Analysis for Crikey [$].
As an old campaigner, I implicitly understand the need to condense complex matters into sound bites or slogans. The problem with stripping the details out of an issue and reducing it to a memorable phrase is that people tend to defer to their own interpretation of what that phrase actually means.
This can be dangerous territory for a politician or party if the sound bite or slogan implies an undertaking. While the nature of the undertaking may be clear in the mind of the spruiker, it might have an entirely different meaning to the audience.
Kevin Rudd learned this lesson the hard way. During the 2007 federal election campaign, Rudd differentiated himself from John Howard on two points: he would scrap Work Choices and ratify Kyoto. Neither Rudd nor the ALP made any effort to explain what ratification of the Kyoto protocol meant in practical terms. They were content with the electorate inferring from this undertaking that Australia’s ratification would fix climate change.
But of course, it did not. In reality, ratification of Kyoto granted access to a number of climate mitigation activities including a future global emissions trading scheme amongst parties to the protocol and emission credits for businesses investing in greenhouse gas reducing projects in developing countries.
After formally ratifying the Kyoto protocol, Rudd subtly shifted his language to the need for Australia to adopt an emissions trading scheme to fix climate change. Having trusted the Prime Minister on ratification, and feeling no adverse effects, Australians were comfortable in the belief that adopting an ETS would be equally painless.
Green words not green deeds
It is important to understand that while people say they want environmental action, and that they are prepared to pay for it, their actions disprove their words. Australian green energy schemes continue to languish in the single-digit percentages because people do not want to pay a premium for a product that has no discernable difference. Surveys of grocery shoppers have found that the actual contents of their trolleys undermine their previously- stated preference for green products.
In reality, most people don’t want to pay more to be environmentally friendly – unless the expense can be expressed in a way that can be seen such as having a water tank or driving a hybrid car or carrying a green canvas shopping bag.
This is where Rudd came unstuck.
The point of an ETS is to wean an economy off fossil fuels. This is done by putting a price on carbon so that fossil fuel based products become more expensive and the renewable based products start to look competitive in comparison. That’s the economic theory.
Problems with decarbonising Australia’s economy
There are several problems with this theory for Australia. Firstly, 80% of Australia’s electricity is generated from coal and we have coal reserves that could last for several hundred years more. Our plentiful coal has allowed electricity prices to remain consistently low, and as a result we currently have the third lowest electricity prices in the world.
Not only have these low electricity prices brought energy intensive industries to Australia, they have contributed directly to the Australian community’s quality of life. Around 11.5% of Australia’s greenhouse emissions come from households and another 14% from transport (most of which is cars, trucks and planes). An ETS would place cost pressure on the households to move them away from the activities and products that use fossil fuels.
Once voters began to realise this, they felt conned and unhappy. This unhappiness has clearly been picked up by party polling, evidenced by both major parties moving to distance themselves from an ETS before the impending election.
While the ETS is now on the backburner, we will nevertheless continue to hear the latest slogan promoting the need to decarbonise the Australian economy if we are to fix climate change.
As point of substance, this contention is patently absurd. Australia contributes less than 2% of the world’s greenhouse gas emissions. No amount of reduction in Australia will make a material difference to the phenomenon. Even if every Australian house had solar panels, and every family drove a hybrid car and grew their own vegetables, there would hardly be a perceptible dip in global emissions.
So, as a point of symbolism, should Australia decarbonise its economy to show leadership and coax other developed nations into doing their fare share to mitigate the problem that they originally created?
If leadership leading to deep cuts in global emissions is the real objective of Australian action on climate change, then penalising Australians for their quality of life will not achieve that objective.
An unconventional solution
There is no way to stop the developing world from using coal in the foreseeable future. These nations are rightly focused on bringing their people out of poverty and will use the most reliable, affordable and safe means of electricity generation available to them.
The International Energy Agency has projected that from the year 2000 to 2030 around $16 trillion dollars will be spent on developing and providing energy to the global population. Over that same period, the number of people with no access at all to a reliable/commercial supply of energy will reduce from two billion to one billion. Those of us sitting in our air-conditioned homes and offices need to bear this in mind when we nod sagely about the need to decarbonise the economy. In 2030 there will still be people on this planet burning cow dung to heat their homes and cook their dinner.
Where does that leave Australia? I believe we can take credible climate action that has both substance and symbolism. Firstly we need to take the economists out of the equation – they have no interest in the human cost of their proposals. Stop focusing on the business case too – there are too many vested business interests on either side of the climate change debate for the market to sort this out.
My solution lets all Australians feel involved, with minimal financial pain, and with greenhouse gas reductions being deployed where they are needed most.
Firstly, impose a greenhouse levy on all taxpayers in the same manner as the Medicare levy, which currently raises around $8 billion each year. Attaching the levy to income ensures that those who earn more will pay more, and those who are disadvantaged or unemployed will not pay at all.
Secondly, use the funds to develop and deploy clean energy projects in the developed world – particularly those countries that have the potential to contribute the most greenhouse gas emissions in future. In doing so, the Australian people would be getting more global greenhouse action for their dollar than they could ever hope to achieve at home.
Does this proposal make economic sense? No. Does it make business sense? No. Does it make sense in terms of Australia being a leader and making deep cuts in greenhouse emissions? Yes.
Maybe its time we changed the way we looked at climate change in Australia, and even the world.