Inside the split at the Climate Change Authority
It was only at the very end that the other members of the government’s Climate Change Authority learnt just how hacked off Clive Hamilton and David Karoly were. There had been months of discussion, argument and compromise between the 10 members of the authority, set up by the government to give it expert independent advice on how it should respond to global warming, as they worked on their last big report.
Now the “special review” was done. The report, entitled Towards a Climate Policy Toolkit, laid out in 200-odd pages the mechanisms by which the government might realistically address the biggest problem facing Australia and the world – the challenge of cutting greenhouse gas emissions in the context of this country’s international commitments, and avoiding runaway climate change.
But at the 11th hour, Hamilton, a resource economist and professor of public ethics at the Centre for Applied Philosophy and Public Ethics at Charles Sturt University, said he wouldn’t endorse the report. Karoly, professor of atmospheric science in the University of Melbourne’s school of earth sciences, and the only actual climate scientist among the group, also refused. This blindsided their colleagues.
“They sprang it on us the day before we were signing off,” says one member of the majority.
It seemed to him that Hamilton and Karoly had planned it for maximum impact, an impression confirmed a few days later when the pair filed a joint piece in the Fairfax press, writing: “We could have just resigned – and we’ve been strongly urged to do so! But Australia’s climate future matters too much for us to just slip quietly back into our university offices.”
And sure enough, they were not going quietly. They placed other articles in other media, notably The Conversation website. They did multiple interviews. And those were but a taste of the swingeing 24-page dissenting report they released on Monday, just five days after the majority report dropped.
The essence of their critique is that the authority has failed its mandate to be independent, has been co-opted by the government and produced soft policy prescriptions that are inadequate to the urgency of mitigating climate change.
And they’ve had a lot of support. The Greens climate and energy spokesman, Adam Bandt, characterised Hamilton and Karoly as “whistleblowers” who had exposed an organisation that was soft-pedalling on policy and targets to match the current government line.
Though the timing of the pair’s ambush came as a surprise, some kind of conflict seemed inevitable to many people. Or renewed conflict: the Climate Change Authority has long been a major battleground in the broader war over climate change policy.
The authority was set up at a time when climate change ranked far higher in public debate than it now does. A Labor minority government, dependent on the goodwill of the Greens and a few climate change-aware independents, was making climate change an issue. As was an opposition led by a climate sceptic, Tony Abbott, which had made virulent hostility to Labor’s climate change policies a core part of its pitch for election.
Having won the 2013 election, the conservatives set about the business of demolishing the architecture of Labor’s policy. The Climate Change Authority was among the many bodies and initiatives – such as the Clean Energy Finance Corporation (CEFC) and renewable energy target – slated for abolition.
The Abbott government thought it could rely on the support of the new, apparently more right-wing senate crossbench to support it. But in June 2014, at one of the strangest media conferences held in Canberra, Clive Palmer appeared with former United States vice-president Al Gore and announced he had struck a deal to support the government in abolishing the carbon tax.
There was, however, a minor caveat: he and his colleagues in the Palmer United Party would not support abolition of the CEFC, the RET or the Climate Change Authority. Palmer also said he supported the concept of an emissions trading scheme, but that it would “only become effective once Australia’s main trading partners also take action to establish such a scheme”.
The government and media were astonished. Indeed, one of the few people not astonished was Ben Oquist, of The Australia Institute, who had worked his way into a position of trust as an informal adviser to Palmer, and who had brokered the deal.
About a year later, the government again needed help for its own weak alternative to the carbon tax – the so-called Direct Action plan, which instead of taxing polluters committed billions of taxpayer dollars, through an emissions reduction fund, to paying them to pollute less – and something similar happened.
It needed the votes of the Palmer senators to get the legislation through the senate. Palmer, again on Oquist’s advice, extracted a further quid pro quo. The Direct Action legislation was amended to strengthen it, and the government was forced to commit to continued funding of the Climate Change Authority, which as part of the deal was also commissioned to do a series of special reports in the lead-up to the Paris climate conference, as well as a post-Paris report about how Australia should meet its targets. Last week’s report was the outcome of that deal.
But while the government could not abolish the Climate Change Authority, it continued to try to weaken and tame it.
In truth it was weakened already, as the former chairman of the authority, Bernie Fraser, can attest. Uncertainty about the future of the body led to a loss of good staff. It was increasingly forced to rely on people seconded from the bureaucracy, which undermined the authority’s independence of government.
But the action that really eroded the confidence of those who supported strong action on climate change came late last year. Bernie Fraser resigned. He gave no explanation, but evidence suggests the respected former Treasury secretary and Reserve Bank governor was pushed.
It was only a couple of weeks after Fraser had issued a damning assessment of the inadequacy of the government’s greenhouse-reduction targets.
Then prime minister Tony Abbott’s repeated assertions that the position Australia would take to the Paris talks was among the strongest in the world and more ambitious than the United States were incorrect, Fraser said.
In reality, Australia’s target – a reduction in the amount of greenhouse gas released into the atmosphere of 26-28 per cent by 2030, based on 2005 levels – put the nation “at or near the bottom” of comparable countries, he said.
On the basis of the government’s current targets, Australia “would slip further behind the efforts being made by comparable countries and likely face large catch-up adjustments down the track”.
What Fraser said was pointed but scarcely new. The authority had previously recommended much bigger cuts to greenhouse gas emissions: 45 to 63 per cent by 2030.
Fraser compounded his political sin by taking the government to task over its claim that the Labor Party’s proposal for an emissions trading scheme amounted to a carbon tax. Not true, said Bernie.
His resignation came after a daylong meeting of the authority. With Fraser out of the way, then environment minister Greg Hunt announced a raft of new appointments to the authority. It was widely seen, on both sides of the debate, as stacking the authority.
The appointees included economist Danny Price and energy industry consultant Stuart Allison, credited as architects of Direct Action and the emissions reduction fund.
Another appointee was Kate Carnell, former Liberal chief minister of the ACT and head of the Australian Chamber of Commerce and Industry, a forestry industry lobbyist and outspoken critic of previous climate change policy.
And there was John Sharp, a former Nationals MP who is still party treasurer.
The new chairman was Wendy Craik, former head of the National Farmers Federation and a former member of the Productivity Commission.
Two other new faces were chief scientist Alan Finkel and Andrew Macintosh, formerly of The Australia Institute, appointed as an “associate member” strictly for the duration of the “Toolkit” review – presumably on the basis that he, as an expert in environmental law, actually had some relevant background.
The three continuing Labor-appointed members of the authority, Hamilton, Karoly and left-wing economist John Quiggin – described by Hunt as “some of the strongest, most outspoken, partisan political players in the country in this space” – were outnumbered.
Climate change experts and activists expected this report to be very different from the authority’s previous work. And indeed it is.
For a start, it is a whole lot more circumspect in its language. There is scant mention of the adequacy or otherwise of government reduction targets or of carbon budgets. The subtext is “nothing radical here”.
As Hamilton and Karoly note in their dissenting report: “The majority report’s analysis and recommendations give the impression that Australia has plenty of time to implement measures to bring Australia’s emissions sharply down.”
The report lulls its readers with assurances, such as “the Authority recommends continuing and building on existing measures, such as the Emissions Reduction Fund (ERF) and its safeguard mechanism, as well as energy efficiency and innovation support measures”.
Yet the recommendations of the authority have found support from credible analysts. Ross Gittins, the economics editor for The Sydney Morning Herald, called it a “potentially breakthrough report”.
The support comes for a couple of reasons. The first is purely political. Within the current government, according to one Liberal Party source, there are still a lot of climate change denialists and many more “do-nothingists” – that is, people who acknowledge the problem but fear the economic costs of strong action to limit emissions.
Some, of the deniers, such as the leader of the Nationals, deputy prime minister Barnaby Joyce, are very senior. About a week ago, another, Liberal MP Craig Kelly, was appointed chairman of the Coalition’s environment committee, which has input into any legislation relating to the environment and energy. That says a lot about the attitude of the Coalition parties.
As one person involved in the authority report told us, it’s best not to startle these people. Thus a purist position on policy was bound to fail. “It’s better,” this source said, “to have 80 per cent of something than 100 per cent of nothing.”
The second reason the report is getting credible support is that it is actually rather more than it purports to be. As one piece of analysis in The Australian Financial Review put it, what the report proposes is “the emissions trading scheme which dare not speak its name”.
In fact, it’s more than that. It proposes a hybrid of market-based and regulatory approaches to carbon reduction, which vary by industry sector, but which are based on current policies.
Take just one example: the Climate Change Authority’s proposal for the electricity generation industry, the largest greenhouse gas-generating sector.
The authority proposes what it calls an emissions intensity scheme. This scheme would set a limit on the allowable amount of emissions, much like the government’s current system of emissions “baselines”.
The cap on the allowable limit of greenhouse gas pollution per unit of power generated would be tightened over time. That’s the regulation part. But within that baseline, individual generators would be able to buy and sell pollution “credits”. That’s the market bit.
“So,” says Richard Denniss, chief economist at The Australia Institute, “if you’re a coal-fired generator and you are above the limit, the way to stay in business is to buy credits from those that are under.
“But every year, as the baseline is reduced, coal-fired power stations would have to buy more credits from the renewables providers. Demand means the price of credits will go up, the dirtiest ones will become progressively less competitive, and eventually be forced out of the market.”
The interesting bit is that the Climate Change Authority report is not prescriptive about how quickly the baseline might be lowered. The report advocates it be lowered on a strict linear trajectory, but only that it would reach zero between 2018 and “well before 2050”.
And that is clever, given the lack of urgency evident in the government’s current approach. Should it, come next year when it reviews its climate change policy, realise the urgency of the problem, or should Australians later elect a more concerned government, the process could be sped up. And that is the story across other sectors.
Said one member of the authority: “We’re doing it in a way that uses the current instruments but modifies them in a way that allows for quite radical change.”
It’s not radical enough for some, of course, such as Hamilton, Karoly and their supporters. But politics, as the old cliché says, is the art of the possible.
And given the government we have, the possibility of meaningful policy change is greater if it comes with the recommendation of John Sharp or Kate Carnell.
This article was first published in the print edition of The Saturday Paper on Sep 10, 2016 as "Inside the split at the Climate Change Authority". Subscribe here.