This week, Labor proposed two emissions trading schemes, one for big industrial polluters and one for the electricity industry, a 50% renewable energy target by 2030 with a net carbon neutral economy by 2050 and it has pledged to reduce emissions by 45% by 2030 on 2005 levels – as recommended by the Climate Change Authority, compared with the Coalition’s pledge of a reduction between 26% and 28%.
Labor estimates its ETS’s will cost $355.9 million over four years with $300 million earmarked to help regions and industries facing upheaval in the transition to a cleaner economy
The reaction of the Liberal-National Coalition has been to describe the idea as putting a ‘handbrake’ on the Australian economy, while the energy sector’s peak groups’ reactions have been less apocalyptic than the reaction to the now-scrapped carbon tax.
The Australian Petroleum Production and Exploration Association said it wanted to work with the ALP to finalise design of its climate action plan to ensure that it recognised that natural gas is a perfect fuel to deliver energy to the world and generating jobs, economic growth and taxation revenues at home.
APPEA CEO Dr Malcolm Roberts said there were significant challenges ahead in meeting Australia’s emissions reductions targets while recognising the energy-intensive nature of Australia’s economy.
He said APPEA acknowledged the goals contained in the recently-signed Paris Agreement and believed it was important they be pursued at the lowest possible cost to the economy.
“Gas remains integral to a low-carbon economy and increasing its use can deliver immediate and substantial carbon savings,” Dr Roberts said.
"APPEA supports climate change policies that deliver emissions reductions at least cost and facilitate broad-based investment decisions consistent with there being an international price on carbon.
“We look forward to a continuing dialogue with Labor to ensure the final design of its policies, particularly its proposed emissions trading scheme, does not undermine the viability of Australia’s $200 billion LNG industry.”
Clearly, if the economy switches to 50% renewables, and the worst coal-fired power plants are to be shuttered, then APPEA believes natural gas can meet most of the remaining 50% – a huge boost for gas producers.
The Energy Networks Association and the Business Council of Australia both welcomed ALP commitments to strong action on climate change.
ENA CEO John Bradley said Australia’s gas and electricity networks can enable the higher abatement targets sought in Labor’s plan, but he warned the outcomes for customer bills and reliability would depend on key implementation measures.
“We welcome key measures that focus on abatement outcomes – such as vehicle emissions standards and emissions trading in the electricity generation sector,” Bradley said.
“We can see opportunities for this to evolve from the current policy frameworks and achieve more enduring carbon policy, which doesn’t change at every election.”
But he said it was too soon to understand how an ETS focussed on lowering emissions efficiently would work together with a specific renewable energy target of 50%.
“It will be critical that the consultation to finalise the 50% target mechanism carefully evaluates options based on the outcomes for customer energy bills, energy productivity and reliability of supply,” he said.
He said there was no doubt Australia will see significant increases in large scale and small scale renewable generation, but that renewables are just one item in a toolbox that also includes demand management, low emission fuels like gas and biofuels, and carbon capture and storage
Bradley said recent analysis by Jacobs on carbon abatement policy options had shown that a move to technology neutral carbon policy could save a typical residential electricity customer $234 per year, while still meeting Australia‘s emissions reduction targets, but he said being fixated on 50% renewables could lead to higher costs.
BCA CEO Jennifer Westacott praised Labor’s ETS, and said the plan could provide a platform for bipartisanship and “build a bridge” for an emission trading scheme.
The BCA had been a fierce critic of the Gillard government’s carbon tax, but it has now changed its tune, saying Australia needs to begin the careful transformation of our economy if the nation is to achieve a lower emission future.
“The last thing Australia needs is to start from scratch on carbon policy. With the support of business and the community in developing specific measures, the opposition’s plan could build a bridge from the existing regulatory frameworks to the first phase of their proposed emissions trading scheme,” she said.
Westacott said the BCA supported measures to reduce emissions, including shifting the mix of power sources away from higher emission technologies towards low or zero-emission technologies, encouraging greater energy efficiency, better managing land use and encouraging the adoption of more fuel-efficient vehicles.
The Liberal party has already called the ETS option “effectively another tax” that will significantly increase the cost of energy.
Deputy Prime Minister Barnaby Joyce has resurrected his much-mocked claims from 2009 of an era of the $100 lamb roast under the previous carbon tax, and has complained of Labor’s policy to allow the commonwealth to prevent land clearing, taking over regulatory authority from the states.
Land clearing, particularly in Queensland, has been blamed for the increase in Australian emissions, as has the CSG industry, which is pulling more power from the coal-dominated National Electricity Market to produce gas for export.
Labor’s policy was announced days after world leaders gathered in New York to sign the Paris climate agreement that aims to limit the rise in global temperatures to less than 2C.
Once in force, the Paris Agreement will create a process according to which, every five years, parties will be obliged to come back to the table with new, improved, action plans to address climate change, although it is unclear how they will be held accountable if they fall short.
