National Press Club Speech: Q&A
Wednesday, 25 November 2015
Topics: Paris climate conference, Emissions Reduction Fund, safeguard mechanism, EPBC Act
Let's move now to our question time, and our first one today is from Deb Nesbitt.
Hi, Deb Nesbitt, Thomson Reuters. It's good to have you here, Mr Hunt.
Congratulations. These are very optimistic figures.
Australia's pledge to the world is – and it's a bipartisan commitment that was made some time ago by both parties – the official commitment is to reduce our emissions 5 per cent on 2000 levels by 2020, but also conditionally to increase it to 15 to 25 per cent, that's if the rest of the world is taking action. Now I think it's probably indisputable that that condition has been met.
Given these figures, isn't it time that you increased the target now and we kept our promise to the world?
Look thanks very much, Deb. There are probably two things I'd gently correct in that.
When you say they're optimistic figures, they're in fact conservative figures. They are designed by the Department to address all of the real world data that we have, but with a conservative bias.
So there is a likelihood that we may well be able to find additional savings over the next five years, that other elements will see further reductions in our projections, which means that we are likely to achieve over and above even that which has been announced even today.
What that does, and this brings me to the second point that you make and which I'd gently respond to, is it allows us to set a 2030 target which is ambitious, and it plays now into where we are looking in terms of 2030.
The big thing that will come out of Paris is that I think, and I know this from my discussions at the pre-conference, the world is likely to come to an approach where we review and reset each five years.
And so we have put ourselves in a position to be able to do that.
And in fact we have been at the forefront of developed countries arguing for and proposing five year reviews.
And so we have prepared ourselves to be able to look out and achieve over a 15 year period – and I view that, now that we have a 2030 target, as one single period.
We'll achieve our 2020 targets, we'll beat our 2020 targets – we'll in all likelihood go even further than we've announced today. The test of time will prove that.
And then that will give us the opportunity, as we head into 2020 and 2025, to consider more ambitious outcomes.
Lenore Taylor from Guardian Australia Minister.
Just to follow up from Deb's question, I understand that you've made a 2030 target, I don't really understand though why, if we're already on track to get to the minimum 5 per cent target, we wouldn't commit to a deeper target in 2020 on that trajectory down to the 2030 target.
Or are you suggesting that if we overshoot in 2020 we could do another sort of accounting carryover into the next period to achieve that target?
Well, the rules for the post-2020 period haven't been set yet.
But what I’d say is this – that firstly, all that the planet knows is if we actually achieve and beat our targets, the overall load of CO2 will be reduced.
Secondly it then allows us, as you say, to consider, once we know the rules for the post-2020 period, the way in which we can carry over, as has happened, any additional surplus which we might have.
And between now and 2030, there is, in my mind, no doubt that we will all be asked to come back, probably in 2020, probably in 2025, and then again in 2030, to review, to update the stocktake, and then to reset more ambitious targets.
Sorry can I just clarify, so you're saying we might carry over again between – from the 2020 target into that 2030 period?
Well everything we're doing now is designed to achieve both targets – both the 2020 and the 2030 target.
The rules haven't been set, so of course that is an option which Australia would consider.
Next question from the Fin Review, Primrose Riordan.
Primrose Riordan from the Fin Review here.
After comments from the Bank of England's Mark Carney and HSBC's Zoe Knight, who recently said the risk of stranded assets is very real and poses a problem for global markets, do you see Government investment vehicles such as the Future Fund explicitly taking this into account in the future, or laws such as in France which force investors to disclose the carbon footprint of their portfolios?
Sure. So obviously we have already the NGER scheme in Australia, which deals with emissions reporting.
That's a world recognised scheme in terms of its transparency.
In terms of our national accounts I'd note that the UNFCCC recently came to Australia and assessed our accounts and gave it an international gold standard, as it were.
And then in terms of the question of stranded assets, the private sector has to make its own judgment on that front.
What is occurring in Australia, though, there is a transition – and it's a transition which I think is not necessarily recognised.
Because as the Renewable Energy Target increases towards the 33,000 gigawatt hours a year, what we see is that there has been a progressive movement downwards in coal-fired capacity.
The latest figures which I've just seen show that we're likely, by 2022, from the period of 2010, to have had a reduction in coal-fired capacity of about 19 per cent – or high-intensity capacity – when you look at other forms of energy, of about – high emissions intensity of just over 30 per cent.
So that transition is actually under way, and it won't stop in 2020 or 2022.
It is a transition, in my view, to a net zero emissions profile over the course of the century.
How quickly it occurs – I can't give you a final time, that's a very large form of history in the making, but there is no doubt and no question the transition is already underway.
At the global level though, I mean we are seeing a lot of coal-fired plants in planning now, and to come on stream in the future.
So are you saying that the, if you like, the offset is going to be even greater than the incoming impact?
Well look, India, China – clearly there is a growth in all forms of electricity.
We know that in India we're seeing very significant growth.
They expect that they will achieve 50 per cent renewables or non-fossil fuels – which includes nuclear – by 2030 according to the meeting I had just last week with the former Climate Ambassador Shyam Saran.
But that means that all forms of energy will be increasing.
So each country will make its own profile decisions and its own decisions about the source of energy.
What matters is the global cap, and that is the key thing. So the total global emissions.
Of course people will be brought out of poverty in India, and China, and Indonesia, and Brazil, in developing countries right around the world, and energy poverty is one of the huge traps within it.
So they need to provide electrification going forwards. The answer is not any one source of energy but progressive movement towards net zero emissions.
Secondly, is the setting of a global cap or trajectory, and in addition, individual national targets. And if both of those things are achieved, the form becomes a matter for each country.
The ABC, Francis Keany.
Francis Keany, ABC News. Reputex says Australia's actual emissions will increase by 6 per cent on today's figures by 2020 compared to today.
In terms of the – much of the gains that we are seeing today are due to accounting methods, and isn't Australia just deferring some of the emissions that it's currently emitting?
Look thanks. This is one of the oddest and strangest, and I've got to say most desperate arguments – and it's not yours – that I have seen in my entire time in the portfolio.
Australia uses the international UN accounting rules, just verified by the UNFCCC.
They were negotiated by the Labor Party.
They were adopted and enshrined in Australia's national inventory and projections by the Labor Party.
They are used by the Labor Party.
And only today my opposite number, who suddenly raised this argument after having practiced the international standard for accounting, wasn't able to say that the Labor Party would suddenly abandon it.
So we have not made any changes to our accounting, they are the global gold standard.
And they were designed this way precisely so as to provide an incentive for nations to overachieve.
But what is interesting is that we can now show that we will achieve our emissions reduction targets by 2020.
And it's beyond a shadow of a doubt. It is beyond a shadow of a doubt.
But the particular group that you mentioned only a couple of years ago may have said we were going to miss, by over 500 million tonnes, our targets; may have said that we were only going to achieve nine million tonnes at absolute maximum under the first Emissions Reduction Fund, but we overachieved that by 500 per cent; and may have been almost $500 million out in their expectations of expenditure under the second Emissions Reduction Fund auction.
So everybody's entitled to their view.
The really interesting thing is if people have endorsed and embraced the global UN mandated accounting standards, enshrined them in Australian law, accepted them over the last four years and then all of a sudden today changed their view, that's not – that isn't environmentalism, that's partisanship.
Next question from Shenhua News..
Haijing Xu from Shenhua News Agency of China. Minister, you mentioned in your speech that a number of countries made their pledges, China also has made its pledge to peak its carbon dioxide emission by 2030 or earlier.
So what's your comment on the Chinese pledges, and do you thing China is serious on its target?
And also, given the close ties between Chinese and Australian economies, what impact do you think this Chinese target will have on Australia or work opportunities it provides? Thank you.
So look thank you very much. The first thing is, the world cannot achieve its emissions reduction outcome without China.
As the enormous and wonderful population brings hundreds of millions of people out of poverty, emissions are growing.
We know in real terms emissions are likely to grow from about 6 billion tonnes in 2005 to somewhere approaching 15 billion tonnes in 2030.
It is the single largest source of emissions growth in the world.
But the efforts that they are making are important, and we welcome China's emissions reductions contributions.
But we do need to be honest that the largest source of growth in the world is the trajectory in China.
The fact that they are now seeking to achieve a levelling and then a drop before 2030, and significantly before, I think is extremely important.
One of the reasons why I believe that they are deadly serious about emissions reduction is the air quality issue.
Now air quality in terms of PM2.5 and PM10 is a different issue, but in many cases it comes from the same source of older coal-fired stations – the equivalent of driving a 1965 Holden around our streets in Melbourne – older coal-fired stations being run now.
And we know that they are phasing them out and moving to higher-efficiency plants, whether they are super-critical or ultra-super-critical.
So yes, China is indispensable. Yes, it is in my view deadly serious. Do I believe it will achieve its targets? I think they will.
The second part of the question from Xu Haijing was about impacts, and I suspect she meant negative impacts, or opportunities as a result of all this.
Look there are both. In terms of the impacts, we will see how our exports go, but in particular the iron ore sector has been hit in terms of the price for our goods, as there's been a decrease in demand as there's been a levelling off of economic growth in China.
What happens in terms of coal is to be debated and determined.
I know that President Xi actually, as I understand it, expressed interest in the quality of Australia's materials on the basis that it could help be more efficient than what they would otherwise substitute.
But on the positive side, there is enormous opportunity under the China Free Trade Agreement.
By some estimates, up to a trillion dollars Australian equivalent is expanded in air, land, water quality or remediation or energy efficiency in China.
There are enormous legacy issues from economic growth in obviously the most populous nation on earth. And so our ability to invest in environmental goods and services in China is one of the great economic opportunities for the service sector in our time.
Question now from David Sharaz.
David Sharaz from SBS. Australia's nearest neighbours are suffering the worst impacts of climate change.
Given that, I was just wondering whether you feel Australia has obligation to them and whether they can expect an announcement on the international climate finance fund?
Sure. So we've just become the co-chair of the Green Climate Fund, and we have helped, along with other nations, to make sure that 50 per cent of the Green Climate Fund allocations are for adaptation as well as mitigation.
So that is very specifically dealing with some of the risks and challenges that our near neighbours, in particular the small island states, face.
I've had that discussion with some of them recently.
And then in terms of the Paris climate conference, funding will be one of the major issues.
Julie Bishop has previously committed Australia to be part of the overall funding approach – I won't pre-empt any of her discussions there.
It is a fair question for you to ask, it is a fair thing for me to defer to Julie on her aid budget.
But I will say this – that the OECD put out a report which showed that the world was on track to achieve that goal by 2020.
And that surprised many, but it has made the likelihood of an agreement in Paris far higher.
Next Question from Michael Keating, Inside Canberra.
Michael Keating from Inside Canberra, Minister. Developing countries have suggested that developed countries create a $100 billion fund to help them adjust and mitigate to the effects of climate change.
It seems that developed countries are unwilling to do this. If China and India were to agree with developing countries on this issue, could it lead to a breakdown of the Paris conference?
Until recently I did think that that was the major risk for the conference.
But because of the OECD report which set out, by my recollection, a figure of about $62 billion per annum as the current flow of funds from government to international organisation, government – country to country, developed to developing, and private sector in its different manifestations, it now appears that we will be able to achieve that outcome of $100 billion through all sources in terms of developed to developing.
What's interesting is much of it is economic investment, and not just classical aid.
I think that is the model which is most important for the world because it is most sustainable.
And where I frankly did have my concerns with the OECD report, and I met with the Secretary-General of the OECD to discuss this only a couple of weeks ago, I think we will find our way through.
And what had been the biggest risk to the talks in the conference will probably be resolved.
Having said that, there's usually a DNA, the talks go well for a week and a half, there's a breakdown on about the Wednesday, everybody storms out – Friday they come back, the clock stops at midnight and somewhere about 4am on the Sunday morning Lenore will be able to put her pen down and say, it is done.
Just to pick up – follow on from Michael's question and pick up on that comment that you made towards the end of the previous answer as well, about just how positive you are feeling about it.
It was only 6 or 7 weeks ago that Ban Ki-moon did say that while he was cautiously optimistic there was some slowness, I think was the quote, in the negotiating process, which he did find worrying.
Now, we're not weeks out, we're days out now – so what has happened in the intervening period?
Have things hastened, have things moved on, or not?
Yes it has, and I think that's a very important question. There was a draft put out of the negotiating text, and some in particular G77 countries thought it was too prescriptive.
Therefore, all options put by all countries were built back in to what then became instead of a text merely a compendium of options proposed.
At this moment, the French and the co-chairs are bringing it back to a refined point.
And by about the end of week one there should be a single text, and then there will be negotiations, painful arduous negotiations over individual clauses.
But there was a backward step, and now there's been a very significant forward step.
But also the mood at the Paris pre-conference, which was chaired by Laurent Fabius, the French Foreign Minister, was very positive.
And I've got to say the French, through the individually nationally determined contributions, have created a process which has defanged or removed much of the potential hostility for the final conference itself.
Go now to Sophie Morris.
Sophie Morris from the Saturday Paper. There are still some MPs in the Coalition who doubt the science of climate change.
You now have a leader who accepts it, believes it, wants action.
How hard has it been for you to bring some of those critics along with you, and does that pose an obstacle to embracing more ambitious targets in the future – that internal resistance within the Coalition, which is very real?
Sure. Let me put it this way.
I have been fortunate to have this role for 8 years now, and I plan as if I would be here for another 15 years out to 2030.
That is close to a life sentence.
But the reason I do that is to think in terms of laying out policy objectives, and then the mechanisms for change, over a long period of time as if I were to be here – and what would my successors want?
There are a series of things that I set out to do in Government.
One, I wanted to make sure that we had in place a system that would last the test of time.
And there are of course two halves – the Emissions Reduction Fund and the safeguard mechanism.
I remember many, many wrote it would be impossible that we would ever achieve passage of those two elements; and if we did it would be impossible that we would achieve the outcomes that we did; and it would be impossible to have a full agreement across the Coalition.
But that wasn't the case. Obviously, when the prime ministership changed what was interesting to me is that some of those who may have their doubts nevertheless made it clear that they were fundamentally committed to this policy.
And that's because it achieves two things. It achieves emissions reduction – but there are people across the country who don't accept the need for that.
But it also achieves positive environmental benefits that you would want in any event, such as improving the productivity of our land, the health of our environment, the air quality in our cities.
And so I set out to achieve those things; then to have us meet our targets; then to set a target that was ambitious; and then to be a part of all of the major international agreements.
And I think that we are able – to be in a position to be able to do those.
And if you think back a year ago, the idea of moving from minus 5, to minus 26, to minus 28 per cent would have been almost unthinkable.
But the party room accepted, embraced, endorsed it.
And I think that that is something which, in my armchair days, I will look back on and be quietly happy at.
David Speers from Sky News, Minister. You do sound very confident that a deal will be done in Paris.
One of the things you may still be negotiating at 4am on the Sunday is what you list here amongst your goals – that countries review their commitments every five years informed by global stocktakes of progress.
Can I just get you to flesh out exactly what you want? Is this a make-or-break element for Australia?
Who would do these global stocktakes? Does it mean a UN team going in to China, for example, to verify exactly what they're doing?
Sure. Look, I think this is an extremely important question. It is not a settled and resolved element so far.
There is a general agreement of the need, but I can't speak for all other countries.
What does it mean in practice? It means that the Paris outcome will achieve the two degree goal through a process, not through the accumulated pledges at this meeting.
But therefore we have to go forwards and have a further round, and the generalised agreement is of five year reviews, but it's not nailed down in its final term. I think we will get there.
We have suggested and proposed that 2020, 2025, and 2030 would be the appropriate times.
Those timeframes are not absolute for us, but I think they are for many in the G77. I know that South Africa, who leads that process and others, are very focused on this.
So what Australia has done is lay out an early point of compromise between developed and developing countries.
And that particular proposal was the biggest single source of support and response to Australia at the pre-Paris conference.
So I think that the most likely form is a five year review, most probably in 2020.
The way a global stocktake is done is that countries adopt international standards, but to their varying capacities, and then report.
And so that is in line with what occurs now under the UNFCCC, but it's about beefing up the support and ability of monitoring and verification.
And indeed the question about the accounting standards in Australia – because our accounting standards are so good and so internationally respected, other countries are approaching us and asking for help in helping them to establish monitoring and verification systems.
Go back now for a question from – second question – from Deb Nesbitt.
Deb Nesbitt, Thomson Reuters. Minister Hunt, I want to take you to environment law.
Like all Environment Ministers since our national environment law was passed by the Howard Government, you've had to make really difficult decisions about big development projects, highly controversial projects, that community groups have then asked if the Federal Court will review how you made that decision – obviously people who object, maybe, to the project.
Your reaction, unlike previous Ministers, has been to table a bill to remove that legal right.
Now, that's being described as undemocratic and it's been highly divisive. It would seem that there's no chance of it getting through the Senate, as evidenced by a recent vote on this EPBC Amendment Bill.
I'm just wondering if you intend to pursue it, and why? I mean, it's not going to get through. Will it win you any votes?
Sure. I think there are two parts to that question.
The first is, what is the nature of the Environment Minister's role under the Federal Environment Act?
You are, in many respects, like a judge – you don't choose what comes onto the docket or the bill in front of you.
These projects are state projects or private sector projects. Other than something such as Badgerys Creek, they are not federal projects,
And every project is a state initiated and private sector run project to the best of my knowledge and understanding.
So then, against that background you have to determine against the law, and on each occasion we have done that on a scrupulous basis.
The next question which you ask is an entirely fair question, but I would again respectfully disagree on something.
The standard which has been under consideration is the Administrative Decision Judicial Review Act standard, which is the general standard for third party engagement across the Commonwealth law of Australia.
It's the standard which was enshrined in the Badgerys Creek legislation and given bipartisan support by the ALP.
And so what we were seeking to do in light of an Americanisation of Australian legal practice, where groups in many cases driven from overseas approaches were adopting an American approach to litigation, is to reconsider that.
Having said that, I think it is unlikely that this particular initiative will get through the Senate.
I've been realistic since the very first day on that outcome. So we're happy to work with the ALP or others to look at what options are available.
Our policy hasn't formally changed, but I'm realistic about the Senate.
The final question today from Lenore Taylor.
Lenore Taylor from the Guardian again. On the second half of the mechanisms you were talking about – that big green block where I think you say you're going to get 200 million tonnes of abatement from the safeguard mechanism – at the moment, isn't that mechanism set in a way that it just is supposed to stop rogue emissions from industrial emitters, stop them sort of going crazy?
But they can still increase their emissions, increase their production, increase their emissions, not reduce them. So how does that tally with 200 million tonnes of actual abatement?
Sure. So just to talk you through the abatement there. You see, carry over – or emissions reduction – you see carry over from purchases now – abatement that will be delivered post-2020.
And I'm very consciously making sure that we're doing long-term contracts, or we've encouraged that, so as there is emissions reduction now and then emissions reduction post-2020 from our current activities.
Then there is in the area that you're looking at, both emissions reduction from the further round of the Emissions Reduction Fund that will run through to 2030, and the safeguards mechanism.
The safeguards mechanism will see about 200 million tonnes come from best practice adoption of progressively changing the standards for new entrants to the market in Australia.
So we've always said that as new entrants come in they would adapt and adopt a standard of national best practice.
So rather than being historically grandfathered, the benchmark changes as the technology changes.
And that was something we discussed in our very first press conference, I think, on this back on I think 2 February 2010.
It's been enshrined in the system and it's been incorporated in the accounts on what is a very conservative approach.
My finishing and final point here is that the accounts that we've released today are conservative.
They continue to work on the basis of what we absolutely know to be the case – rather than ambitious or optimistic.
I think we will be able to achieve and do better than we have said, but my approach is to set the targets, to under promise, and then what we've found so far I think on pretty much all our fronts – whether it's from Green Army, to the Emissions Reduction Fund, or to local projects such as the Tamar River or elsewhere in Australia – delivery earlier and delivery in a greater quality and outcome than we have endeavoured to do.
At the end of the day, what do I think? I think we're doing well in Australia, I think we will achieve a global agreement.
It will be a difficult two weeks, but the importance is too great to fail and the commitment is too broad not to succeed.
We'll finish on that note.
Greg Hunt, thank you very much for your comments today. We obviously wish you well at those talks in Paris next week, you and your colleagues, so good luck.