our region is hungry for energy. We are a reliable supplier to each of the countries that I’m visiting on this trip…The prospects in each country is for growth — for wanting more of our resources, particularly more of our LNG. I’m absolutely confident that we will have a bright future for our energy exports with a price on carbon. There is growth in demand - growth in demand from countries that we already have good trading relationships with and who will look to us because we’ve been a long-term reliable supplier of energy" (Matthew Franklin, “PM Gillard believes carbon tax won’t cost mine jobs”, The Australian, 25 April 2011: http://www.theaustralian.com.au/new... ).

Data on Australian coal and liquid natural gas (LNG) exports is readily available. Thus in 2000 Australia’s Domestic plus Exported GHG in Mt CO2-e totaled 490 (Domestic) + 17 (LNG) + 505 (coal) = 1,012 Mt CO2-e. In 2009 Australia’s Domestic plus Exported GHG in Mt CO2-e totaled 600 (Domestic) + 31 (LNG) + 784 (coal) = 1,415 Mt CO2-e (see: US Energy Information Administration, Country analysis briefs, Australia: http://www.eia.gov/emeu/cabs/Austra... ).

According to the Treasury Analysis, Australia’s Domestic GHG emissions will be 621 Mt CO2-e (under a Carbon Price) and 679 Mt CO2-e (Busioness As Usual). It is predicted that black coal exports will increase at about 2.6% per year and that LNG exports will increase by 9% per year (see Invest in Australia”: http://www.investinaustralia.com/in... and The Australian Bureau of Agricultural and Resource Economics (ABARE), “Australian energy. National and state projections to 2020-30”: http://www.abare.gov.au/publication... ).

Accordingly, in 2020 Australia’s Domestic plus Exported GHG will be (BAU) 679 (Domestic) + 2.58 x 31 (LNG) + 1.33 x 784 (black coal) = 679 + 80 + 1,043 = 1,802 Mt CO2-e. However, in addition, Australian dried brown coal exports (approved by Victorian State Premier John Brumby and Australian PM Julia Gillard in 2010) are expected t reach 20 Mt by 2020 (see Friends of the Earth, “Outrage at deal to export 20 million tonnes of Victoria’s brown coal”, 25 June 2010: http://www.foe.org.au/climate-justi... ), equivalent to 59 Mt CO2-e after combustion. Thus in 2020 Australia’s Domestic plus Exported GHG will be 1,802 + 59 = 1,861 Mt CO2-e.

Accordingly, based on Treasury modeling and ABARE data, Australia’s Domestic plus Exported GHG pollution in 2020 (BAU) will be 1,861 Mt CO2-e/ 1,012 Mt CO2-e = 1.84 times that in 2000 i.e. nearly double that in 2000.

However according to the Treasury Analysis a Carbon Price regimen would yield an Australia’s Domestic plus Exported GHG pollution of 621 + 80 + 1,043 + 59 = 1,803 Mt CO2-e i.e. 1803/1012 = 1.78 times that in 2000.

3. "Fair go" Australia must drastically cut GHG emissions before 2020.

The Australian Climate Commission’s “The Critical Decade” report (launched by PM Julia Gillard in 2011) has stated that for a 75% chance of avoiding a catastrophic 2 degree Centigrade temperature increase the World can emit no more than 1 trillion tones of CO2 before zero emissions in 2050. Australia’s current rate of Domestic plus Exported GHG pollution means that it would use up its share of this terminal global CO2budget within 1.9 years (see Gideon Polya “Country By Country Analysis Of Years Left Until Science-demanded Zero Greenhouse Gas Emissions”, Countercurrents, 11 June 2011: http://www.countercurrents.org/poly... ).

Leading climate scientist Professor Hans Joachim Schellnhuber (Director of the Director of Potsdam Institute for Climate Impact Research, University of Potsdam Germany) has estimated that for a 67% chance of avoiding a catastrophic 2 degree Centigrade temperature rise the World must cease CO2 emissions by 2050 and that relatively annual high per capita CO2 polluters such as the US and Australia (about 4 times the global average) must cease by about 2010 (see Professor Hans Joachim Schellnhuber, “Terra Quasi-Incognita: Beyond the 2 degree Centigrade line”, 4 degrees and beyond, International Climate Conference, 28-30 September 2009, Oxford, UK http://www.eci.ox.ac.uk/4degrees/pp... ).

While Australia prides itself on a “fair go” (equal opportunity and equity) culture, reality is clearly otherwise and most notoriously so in relation to GHG pollution and climate change action.

4. Summary.

Australia is among the world leaders in annual per capita greenhouse gas pollution, coal exports and liquid natural gas (LNG exports). However according to Australian Treasury and ABARE data, Australia is set to nearly double its annual Domestic plus Exported GHG pollution in 2020 relative to that in 2000 with a Carbon Price (1,803 Mt CO2-e per year in 2020) or without a Carbon Price (1,861 Mt CO2-e per year in 2020).

In 2020 Australia’s annual Domestic GHG pollution will be 679 Mt CO2-e (Business As Usual, BAU) or 621 Mt CO2-e (with a Carbon Price) and can only attain the promised “5% off 2000 level by 2020” value of 466 Mt CO2-e by the artifice of purchasing 155 Mt CO2-e of Internationally-sourced abatement credits.

The claim by PM Julia Gillard that her Carbon Price scheme will reduce Australia’s 2020 Domestic GHG pollution by 160 million tonnes CO2-e per year is utterly false. Also utterly false is her claim of “a great clean energy future” for Australia involving expanding coal and gas exports (coal and gas are both dirty energy sources greenhouse gas-wise) and increased Domestic GHG pollution by 2020 even with the proposed Carbon Price mechanisms.

Similarly, Labor’s promise of “80% off 2000 level of Domestic GHG pollution by 2050” can only be attained if about 50% of the GHG pollution savings are via Internationally-sourced abatement credits. Gillard Labor’s Carbon Tax-ETS proposal means entrenched climate change inaction by Australia. Yet the Australian Climate Commission’s estimate that the World can only emit 1 trillion tonnes more of CO2 before zero emissions in 2050 means that at its current rate of Domestic plus Exported GHG pollution Australia has less than 2 years to get to zero greenhouse gas emissions.

Fossil fuel-rich Australia ignores its “fair share” international obligations in relation to GHG pollution and evidently has no intention of curbing its disproportionately huge greenhouse gas emissions until the World forces it to do so. The World may well take action against countries such as Australia and the US through Sanctions, Boycotts, Sporting Boycotts (as were successfully applied to Apartheid South Africa through exclusion from the Olympic Games and other events), Green Tariffs, International Court of Justice litigations and International Criminal Court prosecutions.



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