Taking the partisanship out of power

Policy, like politics, is the art of the possible. And it’s possible to get bipartisan agreement on a policy to achieve the elusive trilogy of electricity affordability, reliability and sustainability. But it will require an end to the hyper-partisanship that has destroyed previous, worthy efforts, such as the previous government’s emissions trading scheme. The only workable policy surviving a decade of climate wars is the National Energy Guarantee (NEG). 

If approved by all states and territories at the COAG energy ministers’ meeting next month, the NEG will require electricity retailers to achieve separate targets for reliability and emissions reductions. 

As the prime minister has pointed out, the NEG is agnostic as to the combination of technologies that different retailers can choose to meet their targets. Accordingly, through what the government has termed ‘negotiated exchange’ (to avoid admitting the NEG involves emissions trading), the retail market will be incentivised to meet the two targets at lowest cost, thereby achieving the third leg of the trilogy – affordability.

While agreement on the NEG at COAG would be a big step towards ending the climate wars, more land mines lie along the pathway to peace. Former prime minister Tony Abbott and several of his colleagues have mounted a guerrilla campaign, threatening to cross the floor and vote against the NEG. That would be a sight to behold, since the NEG itself does not require Commonwealth legislation.

However, the government’s target of a 26 per cent reduction in emissions on 2005 levels by 2030 does require legislation. Abbott and his guerrillas could vote against that bill – in protest against the Turnbull government for legislating Abbott’s own commitment to these reductions in the Paris Agreement.

Labor is committed to a 45 per cent reduction in emissions from the electricity-generating sector, and has publicly stated the government’s 26 per cent reduction is far too low and risks stifling investment in renewables.

Rather than support the government’s target, Labor might seek to amend the bill by inserting 45 per cent in the place of 26 per cent. If the vote failed, Labor could then support the unamended bill, indicating that in government it would amend the act to provide for a 45 per cent reduction.

This is where the government will start a war of words if not of deeds. In labelling Labor ‘climate extremists,’ it will enjoy the support of the Business Council of Australia, which describes 45 per cent for electricity generation as “an economy wrecking target.” 

So how did Labor come up with 45 per cent?

The Abbott commitment to the Paris Agreement was for a 26 per cent reduction in emissions for Australia, not just for the electricity-generating sector. Since the enabling legislation is confined to electricity generation, the Turnbull government is expecting everyone in the rest of the economy – farmers, miners, manufacturers, motorists and households – to reduce their emissions by 26 per cent too. 

How long does the government plan to keep quiet about this: requiring substantial emissions reductions to come from non-electricity parts of the economy that can only deliver them at high cost?

Far from the electricity-generating sector being the hardest to call upon to contribute to our Paris commitments, it is among the least-cost options. Based on low-emissions generating capacity already installed and in the pipeline, a recent audit by Dr Hugh Saddler – a member of the government’s Australian Greenhouse Office Experts Group on Emissions Trading – shows current policies will reduce electricity-generating emissions to 22 per cent below 2005 levels by 2020. 

This means the government’s legislation has an emissions reduction target for electricity generation of only 4 per cent over the entire decade to 2030 – less than 0.4 per cent a year.

We can all survive another war of words, but if the government decides to continue the real climate wars, it will insist on its proposal to set the electricity emissions targets for 10 years to 2030. This would require Labor to vote for a mechanism that cannot be changed for a decade and which is manifestly incompatible with the Abbott government’s Paris commitments.

Under the government’s existing proposal, in 2025, updated targets for the period 2030 to 2035 would be set, and in 2030, updated targets for 2035 to 2040 would be set, and so on for every five years thereafter.  

If, instead, the government were to compromise and set the initial notice period at five years, just like all its ensuing notice periods, then Labor might be able to agree. Then the climate wars would end.

Source: https://www.afr.com/opinion/columnists/tak...