The politics and economics of climate change
How the parliamentary National Party works
“There is method to the madness. But sometimes it is just madness.” That’s a quote from David Crowe writing in the Sydney Morning Herald: Sink or swim: why Barnaby Joyce has to accept net zero. Joyce is shoring up his support in the party room, and he is trying to save LNP seats in Queensland where they are under threat from Labor on the left and from Pauline Hanson and Clive Palmer from somewhere off the political scale. It’s not as if Joyce doesn’t realize he’s out on a limb; rather he has to assert his influence and score a material win he can bring to his supporters.
In the 2019 election 87 percent of Australians did not vote for the National Party or for the Queensland Liberal National Party. Of the remaining 13 percent many would have voted for a candidate in these parties with at least some understanding of the need to see the economy transformed to bring down greenhouse gas emissions. At a guess, perhaps no more than 6 percent of Australians voted for those National Party members who are now holding out on climate change.
There is something seriously wrong with our democracy.
Relax: Rupert didn’t fall off his horse on the road to Damascus
From a distance it appears that Murdoch’s News media has gone through a radical conversion in its treatment of climate change, but writing in The Conversation, Gabi Mocatta of Deakin University takes us past the News media headlines and into its fine print, which is still along its established lines on climate change: What’s behind News Corp’s new spin on climate change? Its articles are about renewable energy being unreliable; it’s still promoting coal and gas; and it is “making a big effort to spruik nuclear power”. Nor are they imposing any clamp on their high-profile shock jocks.
What do people in the bush want?
WTF is the National Party?
The simplified version of the politics of climate change is that it’s a city/bush issue: the cost of adapting to climate change will be borne by those 8 million Australians who live in “regions” (as if we don’t all live in regions, and as if there is some binding communality between Byron Bay, Bourke, and the remote outback, that is covered by the undefined term “regional”).
On last weekend’s Saturday Extra Geraldine Doogue interviewed Guardian Australia’s rural reporter Gabrielle Chan on what people in rural and remote regions seek in relation to climate change. Their responses turn out to be a little more nuanced than Joyce and his colleagues would have us believe.
Among farmers, in particular, there is a high level of awareness of climate change. They are on the front line of climate change as they experience more extreme weather, drier winters, earlier harvests, and more animals suffering heat stress. Also they are well aware of what impact other countries’ policies will have on commodity trade. They have to adapt. Even among mining communities many people are becoming aware of the opportunities presented by a shift to green energy: Twiggy Forrest’s enthusiasm has probably been influential in this regard, as has his capacity to engage people in mining communities in a way that politicians seem to lack.
Much of Joyce’s case rests on the fact that electorates represented by the National Party are among the nation’s poorest, but given the domination of the Coalition in Australian politics, and the strong position of the National Party in that coalition, what does that say about the National Party’s record in attending to those people’s economic interests? (11 minutes)
Chan is author of Rusted off: why country Australia is fed up.
The debate has moved past “net zero by 2050”
Morrison is in an uncomfortable place politically, but true to form he’s making the best of it. With the National Party occupying the most unreasonable and unrealistic position on climate change, Morrison and the Liberals can look like responsible reformers, going for net zero by 2050. But as William Nordhaus, writing in Foreign Affairs, explains – Why climate policy has failed, and how governments can do better – countries cannot meet the 2050 target unless there is an immediate and steep drop in emissions.
Writing in The Conversation Bill Hare of Murdoch University points out that Australia can beat its 2030 emissions target, but the Morrison government barely lifted a finger. That target – 26-28 percent below 2005 levels – is weak. We will probably do better, but only because state governments have more responsible targets for 2030. “The federal government’s claim it is ‘meeting and beating’ its targets is a falsehood. It is doing little, but claiming credit from the hard work of Australia’s states and territories” he writes, calling for much more ambitious Commonwealth targets for 2030.
Also writing in The Conversation Andrew Blakers of ANU describes the engineering path to get to double our present 2030 targets. We can do it through de-carbonizing electricity generation, taking up electric vehicles, and stopping development of new gas sources.
Nordhaus wants to see real outcomes from Glasgow, particularly a significant (at least $US100 a tonne) price on carbon, as well as promotion of low-carbon technologies and an improved architecture of international climate accords. His suggestion for an improved architecture is the establishment of a “climate club” of nations with responsible carbon pricing. Nations within the club would trade freely with one another, but would impose tariffs on those less responsible nations that attempt to free ride on the efforts of those in the club. He doesn’t mention Australia by name, but we are not likely to be on the invitation list.
A report on the world’s polluters: we’re up there with the worst of them
In time for the Glasgow Climate Change Conference the United Nations Environment Program has released its 2021 Production Gap Report: Governments’ fossil fuel production plans dangerously out of sync with Paris limits. To quote from its main finding:
The world’s governments plan to produce around 110 percent more fossil fuels in 2030 than would be consistent with limiting warming to 1.5°C, and 45 percent more than consistent with 2.0°C.
The main culprit in this expansion is gas. On current plans and projections oil production is expected to rise a little, while coal production should fall a little. But if the world is to achieve meaningful progress to limit warming, production of coal has to reduce dramatically before 2030.
It’s worthwhile having a look at the full report, because it reveals some unsavoury facts about Australia. We lie in sixth place for extraction-based CO2 emissions (emissions traced to their origin, where fuels are extracted, rather than to the country where fuels are consumed), and in fourth place for coal-based emissions. A little further on (page 43) a detailed summary of Australia’s situation paints a picture of a country lacking responsibility towards the world and to its own citizens. Our production of coal is on an upward trajectory, our emission reduction targets are pathetic, we are embarking on a “gas-fired recovery”, and we have no national policies towards a wind-down of fossil fuel production. For all that, we collect very little revenue from fossil-fuel producers: in fact we give them substantial financial assistance, as well as subsidising them through not requiring them to pay a price for CO2 emissions.
A similar message comes from the Climate Council which, in time for Glasgow, has produced a report From Paris to Glasgow: a world on the move. In its assessment it finds “Australia is the worst performing of all developed countries when it comes to cutting greenhouse gas emissions and moving beyond fossil fuels”. Just in the last thirty years emissions from electricity production have increased by a third and emissions from transport by a half.(See its specific weightings and rankings on page 31, where we come out at position 31 out of 31 “developed” countries.)
You can hear Tim Flannery of the Climate Council describing our shortcomings – and a few minor achievements – on ABC’s Breakfast program. Fran Kelly puts the Morrison government’s lines to Flannery, who carefully shows them up as marketing spin. He describes the consequences of the government’s “gas led recovery” and the waste of using carbon-capture-and-storage. Perhaps Morrison’s most ridiculous and irresponsible line is that we can do all our significant adjustment after 2030. Australia ranked last on climate compared to global peers in new report. (10 minutes)
Economists call for prices, not handouts
Like bleating sheep, Coalition ministers keep repeating “technology not taxes” as their path to dealing with climate change.
It’s hard to think of any other three-word slogan that so efficiently incorporates two economic fallacies. A carbon price, although it may be collected by the tax office, is a payment for the harm of CO2 pollution (an externality in economists’ terms) and it acts as a market signal to encourage the uptake of technologies. Expressing their policy as a choice between a means and an end reveals the Coalition’s difficulty in thinking clearly.
The Economic Society of Australia has surveyed 58 of Australia’s top economists – including former heads of government departments and agencies, former IMF and OECD officials, and a former and current member of the Reserve Bank board – asking how we should get to net zero by 2050.
Peter Martin, writing in The Conversation, presents the results: Australia’s top economists back a carbon price, say benefits of net-zero outweigh cost. When asked to nominate the measure they would most like to see as a policy response, 86 percent support “an economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)”. Even those few who disagree do not cite strong reasons for their views.
Climate risk
In a speech to the Council of Financial Regulators, Reserve Bank Deputy Governor Guy Debelle has spoken about climate risks and the Australian financial system. The RBA has been involved with APRA and Treasury in developing a Climate Vulnerability Assessment mechanism, which they have run past our main financial institutions.
He points out that banks and other financial institutions face direct physical risk associated with climate change – an asset may be destroyed by fire or flood. They also face what the authors call transition risk, which arises as a result of the economy moving to a lower emission structure. Such risks can be manifest as stranded assets, for example. Debelle notes that while the transition risk resulting from potential impacts of net-zero policies of our largest trading partners is small from an economy-wide perspective, “the effect on the coal industry, and those regions that currently depend on it, is not”.
He also discusses the case for corporations to make specific climate risk disclosures in their regular reporting, noting that “whether disclosures should be mandatory is a question for government”.