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Scott Morrison says his new $3.5 billion climate fund will cut Australia’s emissions, but experts warn he is playing a numbers game that is ‘essentially dishonest’. By Mike Seccombe.

PM’s climate fund fallacy

It is the mantra Prime Minister Scott Morrison intones endlessly when the subject of Australia’s response to climate change arises. We will meet our international greenhouse gas reduction agreements, he says, “in a canter”.

Whenever official data comes out, showing Australia’s emissions have again increased, as they have consistently under this government, Morrison insists we will meet our Paris target of a 26 to 28 per cent reduction, compared with 2005, by the year 2030 – “in a canter”.

When the climate scientists of the United Nations issue a report, as they did last December, bluntly stating “there has been no improvement in Australia’s climate policy since 2017 and emission levels for 2030 are projected to be well above the target”, he blithely dismisses it.

When credible numbers are released by forecasters suggesting Australia will fall way short of its Paris target – Ndevr Environmental’s work of last December showing we will miss the target by a cumulative 1.1 billion tonnes of emissions, to cite just one – Morrison responds with the old mantra.

Until this week, he never gave detail of how it might be done. He just endlessly repeated the simple assurance – we will meet our targets “in a canter”.

Over recent days, though, Morrison finally announced some detail. Australia would meet its targets largely through a $3.5 billion “climate solutions package” which, many climate experts say, relies largely on a combination of Howard-era accounting trickery and Abbott-era policy of dubious merit.

Yet Morrison still insisted in the media blitz that accompanied his policy announcement that we would meet the targets in a canter.

Having seen the policy and watched Morrison’s misrepresentations of climate reality in media interviews, Tim Baxter, a fellow of the Law School and associate of the Climate and Energy College at Melbourne University, doesn’t see Australia cantering towards its climate goals. He sees a gallop. The “Gish gallop”.

For those unfamiliar with the term – as I was when Baxter used it – the Gish gallop is a rhetorical technique, named for an American creationist, Duane Gish, who employed it.

As Baxter explains: “It’s a term for when you throw out copious amounts of half-truths and baseless claims in rapid succession, knowing your opponent cannot rebut each one in the available time. It’s based on the premise that it takes vastly more effort to debunk nonsense than it takes to put it out in the first place.”

Morrison and other members of the government – notably Energy Minister Angus Taylor, who Baxter holds to be an even worse abuser of the truth than Morrison – have Gish-galloped through the past week.

On Tuesday, Morrison penned an op-ed for The Sydney Morning Herald.

“We’re absolutely on track to meet our 2020 Kyoto emissions reduction target and that’s no small feat. In 2013, we inherited from Labor a 755 million tonne projected deficit on our Kyoto 2020 goal,” he wrote. “We are now expecting to over-achieve on the target by 367 million tonnes – a 1.1 billion tonne turnaround.”

Morrison boasted the current government had achieved this through “a combination of successful policies” – nominating “the renewable energy target, the Clean Energy Finance Corporation, and the Australian Renewable Energy Agency”.

These claims were misleading in multiple ways.

It was true to credit the initiatives he enumerated with having made a significant difference to Australia’s progress on reducing emissions. But it was quite untrue for Morrison to claim credit for them. In fact, for most of the time since its election in 2013, the Abbott–Turnbull–Morrison government has been hostile to the renewable energy target (RET), Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA).

The RET long predated the Morrison government. In 2015, under Tony Abbott, the target was cut significantly, from the previously legislated 41,000GWh to 33,000GWh. Morrison actually wanted to cut it further – some in government ranks wanted it abolished – but was prevented from doing so by the parliament.

Likewise, this government tried to abolish the CEFC and ARENA, but was prevented from doing so by the senate. It nonetheless managed to significantly reduce their funding.

It’s a stretch for Morrison to now claim both as policy successes of his government, but the really Gish claim – in that it is wildly misleading but complicated to debunk – is that his government engineered a massive turnaround in emissions forecasts from a 755 million tonne “deficit” under Labor to a 367 million tonne “surplus” under the Coalition.

“What Morrison says is essentially dishonest,” says Erwin Jackson, director of policy at the Investor Group on Climate Change, which advises superannuation funds, with some $2 trillion under management, on climate policy and risk.

The surplus figures are accurate – they come from the Department of the Environment and Energy’s annual assessment of Australia’s emissions – but the claim they are a consequence of current government policy is false.

Jackson notes that the “deficit” to which the prime minister referred had been decreasing long before the current government came to power, and the regular annual reports by the Environment Department “have been very specific about why the gap has reduced”.

“The reasons they give relate to a wide range of things – changes in world economic outlook, the Australian economic outlook, changes in commodity prices, the unexpected closure of coal-fired power stations, the unexpected closure of aluminium smelters or steelworks, the unexpected rate of growth in renewable energy, particularly rooftop solar, unexpected growth in [liquid natural gas] …”

“None of these things,” Jackson says, “have been explicitly targeted by the policies of this federal government.” The reason solar PV has grown so fast, for example, is due to state government policy and the global cost reductions in the technology.

But this is only a partial explanation. According to Tony Wood, energy program director for the Grattan Institute, the apparent turnaround in Australia’s progress towards meeting – and now exceeding – its target of a 5 per cent reduction in emissions by 2020, compared with 2005, has little to do with the policies of this government.

When that 5 per cent reduction target was set, under the second round of negotiations under the Kyoto protocol, “they created a trajectory and then calculated how much we actually had to reduce our emissions over the period 2013 to 2020”, says Wood.

“When this was done, back in 2008, that was about 1.3 billion tonnes. By 2012-13, when the current government came to power, that number had been reduced to 755 million tonnes.

“That’s what the Abbott government inherited. Since then they’ve done… not much. But every year, when they updated the projections, the number kept coming down – from 755 to 421 to 236,” Wood says.

“By the time we got to 2015, we were essentially square, if you included the previous carryover. So, at the end of 2018 we were projected to overachieve by 367 million tonnes.”

He concludes: “That’s where Morrison’s numbers come from.”

But what is the carryover?

It is the amount Australia exceeded its commitments under the two previous rounds of climate negotiations, says Richie Merzian, a former climate negotiator for the federal government. Merzian is now director of the climate and energy program with The Australia Institute.

“Under those two previous protocol periods, Australia negotiated a low reduction targets. Actually, the first target [for the period from 2008 to 2012] was not a reduction at all. It was set at 108 per cent 1990 levels – meaning an actual 8 per cent increase in our emissions.

“The second target was a 5 per cent reduction. Australia was able to meet both those targets quite easily, because of a clause in the Kyoto protocol known as the Australia Clause,” says Merzian.

Article 3.7 of the Kyoto Protocol, colloquially known as the Australia Clause, allowed countries to include emissions from land clearing in their baseline emissions. Australia was clearing vast tracts of land in 1990, when the baseline was set, but land clearing sharply declined throughout the 1990s – giving the appearance of emissions reductions by Kyoto’s calculations.

If you exclude land clearing, Merzian notes, Australia’s greenhouse emissions actually grew by 28 per cent over the term of the first Kyoto agreement.

“But changes to land clearing laws in Queensland and New South Wales resulted in the country being suddenly on track to meet its target, and then beat it, to the extent that it generated a lot of extra credits. In total, there’s more than 360 million tonnes of credits,” he says.

Morrison’s success in meeting Australia’s climate targets in fact relies merely on the flow-on effect of unambitious targets and an accounting dodge, which was forced on international climate negotiators by the Howard government. As Merzian adds, “the [Environment] Department did a poor [but honest] job of calculating our emission projections/forecasts to be much higher than they actually are”.

The upshot of this is that the government now has 367 million tonnes of carbon credits in the bank, as it were, and it intends to use them to offset Australia’s commitments to further emissions reductions under the Paris agreement.

Tony Wood says it was predicted at the end of last year that Australia would have to cut its emissions by 695 million tonnes in order to meet the Paris targets. “But if we deduct our overachievement, we get 328 [million tonnes],” he says. “And there are currently no accounting rules under the convention to stop us doing that.”

Most other comparable nations are not proposing to further extend this very tricky accounting practice in order to meet their targets.

“It’s a dodgy process,” says Merzian, “and not in the spirit of the Paris agreement.”

“Most countries that we compare ourselves to, that are in a similar position, have taken an in-principle stance against doing this. The most recent was New Zealand, in December. This built on the UK having done it, Sweden, Germany Denmark, the Netherlands and others. They have taken a principled decision. Our government has done the opposite.

“Think of it as the government holding outdated store vouchers and trying to negotiate with a shopkeeper to have them recognised.”

In his Sydney Morning Herald op-ed this week, Scott Morrison referred to a number of policies that he says helped set up the carbon credits surplus, including the emissions reduction fund and a so-called safeguard mechanism. This is a dubious claim.

The safeguard mechanism, set up to apply to some 140 businesses that produce emissions of more than 100,000 tonnes of CO2 equivalent emissions a year, can be quickly dispensed with.

In theory, it is a very good idea. The safeguard sets a baseline for the amount of climate pollution these businesses can emit. If they exceed it, they pay. It could be a powerful tool for encouraging energy efficiency and reduced emissions – if the baselines were lowered, progressively, over time.

But the reality is the government has set very high baselines. To quote from the department’s own brief: “Baselines will reflect the highest level of reported emissions for a facility over the historical period 2009-10 to 2013-14 …”

The $2.55 billion emissions reduction fund was set up by the Abbott government to essentially pay people not to pollute.

“The ERF,” wrote Morrison in the Herald this week, “has already secured 193 million tonnes of emissions reduction through 477 projects across Australia.”

Those figures are very rubbery, says Tim Baxter.

“The big problem with the ERF is you can’t really trust … that the money spent actually delivers additional abatement,” he says. “The key word is ‘additional’.”

Baxter says much of what’s been contracted so far under the ERF are “anyway” projects, crediting the term to Paul Burke at the Australian National University.

“They are things that would have happened anyway, things that people were already doing or had already planned to do, that the government claims credit for,” says Baxter.

He points to projects that were funded to harvest greenhouse gas from landfill sites as the most obvious example.

“Some 80 to 90 per cent of landfill gas projects either pre-existed the emissions reduction fund or would have happened on the basis of their economic viability, even without the reductions fund,” says Baxter.

Those landfill gas projects made up more than 10 per cent of total emissions reduction claimed by the government through the ERF, which suggests that a couple of hundred million dollars of taxpayers’ money was wasted on encouraging action that needed no encouragement.

Says Baxter: “The government says they are rewarding good behaviour from corporate actors who moved early to reduce emissions. But that is not the purpose of the ERF. It is not there to reward good actors, but to reduce our emissions.”

Similar problems exist across almost all areas the government has spent ERF money.

Take “avoided deforestation”, a category under which landowners are paid not to clear vegetation.

“In avoided deforestation, the second biggest [area of ERF spending], you have projects where land-clearing permits were approved only a month before they were registered with the ERF and surrendered,” says Baxter. “The obvious question there is whether these people ever planned to clear that land.”

The ERF is not all wasted money, nor has there been no climate gains as a result of the spending. But the consensus among experts is that a lot was wasted, and the gains were far less than claimed.

The centrepiece of Morrison’s climate policy announcement of this week was an extension of the ERF, a commitment to spend another $2 billion over 10 years and deliver a further 103 million tonnes in emission reductions.

Baxter questions if this will achieve anything. He points out the program is not slated to begin until 2020, well past the next election, and would roll out over two parliamentary terms beyond that.

Even if the Coalition is still in government by then, he says, it would take many more years before Australia saw any emissions bang for the taxpayer buck.

“The average contract length – the time between when a contract is awarded and when the promised emissions reductions are delivered – under the ERF is currently 9.2 years,” Baxter says. “So even if that $2 billion is in fact spent – which I doubt – only about 60 per cent of it will come in this decade, and the allocated money will not deliver abatement until post 2030.”

In short, Morrison’s promise of more ERF spending is unlikely to be delivered, and unlikely to be particularly effective even if it is.

There were, however, a few good elements to the prime minister’s climate solutions package.

One was a commitment to invest $1.38 billion in Malcolm Turnbull’s pet project, Snowy 2.0. The scheme would pump water uphill using renewable energy – wind and solar – when those renewables were plentiful and cheap, and use that water to generate hydro-electricity when the wind didn’t blow or the sun didn’t shine, or when demand was high and power expensive.

The other was a commitment of $56 million to “fast track” the development of a second electricity transmission interconnector – the Marinus Link – between Tasmania and the mainland. Ultimately, this will bring up to 2500 megawatts of reliable renewable hydro power into the National Electricity Market.

Morrison grandly suggested this would make Tasmania the “battery of the nation”.

Leaving aside the significant issue of who would pay for the link, what’s interesting is that to be viable the scheme would require the early closure of a large proportion of Australia’s current coal-fired power capacity.

A recently completed feasibility study into the Marinus Link concluded its benefits would justify its costs only if “approximately 7000MW of the NEM’s present coal-fired generation capacity retires”. That equates to more than a third of existing generation capacity. It implied an emissions reduction target of more than 50 per cent, and total renewable generation at about the same level.

“That is a strange position for the Coalition government to find itself in,” says Wood, “since it is arguing that 45 per cent renewables is economically irresponsible.” This is a masterful understatement.

In his SMH piece, Morrison attacked the Labor Party’s policy of a 45 per cent emissions target and a 50 per cent renewable energy target, saying it would “cost the economy an additional $472 billion, slash more than 336,000 jobs, cut the average wage by over $9000 a year, and increase wholesale electricity prices by more than 58 per cent”.

And so we have a prime minister contradicting himself while simultaneously advancing contradictory polices. He supports coal-fired power and also an allegedly “economy-wrecking” massive shift to renewables.

The Gish galloper is galloping around in circles.

This article was first published in the print edition of The Saturday Paper on Mar 2, 2019 as "PM’s climate fund fallacy". Subscribe here.

Mike Seccombe
is The Saturday Paper's national correspondent.