As the 26th annual UN climate summit (COP26) in Glasgow approaches, we are seeing a good deal of movement — or at least positioning — from the Morrison Coalition government.
The first of four core areas for discussion at COP26 is the most important: securing net zero. The government finally seems to be accepting that it’s going to have to commit to net zero by 2050. And unlike folks in some countries, Australians will demand that it does what it says.
Wentworth MP Dave Sharma led the charge from within the Coalition for more aggressive interim emissions reduction targets. In remarks at UNSW’s Energy Institute, he said: “A 2035 target of 40-45% below our 2005 levels is achievable on the technology and policy levers available today, and will put us on a managed transition to net zero by 2050.”
Bigger news still was a volley (pun kind of intended) of media appearances by Treasurer Josh Frydenberg making the point that Australia would be punished by international capital markets if it was seen as recalcitrant, and that punishment would have tangible effects on ordinary folks.
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“Reduced access to these capital markets would increase borrowing costs, impacting everything from interest rates on home loans and small business loans, to the financial viability of large-scale infrastructure projects,” he said. “Australia has a lot at stake.”
It was tempting to see this as a case of “shots fired” within Coalition ranks. But even Barnaby Joyce, the government’s fossil-in-chief, seemed to accept this reality. On ABC’s Insiders he said the Australian coal industry shouldn’t decline because of “any domestic policy” but shrugged that if it happened because of “world markets” then, you know, whatever.
Curiously, host David Speers interpreted this as a case of Joyce “digging in”. The better reading was that Joyce was heeding Simpsons character Chief Wiggum’s aphorism: “Dig up, stupid!”
In case you were in any doubt about Frydenberg’s strategy, it’s this:
- Point out the truth — that capital markets are demanding serious action on emissions reduction and are punishing those who fail to take such action
- From his position as the chief Australian authority on what financial markets mean for the country, note that it doesn’t matter whether we want to be green or not. We’re going to lose out big time if we don’t embrace net zero
- Stand back and let Joyce use markets as air cover for grudgingly agreeing to serious action on emissions reduction.
What needs to happen now, though, is twofold. First, ensure that Australia doesn’t unnecessarily constrain itself in achieving net zero by exempting whole sectors of the economy from climate action. The idea that it would commit to net zero but exempt agriculture is bizarre. Not only are there huge economic opportunities for the agriculture sector in the green economy, the rationale for net zero is that Australia can still have emissions in some parts of the economy provided they are offset in other parts.
Second — and there’s really no getting around this — is Australia needs a price on carbon in the economy. The government’s “technology not taxes” bumper sticker completely misses the point. Australia won’t get technological innovation and adoption without a price on carbon.
Pursuing technology alone risks a misguided detour into 1970s-style industry policy, complete with waste, gaming, rent-seeking and worse. Technology and taxes (or more precisely subsidies for green tech and a price on carbon) are what economists call complements (as opposed to substitutes). Doing more of one makes it more appealing to do more of the other. Adopting green tech is more appealing when the alternative is paying more (through a price on carbon) if one doesn’t.
And putting a price on carbon is more attractive when technologies are around for it to help drive efficiency and change. Technology and taxes aren’t binary alternatives. As I observed previously in Crikey — in language to which our PM might relate — they’re like a beer and a pie, or a hi-vis vest and a camera.
The Coalition is finally moving on climate. At least a bit. It is tempting for people like me who have long been advocates of strong action to see this as giving in to domestic electoral and international political pressure. But so what? There’s movement. That’s good for the country and good for the planet.
And when people finally do some of the things critics want, rather than cry “hypocrisy” we should — as American baseball fans say — “just take the W”.
This article was first published by Crikey.