How Australia Survived a Climate Policy Reversal

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By Murray Griffin

Australian businesses and organizations say they know firsthand the damage that can be done if a national government retreats from climate commitments—and they have some suggestions for U.S. companies on how to respond.

The Liberal-National Party, led by Tony Abbott, swept into office in 2013 and famously repealed a national carbon tax, becoming the first nation to both adopt and then revoke a price on carbon dioxide emissions.

Abbott’s government also abolished a climate-change commission, drastically weakened the former government’s 2020 greenhouse gas emissions targets, and tried to abolish several agencies. Less than two years later, with his poll numbers plunging, Abbott’s own party dumped him as its leader. His replacement is current Prime Minister Malcolm Turnbull, who accepts climate change science.

Abbott portrayed his policies with a message that was similar to what President Donald Trump said last week when he announced that the U.S. would withdraw from the international Paris Agreement on climate change: These policies will hurt our businesses and our economy.

Some industry groups applauded Abbott’s efforts, including the Minerals Council of Australia, which represents major mining companies and continues to express concern about subsidies for renewable energy.

But others in Australia involved in climate-related matters contend the Abbott-era repeal of climate change policies “did no favors for business,” said Peter Castellas, head of the Carbon Market Institute, which helps Australian companies take advantage of opportunities in carbon markets. It counts large greenhouse gas emitters and carbon offset providers among its members.

“When you have inward-looking, divisive political approach to addressing climate change, it doesn’t help business position and navigate the transition to a low- or net-zero carbon economy,” Castellas told Bloomberg BNA.

That’s a big problem, Castellas said, “because that transition is on.”

Quantifying Risk

Under Abbott, clean energy jobs were lost in Australia, renewable energy investment stalled, and large emitters could discharge greenhouse gases without meaningful penalty or restraint. Many governments and organizations outside Australia appeared to watch in disbelief and made it clear that climate change was a crucial concern.

In a 2014 speech in Brisbane coinciding with an Australia-hosted G-20 summit, then-U.S. President Barack Obama said climate change threatened “the incredible natural glory” of the Great Barrier Reef.

The remark irked the Abbott government, with one minister saying that others shouldn’t be “coming and lecturing us on climate change.” But Obama’s assertion also proved prescient, with the world’s largest coral reef suffering unprecedented back-to-back major coral bleaching events over the past two years.

According to Castellas, the toxic political environment and policy uncertainty in Australia made it near-impossible for businesses to quantify their long-term carbon risk and “make the appropriate future-proofing decisions.”

As a result, Australian businesses have become much louder in demanding a mature approach to climate policy as something that is “in the economic interest of the nation,” he said.

Major associations such the Australian Industry Group and the Business Council—the latter representing the country’s largest companies—are now “back out of the climate closet to articulate the need for long-term certainty and argue against divisive policies,” Castellas said.

For example, the Australian Industry Group has been blunt in its appraisal of existing federal policies, telling the government there is “no likelihood” that they will allow Australia to meet its commitment to cut emissions 5 percent below 2000 levels by 2020.

Business Alliances

Businesses have also formed alliances with other parts of society, most notably through the Australian Climate Roundtable. Its members include the Australian Industry Group, the Business Council, environment group WWF, the Australian Council of Trade Unions, and industry associations representing the aluminum industry and energy companies.

The Climate Roundtable has criticized politicians for failing to implement effective climate and energy policies. After Trump announced he would withdraw the U.S. from the Paris Agreement, the roundtable issued an endorsement of the accord, describing it as “firmly in Australia’s interests.”

When it comes to climate policy chaos and disappointment, “Australia has been there,” said carbon consultant Erwin Jackson, former deputy chief executive of the Climate Institute.

The policy uncertainty has unnecessarily cost the Australian economy “billions of dollars,” Jackson told Bloomberg BNA, because the disruption to energy investment decision-making has triggered large rises in electricity prices. However, he noted the energy sectors in the U.S. and Australia operate very differently.

State Activities

Sensible, stable federal policy action on energy and climate is essential, but in its absence Australian states have stepped up their activities, Jackson added. Several states either already have or are in the midst of introducing or strengthening schemes that encourage new renewable energy generation or result in energy efficiency improvements.

They have also teamed up with mayors of cities including Sydney, Melbourne, and Adelaide to form their own climate action roundtable, while South Australia, Victoria state, and the Australian Capital Territory are also members of the international Under2 Coalition, which includes 170 jurisdictions representing 33 countries and six continents seeking to reduce carbon emissions.

Australia’s experience was that attempts to undo climate policy don’t succeed and don’t last, said Emma Herd, chief executive of the Investor Group on Climate Change.

Many had expected the abrupt policy reversal of 2012 would lead to a five- or 10-year delay in action, but that has not proved to be the case, she told Bloomberg BNA. Instead, within 18 months the pendulum started to swing back the other way, she said.

Herd added that the Abbott government’s attempted “frenzy of undoing” climate policy had proved only partially successful.

“The first thing that happened was that you began to see organizations strategically rename themselves to carry on,” she said, with strategies referring to issues such as energy efficiency or disaster resilience instead of climate change.

“There was a lot of hiding things in plain sight,” she said.

In addition, there was a growing recognition that some forms of regulation had become quite important for other reasons, and that organizations such as the Clean Energy Finance Corporation “were doing quite a decent job,” she said.

Herd added that she had often quoted former U.N. Framework Convention on Climate Change Executive Secretary Christiana Figueres, when she was asked during a visit to Australia how organizations and businesses should respond to policy chaos. The response from Figueres was “not to look at how high the waves are, but at which way the current is flowing,” Herd said.

Abbott’s Actions

The first public act of Abbott’s environment minister Greg Hunt was to abolish the Climate Commission, which provided expert advice to the public on climate change.

Abbott dumped the former government’s target of a 5 percent to 25 percent emissions cut below 2000 levels, depending on international developments, instead aiming only for a 5 percent reduction. His government repealed a national carbon price scheme that applied to facilities emitting more than 25,000 metric tons of greenhouse gases annually, which had been introduced by the former Labor government.

Abbott’s government weakened a national Renewable Energy Target regime that provided incentives for the installation of new clean energy generation. And it tried to abolish several agencies, including Australia’s equivalent of the UK Green Bank (known as the Clean Energy Finance Corporation), although its efforts were stymied in the Senate.

The Minerals Council, which spearheaded a business campaign against the former national carbon price scheme, argues that the solution to Australia’s energy problems lies largely in new more efficient coal-fired power plants, possibly coupled with carbon capture and storage.

The Minerals Council is not a participant in the Australian Climate Roundtable, and has not put its support behind the roundtable’s statements that the country must aim for net-zero emissions.

Abbott remains in Parliament. along with a small but influential group of politicians within Turnbull’s ruling Liberal-National Party Coalition, and he continues to criticize climate change policies, particularly anything that would involve a carbon price.

Clean Energy Boom

In Australia, the era of dismantling policy is now over, though the task of reestablishing a full suite of effective climate policies is far from complete.

Australia’s clean energy industry is experienced an unprecedented boom thanks to falling renewable technology prices, state action, and support from the funding bodies that Abbott tried and failed to abolish.

The country has retained and developed a thriving carbon offsets industry, thanks largely to the efforts of Hunt, even though he was Abbott’s key tactician in the campaign to demolish carbon pricing and all climate agencies.

And there is a growing view that the federal government must soon, in some way, bow to the widespread calls for a lasting energy and climate policy that can put the country on track towards net-zero emissions.

To contact the reporter on this story: Murray Griffin in Melbourne at correspondents@bna.com

To contact the editor responsible for this story: Greg Henderson at ghenderson@bna.com

For More Information

The June 2 Australian Climate Roundtable statement is available at http://src.bna.com/pxe.

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