Rudd's carbon reduction fraud

By Shua Garfield

The Australian government is playing “Russian roulette with the climate system, with most of the chambers loaded”, according to CSIRO climatologist James Risbey. In an April 8 submission to the Senate select committee on climate policy, Risbey outlined the disastrous consequences if the government’s greenhouse gas (GHG) emissions reduction targets for its Carbon Pollution Reduction Scheme (CPRS) — 5% below 2000 levels by 2020 and 60% below by 2050 — were emulated by the rest of the world.

He explained that if these were adopted as global targets, there would be a 50-90% chance of exceeding atmospheric GHG concentration thresholds that would lead to the breakdown of Himalayan snowmelt systems which are the source of Asia’s nine largest rivers; acidification of oceans, causing extinction of many shellfish species; collapse of the Greenland and West Antarctic ice sheets, leading to a 12-metre increase in sea level; and release of methane from tundra permafrost, which could cause global warming to continue for centuries regardless of efforts taken by humanity to stop it.

However, Risbey pointed out that, “In practice, the implications of the CPRS targets are even worse than this. Fairness considerations dictate that the reduction in emissions would need to come disproportionately from the developed countries in order to converge to equal per capita emissions by 2050. As such, one can’t simply extrapolate the Australian CPRS targets to the rest of the world. Thus, the CPRS targets imply much higher stabilisation levels of greenhouse gases by 2050, with a near certainty of exceeding the 2oC [average global surface temperature increase] threshold.”

Changes to CPRS

On May 4, less than a month after Risbey made his submission, the PM Kevin Rudd government announced new changes to the proposed CPRS. In addition, several new environmental spending programs were announced in the 2009-10 federal budget. Some of these measures were no doubt intended to appease those who have pointed out the gross irresponsibility of the Labor government’s GHG emissions reduction target. However, these measures leave much of the original CPRS proposal intact — including the “5% by 2020” target. Other changes are much more clearly intended to further sweeten the CPRS for polluting industries, which were already set to gain massive government handouts in the original version of the proposed legislation.

If the legislation is adopted in its current form, companies emitting more than 25,000 tonnes of CO2-equivalent per year (or 10,000 tonnes in the case of some landfills), or which produce or import GHG-producing fuels for use in Australia, will be required to surrender a permit for each tonne of emissions at the end of each financial year. Citing the need to be “economically responsible” in the face of the global capitalist recession, the Rudd government has delayed the mandatory participation in the CPRS until July 1, 2011, one year later than originally proposed.

The government has also decided to fix the price of one tonne of CO2-equivalent emissions at $10 for the first year of the scheme. Government climate change advisor Ross Garnaut, who compiled the economic and environmental modeling and policy proposals that formed the basis of the CPRS legislation, estimated last year that for the scheme to achieve a 5-10% reduction in GHG emissions by 2020, the permit price would need to start at $20 per tonne and rise at above-inflation levels. One wonders then, what the government hopes a $10-per-tonne permit price will achieve — other than making the scheme even easier on polluting corporations than it already is.

Handouts to big polluters

But that’s just the least of the sweeteners the government has thrown in for big business in its latest version of the legislation. “Emissions-intensive trade-exposed industries” — the government’s euphemism for highly polluting corporations which compete with similar corporations from other countries to realise profits — have been promised extra free permits in what the government is calling a “Global Recession Buffer”. Businesses that emit at least 2000 tonnes of CO2-equivalent per $1 million in revenue had already been promised 90% of their permits free at the outset of the scheme in previous versions of the legislation, with rates of assistance declining at 1.3% per year thereafter. Now they are promised 94.5% of their permits for free at the outset. Companies emitting 1000-2000 tonnes CO2-equivalent per $1 million revenue, previously promised 60% of their permits for free, will now receive 66% at the scheme’s outset.

The new promised free permits will provide approximately $2.2 billion in extra business handouts, bringing the total in promised handouts to big business to $16.4 billion. This is enough to fund the replacement of around a quarter of Australia’s coal-fired power generating capacity with solar thermal power plants, thereby cutting Australia’s GHG emissions by around 10%!

But no efforts to phase-out coal are planned: free permits will also be granted to corporations that purchased or constructed coal-fired power generators before the government announced it would implement an emissions trading scheme (ETS). The purpose of these free permits is to compensate investors for “losses of asset value”, according to the parliamentary secretary for climate change, Greg Combet. And in yet another example of the Rudd Labor government’s “pay the polluter” principle, $200 million will be granted to businesses to undertake energy efficiency measures.

Given all these problems with the CPRS, one would expect environmentalist organisations to condemn this fraudulent “carbon reduction” scheme. Yet several environmental peak bodies have offered support for the passage of the CPRS legislation. In a May 20 media release, the Australian Conservation Foundation (ACF) justified its “qualified support” for the legislation with the hope that the “revamped scheme’s 25 per cent target improves the chances of a good outcome at the critical UN climate negotiations in December”.

The World Wildlife Fund for Nature — Australia (WWF) justified its support for the CPRS in similar terms in an open letter to its supporters who have questioned this policy: “Our decision to support the announced changes including a 25% [sic] was taken because our key objective is to get an effective international agreement at the UN Climate Change Meeting in Copenhagen. This will require developed countries as a group to reduce emissions between 25% and 40% below 1990 levels by 2020.”

All it has taken for the government to win the support of these groups is to raise the maximum 2000-2020 emissions reduction target it is willing to consider from 15% to 25%. This is more of a carrot-on-a-string than an actual policy, and the WWF, ACF and Climate Institute, along with the perennial ALP cheer-squad in the ACTU have shown themselves to be obedient donkeys. The 25% target remains conditional on the Rudd government getting the Copenhagen summit to adopt an “international agreement involving comprehensive global action capable of stabilising greenhouse gases in the atmosphere at 450 ppm CO2-e or lower”.

The government’s Strengthening Australia’s 2020 Carbon Pollution Target document, released on May 6 by the Department of Climate Change, goes on to list five further conditions that such an agreement must include, one of which is “fully functional global carbon markets”. In the meantime, the government’s minimum target — 5% — remains its real target.

Many other environmentalist organisations, including Friends of the Earth, several state-based conservation councils, Greenpeace Australia, The Wilderness Society and at least 65 local climate action groups have rejected the government’s illusory carbon carrot. They have also criticised the 25% target, pointing out that it is consistent with allowing at least a 2oC rise in average global temperatures, which is likely to lead to the loss of the Great Barrier Reef and still holds significant risk of exceeding “tipping points” that could induce irreversible melting of Greenland and Antarctic glaciers. Many of these groups have instead suggested that a 40-50% target for GHG pollution reduction by 2020 would be more consistent with what current climate science says is necessary to maintain a safe climate.

The Greens have also rejected the legislation, criticising its massive handouts to polluters and its failure to allocate resources to restructuring and/or replacing these industries. They have refused to support it in the Senate, where it now appears to be set for either defeat or at least a long delay. While these groups have correctly criticised the government’s emissions reduction targets and its handouts to big business, much less criticism has been directed at the mechanism the government proposes to achieve GHG pollution reductions — emissions trading. Indeed some of these groups, including the Greens, support emissions trading. But it’s no use rejecting the carrot if you’re still going to drink the Kool-Aid!

Emissions trading

In his May 14 speech to parliament on the legislation, Combet outlined the reason that Australia’s government prefers this mechanism: “There is a key reason why a cap and trade scheme delivers emissions reductions at least cost, and that is the flexibility it gives to individual firms. It is important to appreciate that a cap and trade scheme works by reducing pollution across the economy rather than dictating exactly where and when this occurs … This model provides flexibility and minimises costs. The government does not dictate to individual firms how emissions should be reduced, or by how much. That judgment is left to individual firms, taking into account the price of permits and their assessment of emissions reductions opportunities.

“In short, this is an incentives-based model rather than one based on prescriptive directions. There is an economy-wide incentive to reduce emissions, which over time drives the uptake of low carbon technologies. This will place the economy in a better position over the longer term and avoid the need for large and sudden adjustments in the carbon intensity of the economy [italics added].

“We should not ignore the international trend towards cap and trade schemes … Emissions trading is already underway in 27 European countries. New Zealand has passed legislation to introduce a cap and trade scheme. In the United States, President Obama has … called on Congress to send him legislation to establish a cap and trade system … The Scheme has been designed to be able to link with international carbon markets. Linking allows the import of emissions units from other schemes, which will reduce global and Australian abatement costs by ensuring that the cheapest abatement opportunities are pursued first, regardless of where they occur in the world.”

The reasons the government gives for supporting emissions trading are exactly the reasons it should be rejected. There is already a need for “large and sudden adjustments in the carbon intensity of the economy.” Emissions trading, as Combet’s justification makes clear, is at best a recipe for achieving small, gradual emissions reductions. It avoids placing responsibility on any specific government or corporation for developing and implementing low-carbon technology. Instead, we are meant to believe that “market forces” will create the right incentives to make this happen if carbon pollution is made into a tradable business expense. And of course Labor trusts market forces to do this — just look at how well the capitalist market has solved the problem of global poverty!

Examples of emissions trading so far have not been promising. Corporations covered by the European Union’s ETS actually increased their GHG emissions during the first three years of that scheme, which commenced operation in January 2005. While cuts in energy consumption since the onset of the global recession have since reduced these companies’ emissions, their reductions have actually been smaller than those that have occurred in the same period by companies not covered by the scheme!

Promises of more stringent emissions caps in the future don’t change the fact that these are just promises — made by capitalist governments whose priority above all else is to make the capitalist profit system “work”, i.e., maximise business profits. Thus, ETSs also allow companies to pass on the cost of purchasing pollution permits to consumers — making necessary commodities more expensive for working people. This means that those not responsible for the climate crisis, and least able to afford it, have to pay for it. If this is successfully sold to the general public as “the way to fight climate change”, this will only undermine mass support for real action to combat climate change.

Empowering the rich, poisoning the poor

By turning pollution rights into a commodity that can be bought and sold, ETSs reinforce the power of the richest corporations. This is particularly sinister in light of the intention to construct a global ETS. A corporation wanting the right to pollute more (or a bank wanting to generate pollution permits to sell) can “offset” these emissions by buying land in the Third World for various activities that supposedly reduce GHG emissions. Under the Kyoto treaty, such arrangements have already seen farmers in India kicked off their land (and subjected to police brutality when they resisted) to make way for hydroelectric or wind-power stations.

Other such “offset” projects have involved polluting companies in the Third World, such as refrigerant manufacturers, generating large numbers of pollution permits by making relatively small adjustments to production methods. This has created an incentive for these companies to actually increase polluting activities (including production of non-GHG pollution) so they can sell more permits by “reducing” the proportion of GHGs released into the atmosphere. In his forthcoming book The Impact of Climate Change in India, Larry Lohmann cites the example of the Indian refrigerant company SRF, which has made a $600 million profit from selling pollution permits after spending $2.2 million installing infrastructure that allows it to burn off HFC-23, a potent GHG. Lohmann also cites the example of a coal-fired iron-works in Chhattisgarh, India, that “pumps out smoke that dims the sun and blackens trees, soil and workers’ faces alike … spoil[s] farmland and crops, usurp[s] local groundwater, displace[s] villagers, and damage[s] the health of local residents.” Because this company claims it has made part of its operations more energy-efficient, it is able to sell pollution permits to First World-based corporations.

To genuinely address climate change, governments like Australia’s would need to do exactly what they are trying to avoid through ETSs: directly invest in a massive expansion of renewable energy, public transport, sustainable agriculture, etc. Instead of its “pay the polluter” principle, the government would have to “make the polluters pay” — or face expropriation. It would need to by-pass and even act against market forces and private property rights by freely sharing “green” technologies with poorer countries.

As a whole, such measures are beyond the scope of governments whose purpose is to defend the capitalist system. The lead-up to Copenhagen and the divisions among capitalist politicians over the CPRS provide enviromentalists with an opportunity to mobilise people to demand real solutions. Some concessions might be won by sufficiently large and sustained mobilisations. But piecemeal reforms are not a sufficient solution to the crisis we face, especially when the government will seek to put the burden of paying for such reforms on those least able to afford it. We must not delude ourselves that a long-term, sustainable solution to the impending climate catastrophe will come as long as we allow the capitalists to rule us.