2010: Year in Review

Written by: Matthew Sander, Kinesis

2010 has been a confused and dramatic year for climate change policy in Australia. After apparent setbacks the end of the year has seen tentative signs of progress.

When I first began working in the climate change policy space, as a research intern at the Climate Institute in 2006, it seemed as if a perfect storm was forming around climate policy in Australia:

• A worsening drought had created a sense of urgency around the need to reduce greenhouse gas emissions
• The release of the Stern Review centred the debate around the relative cost of reduced emissions compared to the cost of un-checked climate change
• Al Gore’s documentary, An Inconvenient Truth, helped push the climate change issue into the mainstream political consciousness

When then Prime Minister, John Howard, announced the Shergold Review which would examine the potential framework for a National emissions trading scheme, the issue of a carbon price had bi-partisan support. It appeared inevitable that Australia would soon have a legislated price on carbon.

This sense of inevitability persisted through the 2007 Federal election and the release of the Garnaut Review, the Carbon Pollution Reduction Scheme (CPRS) Green Paper and White Paper and Treasury Modelling.

But the ascendency of Tony Abbott to the Federal Opposition leadership in late 2009 meant that for the first time in three years there was no longer bi-partisan support for a price on carbon. This, coupled with the perceived failure of the Copenhagen and the “climate-gate” controversy, presented the first of what would be a series of setbacks to climate change policy.

In April, after a four month post-Copenhagen silence, Prime Minister Kevin Rudd announced that the Government would be delaying the introduction of the CPRS until “after the end of the current commitment period of the Kyoto Protocol (which ends in 2012) and only when there is greater clarity on the actions of other major economies including the US, China and India.”¹  This announcement followed the failure of the Government to pass the CPRS legislation through the Senate. The Government also cited “slower progress than expected in terms of global action on climate change” as a reason for delay.

This decision was one of the factors in the rapid decline in Kevin Rudd’s approval rating his replacement by Julia Gillard as Prime Minister in late June. When a Federal Election was called for the 21^st of August, neither party had a policy for introducing a mechanism for a price on carbon during the next term of Government; a complete reversal of the position of both parties in the lead up to the 2007 Federal Election.

However, while the lead up to the Federal Election may be seen as the low point of climate policy in 2010, the result means that progress may once again be possible.

In order to secure the support of the Greens, Labor entered into an agreement in which both parties agreed that “Australia must tackle climate change and that reducing carbon pollution by 2020 will require a price on carbon.”²

Since then, a cross party parliamentary committee has been established that “will explore options for the introduction of a carbon price”³ and it has been announced that the Productivity Commission will “undertake a study of emission and energy-reduction policies in key international economies to help inform the Government’s plan to introduce a carbon price in Australia”⁴.

At a speech to the Council for the Economic Development of Australia on the 29^th November, Prime Minister Julia Gillard committed to introducing a carbon price in 2011 stating that the Government “must decide in 2011 on a way of pricing carbon that is supported by a broad enough consensus that it can be legislated”.⁵

However, despite these developments much uncertainty remains, and it is clear that a price on carbon cannot yet be seen as an “inevitable” development as it might have appeared only a few years ago. In particular, it is unclear what mechanism might be pursued to achieve a price on carbon. There are important differences between an emissions trading scheme and a carbon tax that affect the efficiency and effectiveness of achieving economy wide emissions reductions. Determining which approach will be best suited for Australia’s economy will be a key task for the Parliamentary Committee in 2011.

The uncertainty around the Federal Government’s approach to climate policy has also created an opportunity for other levels of Government to show leadership and innovation in this space. The City of Sydney’s plans for a decentralised energy network based on trigeneration both show that there is considerable opportunities for Government to undertake innovative policy actions to achieve large scale emissions reductions that can compliment a National carbon price.

With 2010 on track to be the hottest year globally on record, the imperative to reduce greenhouse gas emissions has not diminished. Amongst the current uncertainty around Australia’s climate change policy direction, it is perhaps this imperative which remains truly inevitable.

Matthew Sander is the policy analyst at Kinesis; a consultancy firm working with government and business on climate change and innovative ways to reduce emissions. You can find Matthew on the member directory.

¹ Department of Climate Change (2010), Carbon Pollution Reduction Scheme, Available: http://www.climatechange.gov.au/en/media/whats-new/cprs-delayed.aspx

² The Australian Greens & The Australian Labor Party (2010), The Australian Greens  & The Australian Labor Party (“The Parties”) – Agreement, http://greens.org.au/sites/greens.org.au/files/Final%20Agreement%20_ALP_GRNS.pdf

³ Minister for Climate Change and Energy Efficiency (2010), Prime Minister Establishes Climate Change Committee, http://www.climatechange.gov.au/en/minister/greg-combet/2010/media-releases/September/mr20100927.aspx

⁴ Minister for Climate Change and Energy Efficiency (2010), Study into emission reduction policies in key economies, http://www.climatechange.gov.au/minister/greg-combet/2010/media-releases/November/mr20101015.aspx

⁵ Prime Minister of Australia (2010), Speech to the Council for the Economic Development of Australia, http://www.pm.gov.au/node/7031