'Direct Action' will not deliver emissions reduction target

Issue 

The federal government has now spent $1.22 billion on its “Direct Action” policy that is supposed to reduce greenhouse gas emissions but will actually allow them to increase.

The results of the government's second round of emissions reverse auctions under the Direct Action scheme were released on November 12, revealing that the Clean Energy Regulator had paid $557 million to companies in return for emissions cuts of 45 million tonnes of CO₂. The first auction, in April this year, spent $660 million to buy 47.3 million tonnes.

The government has now spent almost half its $2.55 billion Emissions Reduction Fund (ERF) to buy 92.8 million tonnes. But Australia must reduce its CO₂ emissions by 236 million tonnes if it is to meet its 2020 target of 5% below 2000 levels.

If all the emissions reductions contracted in these auctions are delivered, and the price per tonne of carbon remains the same for future sales, then the $1.89 billion the government has left in the ERF will only buy another 101 million tonnes of emissions — a total of 193 million tonnes. The best possible outcome would be a shortfall of 44 million tonnes in Australia's 2020 target.

But the contracts show that only 45% of the emissions reductions will contribute to the 2020 target. The rest will occur after 2020. This means that only 51 million tonnes of emissions will be cut by 2020, leaving Australia 185 million tonnes short of its target

Clearly, while the auctions have benefited companies that may have already been intending to reduce their emissions, the Direct Action policy will not reduce Australia's emissions to meet its long-term, internationally promised reduction targets. In fact it is likely to increase Australia's emissions.

Hugh Grossman, chief executive director of Reputex, a division of rating agency Standard & Poor's, said: “While the ERF has again been successful in contracting abatement, the policy has not curbed Australia's net emissions growth. We continue to forecast a 15% increase in national emissions through to 2030.”

John Connor, chief executive of the Climate Institute, said the ERF was never going to meet long-term greenhouse goals.

“We need to get down to the policies that matter. We need to tackle the biggest polluting sector of the economy — the electricity sector. This starts with a closure plan for our old and inefficient coal-fired power plants so they can be replaced with clean energy alternatives.”

The latest round of UN climate negotiations, beginning in Paris later this month, aims to produce tougher national greenhouse targets for the decade to 2030. However, it would be a mistake to assume that Australia will meet its 2020 target. Current Coalition — and Labor — policies cannot deliver on that target.

Australia's 5% target is one of the weakest of any developed nation. Moreover, the strongest targets for emissions cuts in the developed world are not close to being sufficient to prevent catastrophic climate change.

The bulk of the contracts agreed in both the first and second auctions have simply re-funded already established emissions reduction schemes. Most of the projects involve “forest protection”, which generate carbon credits by paying to halt the destruction of native vegetation — so-called “avoided deforestation”.

The Direct Action policy is paying rural landowners to avoid activities that may release emissions in the future, which could be achieved at no cost by legislating to ban deforestation.

If the government is going to spend public money on emissions reduction, it is reasonable to expect it to be spent on creating structural change, by closing polluting industries and moving to renewable energy.

While industrial and mining projects took part in the auction for the first time, no major emitters in the energy and resource sectors participated. The government's paying to not pollute approach is incapable of driving a transition to renewable energy or encouraging substantial emission reduction by major industrial emitters.

Activists fear that while the policy may buy significant amounts of CO₂, this will be overwhelmed by increasing emissions elsewhere. Greens Senator Larissa Waters compared the emission reductions bought with the greenhouse gas that would be created from burning coal from Adani's proposed Carmichael coalmine.

“The government has just given half a billion dollars of taxpayers' money to polluters to achieve a pollution reduction of just 1% of the expected emissions of Adani's coalmine,” she said.

Neither the Coalition, nor Labor, have shown any interest in slowing the development of new coal projects, even claiming there is a “moral” imperative to use coal to generate electricity.

It is clear that this approach is doing nothing to prepare Australia for the 2030 target it is taking to Paris — 26 to 28% below 2005 levels — let alone for the emissions reductions required to avert dangerous climate change.

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