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The Coalition’s commitment to net zero does not come with new laws, but the nature of the agreement embeds the target in at least two pieces of legislation. By Karen Middleton.

How it happened: the Nats and net zero

Nationals David Littleproud, Bridget McKenzie and Deputy Prime Minister Barnaby Joyce at a press conference at Parliament House last Sunday.
Credit: AAP / Mick Tsikas

There’s a view among some in the government that in negotiating on a pledge to reach net-zero greenhouse gas emissions by 2050, the deputy prime minister and Nationals leader, Barnaby Joyce, did not actually want a deal.

In fact, some senior colleagues in both the Liberal and National parties believe he was trying to blow up the whole thing.

Others insist he put enormous effort into wrangling the best possible outcome for his party – and would not have done so if he wasn’t genuinely seeking a resolution.

“If Barnaby had wanted to blow something up, he could have done it,” was how one supporter put it this week.

But even they concede that behind closed doors, when it came to the crunch, Joyce did not support the deal he had negotiated – not because he didn’t think it was good enough, but because he still doesn’t believe in aiming for net zero.

The 21 Nationals met last weekend to thrash out the final offer from Prime Minister Scott Morrison, with a majority eventually deciding to back the net-zero target. But the party room remains divided.

As one MP said after the meeting, Joyce was “not on board”.

The Nationals did not take a formal vote. Instead, after Joyce’s presentation on the proposed plan and Morrison’s offer, each member was asked to state their view. Some who opposed the agreement thought the deal wasn’t good enough. Others just weren’t in favour of committing to net zero.

Around the room, some hesitation came from the view that “net zero” had been allowed to be defined by parties on the left of politics and was associated with the demise of rural industries. They ended up endorsing it because they were persuaded that the government’s emissions reduction package could – and would – redefine the term.

Two did not say explicitly if they were for or against. Even without their specific indication – and they are believed to have ended up in the Yes camp – Joyce could read the room. He said he believed there was majority support and urged anyone who disagreed to speak up. None did.

That sealed both the deal and the net-zero target, just days before Morrison headed to the United Nations Climate Change Conference (COP26) in Glasgow. Two days earlier, Joyce had foreshadowed that the Nationals might not agree. “We’ve got two different positions – the Liberal position and the Nats’ position,” he told 88.9FM radio in Tamworth in his electorate.

“We’re happy. We’re prepared either way it goes, and we’re trying to be constructive. Not hanging anybody out to dry, not being grandstanding ransom merchants, but we want our people looked after and that is what we are going to do.”

The first part of the internal Coalition deal was confirmed early: an extra Nationals cabinet position, which elevated Resources minister Keith Pitt from the outer ministry.

That move has angered some Liberals. A Queenslander, Pitt had been among those speaking out against the net-zero target, demanding the government provide a $250 billion lending facility for the coal industry in return for his party’s support.

His elevation now binds him to cabinet’s position, and quietly. But it has prompted some Liberals to ask why grandstanding is being rewarded.

The promotion was among a list of commitments Scott Morrison made to the Nationals in a formal letter of offer ahead of last weekend’s meeting. None had specific dollar figures attached. Among them was a pledge to establish a rural future fund to guarantee longer-term financial support for regional Australia.

Joyce says more will be revealed. “There are a whole range of default programs that we instigated and are driving forward and you will see over a period of time,” he said on Thursday. “And I say this, because this is really important – that you’re seeing now, as this process goes forward, the reason why the National Party had to go into bat.”

The Saturday Paper understands these programs include economic infrastructure, with some requiring financial appropriation, which will be rolled out in the lead-up to the election.

The Nationals leader wants political bang for his buck following what was a tough negotiation.

Asked recently on ABC TV if the Nationals’ agreement would involve a government pledge of more money for regional Australia, the Nationals deputy leader, David Littleproud, said: “Well, money makes the world go around, mate, so it inevitably will.”

Some are seeing the eventual deal as a proxy update to the Coalition agreement, which Joyce failed to have revised when he took the Nationals leadership earlier this year.

As a result of Sunday’s meeting, two sets of measures were finalised – the government’s net-zero plan and the list of Morrison’s undertakings in return for the Nationals’ support.

The first has now been made public in full, the other only in part. While there is some overlap, they are not the same.

Among the measures on both lists is the guarantee that the Productivity Commission would review the government’s low-emissions plan every five years.

The rest of what has been promised was not spelled out in the 129-page document Morrison published after concluding a lengthy news conference on Tuesday to unveil the basics of the plan he is calling “the Australian way”.

The plan relies on aggregating existing renewable energy and emissions reduction programs to estimate how much each will reduce Australia’s greenhouse gas outputs between now and 2050.

It says Australia will build on the 20 per cent cut already achieved on 2005 levels with another 40 per cent to come from investing in already-identified low-emissions technologies, 15 per cent more from harnessing “global technology trends”, and between 10 and 20 per cent more from carbon offsets, including setting up an offsets program in the Indo-Pacific.

The final 15 per cent relies on unspecified “further technology breakthroughs”.

Morrison is now positioning his commitment to net zero as being a positive for the economy.

“This is real, it’s happening,” he said of climate change. “We understand it and we recognise it. We need to protect against the threats that come from that. And we also need to realise the opportunities that indeed help mitigate those threats and enable Australia to succeed.”

Opposition Leader Anthony Albanese called the announcements a “scam”.

“Two days before the prime minister jets off to Glasgow for the most important international conference on climate change this century, he has come up with this non-policy which has no new initiatives,” Albanese said. “… In their own words, ‘This plan is based on our existing policies.’ So, they themselves have stood up today, and said, ‘Nothing to see here.’ ”

Labor wants the net-zero target legislated. Morrison doesn’t, because it would further expose the Coalition’s divisions and risk some Nationals crossing the floor.

Joyce is also railing against using “laws” to set the net-zero target.

“We must remember legislation is to bring in laws and laws are there to outlaw things,” Joyce said on Thursday. “And ruling things out comes with penalties, penalties and impositions on the private enterprise and private rights of people.”

Once lodged with the UN the government’s commitment becomes effectively embedded in Australian legislation anyway. Incorporating it as part of Australia’s nationally determined contribution, or NDC, embeds it in at least two pieces of Australian legislation and possibly three.

Both the Carbon Credits (Carbon Farming Initiative) Act and the Australian Renewable Energy Agency (ARENA) Act authorise government environmental agencies focused on emissions reduction and renewable energy to take action to uphold Australia’s commitments under international agreements – particularly any successor agreement to the Kyoto Protocol.

A third law, the National Greenhouse and Energy Reporting Act, underpins a national reporting framework on emissions reduction and includes meeting international obligations as part of that.

The Australian Industry Group’s head of climate and environment policy, Tennant Reed, confirmed the new commitment will link to existing laws. “Australia has several major pieces of climate-related legislation whose objects are, in part, to implement our international climate commitments,” he says. “These include the laws underpinning carbon crediting, carbon reporting, ARENA and the Clean Energy Finance Corporation. The work of the relevant agencies will be reshaped by the change in Australia’s commitments.”

Reed tells The Saturday Paper that the new target will guide the Clean Energy Finance Corporation’s working definition of which investments qualify as “low emissions”.

He says, “Electricity system development will also be transformed, with clear net-zero commitments narrowing the range of scenarios that planners and regulators must consider. In short, net zero punches a new destination into the GPS of Australia’s existing policy vehicles. That will help them get more done and make it easier for many businesses to transition. A faster first leg and some engine upgrades will still be needed to get the whole economy to net zero in one piece.”

The government remains reluctant to commit to anything that will actively damage the mining or farming sectors. On Thursday, it confirmed Australia would not sign a United States-led global pledge for a 30 per cent reduction by 2030 in methane – the damaging greenhouse gas produced by burping cows that accounts for 10 per cent of Australia’s emissions.

Joyce confirmed that was one of the Nationals’ demands. He said measures aimed at reducing emissions, including special seaweed feed supplements to cows, were not yet available.

“This is why the National Party insisted that methane emissions, especially in the livestock industry … had to be excluded,” he said. “If we hadn’t got these insurance policies in place, there’d be farmers today who would be absolutely melting the phones down because they’d be saying, ‘That is my livelihood.’ And the only way you can get your 30 per cent by 2030 reduction in methane on 2020 levels would be to go grab a rifle, go out and start shooting your cattle, because it’s just not possible.”

Conceding Australia won’t sign the specific pledge, Morrison insists no sector has been excluded from the plan overall. But the plan relies on voluntary shifts in practice and contains no penalties or interventions affecting heavy-emitting industries.

After decades of resisting action because of the economic pain it will cause, the government has now produced a plan it says will achieve net zero emissions by 2050 with no pain whatsoever. It does not propose any active reductions in fossil fuel production and relies on making alternative renewable energy sources cheaper as the key incentive for making the switch.

“This Plan does not rely on taxes and it will not put industries, regions or jobs at risk,” its summary says, defining itself in the negative.

“No Australian jobs will be lost as a result of the Commonwealth Government’s actions or policies under the Plan … It does not impose new costs on households or businesses … It will not raise the price of our energy or reduce the competitiveness of our export industries … It will not shut down coal or gas production or require displacement of productive agricultural land.”

The plan relies heavily on transitioning to electric vehicles, reflecting a policy Labor took to the 2019 federal election that the Coalition said at the time would rob Australians of their “utes” and “end the weekend”.

It also dispenses with another previous Coalition slogan. Not only will emissions reduction not see the South Australian steel town of Whyalla “wiped off the map”, as the Coalition warned under Tony Abbott, the plan singles it out as being among those towns particularly well-suited to hosting low-emissions industries powered by renewables.

Morrison says it is “the right plan for Australia” and will improve individual income on average by $2000 a year by 2050, compared with making no policy change.

But buried in the plan’s detail is the acknowledgement that other countries’ actions to cut emissions will be what dictates the future of Australia’s fossil fuel industry – and fewer will buy Australian coal and gas.

While the plan says no jobs will be lost, it appears to mean no net job losses. It says “job gains can far outweigh job losses” depending on Australia’s active policy choices and use of comparative advantages. It acknowledges customer demand for fossil fuel exports will fall over time.

“We will continue to export our traditional energy exports for as long as our customers demand them,” the plan says.

Its fine print acknowledges the industries are doomed, even if the government doesn’t, saying clean hydrogen will be among the replacement fuels that will “help offset” the long-term impact on sectors including thermal coal and natural gas.

It says this shift will “unfold over decades” and that coal and gas will continue to underpin regional communities for years.

The plan is based on a set of principles, not policy change. It acknowledges there are no new measures but relies on existing measures. It contains no costings.

After Labor demanded to see the modelling on which it was based, which was prepared by consultants McKinsey with some extra work undertaken by the Department of Industry, Morrison said it would be available “in a couple of weeks”.

On Thursday, departmental officials told a senate estimates hearing the modelling was “still in spreadsheet format” and being compiled into a document that was easier to read.

Even some Coalition MPs acknowledged there were gaps in the plan. “What we all need to see is some more of the detail,” Victorian Nationals MP Anne Webster told Sky News on Wednesday.

There is some detail but the language is heavily qualified. The 129-page plan document does not give a firm undertaking to reach net-zero emissions by 2050. It says the unpublished modelling finds that by driving down the cost of new technologies and rolling them out at scale Australia can “get within range” of net zero by 2050.

It also contains an estimate that using new technology “could” create 100,000 new jobs “in industries including critical minerals, clean hydrogen, renewable energy, green steel and alumina”. It says “many” of those jobs “could” be in Australia’s regions.

It also says Australia will “continue to set the benchmark for global transparency and accountability in our emissions reporting”.

But in line with what the Nationals demanded, the government has steadfastly refused to upgrade Australia’s 2030 emissions reduction target, beyond the 26-28 per cent cut on 2005 levels agreed at the Paris COP in 2015.

Morrison insists Australia is already on track to “meet and beat” that target and will achieve at least a 35 per cent cut on 2005 levels by 2030, a boost largely attributable to mitigation programs undertaken by the states.

Labor is attacking the government over its 2030 response, with 2030 commitments the main focus of next week’s Glasgow meeting. In response, Morrison points out that Labor has also not confirmed whether it will reaffirm its previous commitment of a 45 per cent cut – the Business Council of Australia now supports up to 50 per cent – or default to a lower figure.

Australian Industry Group chief executive Innes Willox said the commitment to net zero would immediately boost the efforts towards transitioning to a lower-emissions economy. “But a lot more work will be needed to flesh out the plan to get there,” he said.

It paves the way for Australia to phase out fossil fuels, even if the government won’t admit it, and represents bipartisan acceptance of the need for more action – albeit without all the Nationals. Queensland senator Matt Canavan is vowing to campaign against it.

Some Nationals remain angry that Joyce – who began his own political career as a Queensland senator – has done nothing to rein him in. Morrison is seeking to turn conflict into virtue, suggesting it is “a badge of authenticity”.

In his weekly address to Coalition MPs on Tuesday, Morrison implied the bruising few weeks could’ve been worse, giving a lengthy dissertation on the importance of the Coalition staying together.

He recalled the two periods in the Coalition’s 75-year history when the Coalition split – after their 1972 election loss and in 1987, through the Queensland Nationals’ Joh-for-Canberra period.

He likened it to a marriage that required give and take. “Not every partner is always completely happy where something might be at any given time,” he is believed to have said. “But we understand that it’s the coming together that is so important.”

With part of the Nationals’ party room unconvinced about his plan – including now-acting prime minister Barnaby Joyce – it’s the coming apart that could do the damage. 

This article was first published in the print edition of The Saturday Paper on Oct 30, 2021 as "How it happened: the Nats and net zero".

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Karen Middleton is The Saturday Paper’s chief political correspondent.