Direct Action policy leaves loopholes for big polluters

The long-awaited white paper about the A$2.55 billion Emissions Reduction Fund provides answers to some questions regarding the Abbott government’s Direct Action Climate Plan. The policy lets off the few polluting companies.

The government has made it clear that it will not add more money to the ERF than what is budgeted. Australia may be able to reach its 5% reduction target by 2020 but will find it difficult to reduce further than that.

Hunt stated that the government would not go beyond the 5% goal until “strong, similar action” is taken by the major countries in the world. The government’s Climate Change Authority has recently advised that these conditions have been met and suggested Australia revise its aims to a reduction of 19%.

Emission targets

Yesterday, the minister outlined the Emissions Reduction Fund’s goal to reduce 421 million tons of carbon dioxide from the Australian economy. Hunt said that Australia could “easily meet” its 5% target if it funded projects like cleaning up coal mine waste gas, increasing energy efficiency, cleaning power stations, and capturing CO2 through tree planting and soil carbon storage.

All of these are worthwhile efforts and approaches.

If they are combined with other rising emissions, the overall impact may be limited, and we will not focus on more important issues.

In the new white paper, it is stated that “specific provisions will be made for projects that will play a vital role in Australia’s development.”

Carbon reprieves are often given to projects with high emissions but high economic value.

Australia’s emissions fell last year but are expected to rise again if there is no action. This will be mainly due to increased gas and coal emissions. Emissions reduction fund white paper CC-BY

Polluters are not held accountable for their actions.

The white paper highlights that non-participation has limited financial consequences for polluters.

Businesses that do not want to participate in the program are given a green light to continue emitting. It allows companies that pollute more than others to continue.

Carbon policy is a way to create a level playing field for the industry. Since there are no financial penalties, companies do not consider dealing with emissions a priority.

A second aspect of the policy involves the introduction of a “safeguarding mechanism” in July 2015. This is designed to prevent other polluters from blowing their emissions out and ruining the good work of others.

The safeguarding mechanism audits the emissions from around 130 large facilities. Hunt stated that there would be no new reporting requirements, and the government does not intend to generate revenue by fining those who increase their emissions.

A significant gap exists in the way that a company will measure its emissions reductions. The white paper proposes that “baselines,” or the lowest emissions of the last five years, should be used to measure the reductions.

Each company will, therefore, have its baseline. If a company’s emissions have already been reduced since their peak, even if they still pollute more than their peers, then it might not be required to reduce them under the ERF further.

This is a hypothetical example of how an organization would determine its baseline emissions. Emissions reduction fund white paper CC-BY

The scheme is different from other credit and baseline schemes that look at emissions produced by the best technology available in each industry sector and use this standard to determine a baseline appropriate for that industry.

The steel industry, for example, has a baseline emission intensity per unit of steel. This approach to leveling the playing field also encourages enterprises to become more competitive and efficient both domestically and abroad.

Can we stop “fugitive emissions”?

There will be specific provisions for high-emission facilities. In response to a strong export demand for LNG and coal, Australia is expected to increase its emissions by the most amount until 2020.

The reduction of emissions through projects like energy efficiency in the housing sector is important. However, this could be dwarfed quickly by increasing LNG emissions as well as “fugitive emission” from other sources, including waste methane produced from increased black coal mining.

If left unattended, it’s like someone who eats three desserts after a small meal and expects to lose weight still.

Sources of predicted increases in emissions from now until 2020. The largest single increase in emissions is expected to be fugitive, mainly due to the boom of LNG and coal exports. Emissions reduction fund white paper, CC BY

Hunt said that Direct Action is designed to allow the economy to grow. The risk is that the taxpayers end up paying for projects to reduce emissions that are dwarfed in the end by new sources of emissions.

The ERF White paper leaves many questions unanswered about how exactly it will achieve its good intentions to reduce carbon weight.

The Senate has proposed to repeal Australia’s current policies on carbon emissions. This will be discussed in July. Parliament is being asked once again to eliminate existing measures like the Clean Energy Finance Corporation.

Direct Action is a promising alternative, but the details are still lacking.