US and Australian climate bills: necessary evils


The Australian and US government's have proposed carbon trading schemes as a response to the threat of climate change. How to respond has been hotly debated in the climate action movements of both countries. Green Left Weekly has campaigned strongly for the Rudd government's carbon trading scheme to be rejected as a false response to the climate emergency. Below, Ilan Salbe puts an alternative view.


Australia and the United States have greenhouse gas abatement bills making their way through their legislatures. Some view these as important starting points to tackle global warming. Others argue the bills represent a drop in the ocean in the face of a climate crisis that will engulf humanity.

In the face of political realities, both are right. A start (however small) is essential; and agitation is needed to accelerate policy towards required levels of mitigation.

The US Congress passed the climate bill, with its "energy efficiency promotion" part and its "emission cap and trade scheme" part, in late June 2009. If it gets through the US Senate it would come into effect in 2012.

The energy efficiency part purports to kick start emission abatement: "Energy consumption levels that would be reached in 2015 without the policy are not reached until 2040."

Predicted efficiency gains reduce the demand for "allowances" (or in Australia, "permits") in the early years. That results in a lower allowance price, which limits the incentive for an early transition to lower emission energy sources.

Renewables are not advantaged by the US bill. Instead, nuclear power generation is expected to grow 150% by 2050 to make up 40% of total US electricity.

While there is a nominal 20% renewable electricity requirement by 2020, the bill reduces the requirement for efficiency gains, new nuclear and carbon capture and storage generation and existing hydropower. This means forecast renewable electricity would amount to 12% of the total in 2020 and reach 20% only by 2030.

Rather than the oft-quoted "reductions in a particular year" measure, the vastness of the oceans and atmosphere mean that what matters for global warming are cumulative emission reductions. US domestic cumulative emissions to 2050 are reduced 25% by the bill. With domestic and mostly international offsets projects (non trading scheme induced projects) added, the forecast cumulative emission reduction rises to 40%.

Very generous concessions are provided to trade-exposed, emission-intensive industries. These are only phased out between 2025 and 2035 or earlier if other countries "take comparable action on climate change". Local electricity distributors are given a declining volume of free allowances until 2030.

It is striking how little pain the bill inflicts. Household consumption is still expected to have increased by 80% by 2050. Without the bill, household consumption would be only 1% higher.

Australia's climate bill has been widely reported. Treasury modelling shows it has many similarities to the US bill. On paper, the Australian bill is more serious about renewable power with a 20% target for 2020 and 50% by 2050.

The emission reduction target is seen as depending heavily on carbon capture and storage, a non-existent technology. Australia's Gross Domestic Product is still expected to grow 200% by 2050. Without the bill, GDP growth would be only 6% higher.

The US and Australian schemes' targets are modest, especially in the early years, and are projected to rely on unproven technologies. With growing consumption and risky high-tech generation, it is likely the schemes will have to adapt to achieve projected emission cuts.

What are the overall positives and negatives?

The bills cover most of US and Australian emissions. Use of international offsets will provide some global coverage. Two things are important to recognise in this regard.

Firstly a large pool of international offset projects is expected to be available and could allow for accelerated abatement. Secondly, international offset projects are likely to provide auxiliary non-greenhouse environmental benefits to countries that normally can't afford such luxuries.

Both schemes have regular built-in reviews that can reset targets. This potentially provides a mechanism for accelerated action. The first such review will occur in Australia by June 2014 and in the US by July 2013.

Compliance auditing will be challenging. The bills have various provisions to deal with this — and with experience, auditing should become less of a problem.

To sum up: the two bills as currently framed propose minimalist short-term actions to meet current political expectations. There is no hint of a change to the "material growth is good" mindset.

Although grand designs are presented for the longer term, the reality is that it is left for future generations to sort things out. Concerned environmentalists should do anything and everything to draw attention to this.

However, the Australian Greens — and other independent elected representatives with legislative clout — need to seriously consider passing Australia's bill because it can be adjusted to play a more meaningful role in the future.

What is the alternative? Delay and you play into the hands of those who profit from deferment. Delay and risk weaker bills from post-honeymoon administrations. Delay and you defer technological and auditing improvements. Delay and risk removing yourself from the agenda that you spent blood, sweat and tears creating. Don't delay.

[Abridged and reprinted with permission from the July newsletter of the Australian Jewish Democratic Society.]