E&OE….
Topics: Emissions Reduction Fund first auction results, Bjorn Lomborg
ELLEN FANNING:
Well Greg Hunt is the Federal Minister for the Environment; he’s been listening on the line from Melbourne. Welcome again to Breakfast Minister.
GREG HUNT:
Good morning Ellen.
ELLEN FANNING:
This is perhaps all very confusing for the listener. On the one hand we have a Minister you’ve been so positive about this Direct Action scheme saying this first auction…
GREG HUNT:
Sure of course it’s a stunning success in fact.
ELLEN FANNING:
Indeed, a stunning result, and on the other hand we hear these leading independent scientists almost universally saying that you’re unlikely to meet the target, simply because you’ve spent 25 per cent of the money available to buy up just 15 per cent of the pollution.
GREG HUNT:
Well that starting statement from not independent organisations, but those that are completely associated with the ALP, is of and in itself false and incorrect. So let me try to help your listeners – the starting point is yesterday we exceeded expectations about tenfold and produced the largest reduction in emissions in Australian history by an order of magnitude.
Contracts were struck for 47 million tonnes of emissions reduction and the critics who said we’d never achieve that, we’d never achieve four or five million tonnes are instead of welcoming it, I think it’s revealed their political agenda, are saying gosh that’s too much. This is four times the entire emissions reduction on the absolute best reading of what happened throughout the carbon tax experiment and that’s just from the first auction.
It comes at about just over one per cent of the cost per tonne of emissions reduction of that which occurred under the carbon tax. Essentially the carbon tax cost $1,300 per tonne of emissions reduction, this is $13.95 a tonne. So dramatically lower cost, dramatically more emissions reduction, and it’s a long-term plan. I know that the report prepared by Gregg Borschmann referred to a plan after 2020; that of course is false, this is a plan for the next half century, and we’ve already struck contracts for three, seven, ten years. So tremendous long-term activity from just the first auction.
ELLEN FANNING:
Alright well let’s look beyond 2020, the big international meeting in Paris where everyone will sign up to the next round of cuts. The Climate Change Authority this week said our fair share is 25 per cent cuts, some folk says 40-60 per cent cut by 2030.
Regardless of what Australia ends up offering up, can taxpayers seriously be expected via the Emissions Reduction Fund or some other form of Direct Action to keep on paying for this?
GREG HUNT:
Well of course there was a $30 billion taxpayer payment under the carbon tax which Labor seemed to have airbrushed which included extraordinarily $5.5 billion to brown coal generators to keep producing. The opposite of what anybody would expect, so what we’re doing is dramatically lower cost.
ELLEN FANNING:
Forgive me but let’s talk about the future, because the principal of pollution policy for decades now has been the polluter should pay.
GREG HUNT:
Well no that wasn’t what happened after the carbon tax of course. Under the carbon tax Labor gave out $30 billion to large industry, we don’t give anything to large industry. What we do do is we contract for emissions reductions, overwhelmingly it’s been the farm sector and small individual units that are going to progressively capture carbon in forestry plantations, avoided deforestation, and reforestation.
ELLEN FANNING:
Yes, we understand the principal, and forgive me because time is short and the issue is big. Let’s just stick with the maths.
GREG HUNT:
Okay.
ELLEN FANNING:
You know, if you spend $2.55 billion in this Emissions Reduction Fund to buy up five per cent of reductions to 2020. Surely you’d need multiples of that to fund any future commitments when Australia’s probably going to end up making double digit cuts into the future. Doesn’t the Treasurer just look a little weak at the knees when he starts to do these numbers?
GREG HUNT:
No I think that what we’ve found from yesterday is that we’re not just on track, but we will breeze past our target for 2020…
ELLEN FANNING:
Yeah but because you’re spending taxpayer…
GREG HUNT:
Let me, I’ll finish please. We’ll be in a position to achieve real and significant outcomes beyond that. There are multiple elements to our approach. Yesterday the first auction was a stunning success. It’s literally destroyed the criticisms of the ALP and others.
Secondly as you go forward we have the safeguard mechanism which is designed to be in place for the next half century which will allow us to work with industry to reduce their emissions. We have the planting of forestry in different parts of Australia. The ozone reduction tightening legislation which will also have a significant CO2 impact. Vehicle efficiency, future auctions which will help in cleaning up power stations, so multiple measures.
More to the point we are already on track for double digit reductions by 2020. We are on track for a minus 13 per cent reduction of the 2005 base. We will be one of the few countries in the world to have met and exceeded our first round of Kyoto targets, we’re now on track to meet and exceed our second round of Kyoto reduction targets which is to 2020, and we will be a very constructive participant, and as of yesterday with higher speed than previously in the post-2020 targets discussions.
So we can really help the world and this system which has now been proved to be a tremendous success in the face of a high cost, low reduction system under the carbon tax will reverberate around the world, and help the world and not just Australia.
ELLEN FANNING:
Malcolm Turnbull once described direct action-type schemes as a recipe for fiscal recklessness on a grand scale and a very expensive charge on the Budget in the years ahead. Notwithstanding those other measures that you’re talking about around industry, Australia’s primary mechanism will continue to be Direct Action unless you go to a market mechanism.
Just be frank with the taxpayers listening, doesn’t that mean that we have to dig deeper and deeper into our pocket to pay for more and more reductions over time, particularly after Paris?
GREG HUNT:
No. Of course, we’re spending dramatically less than the $30 billion that the ALP was giving to industry to…
ELLEN FANNING:
But there is another option and that is a market mechanism, so it’s not just Direct Action or carbon tax, is there? There’s a market mechanism and a polluter pays principle.
GREG HUNT:
We just held a major auction yesterday. Was that a market mechanism?
ELLEN FANNING:
Yes, but I’m asking you about the mechanism that will allow polluters to pay, rather than taxpayers, to continue to fund that market mechanism you’re talking about.
GREG HUNT:
Qantas is paying $100 million a year to fly their planes. They are notionally paying a carbon tax, but every time they pay the carbon tax, that is an emissions failure. They are paying to purchase a license to pollute. The carbon tax is a license to pollute. Of and in itself, it’s not actually reducing emissions; it failed abysmally when we went through a two year experiment in Australia.
I would say most people looking at the European system would say that it has been a dramatic failure in actually reducing emissions; Point Carbon, probably the leading global carbon market observer, has said they don’t expect that the European ETS will reduce emissions by one tonne between now and 2020…
ELLEN FANNING:
But let’s just talk about Australia.
GREG HUNT:
Forty-seven million tonnes of guaranteed emissions reduction, the largest emissions reduction in Australian history, not by a little amount but by a factor of 400 per cent compared with what we saw during the entire carbon tax experiment, and this was just the first auction and that just over 1 per cent of the cost per tonne of emissions reduction under the carbon tax…
ELLEN FANNING:
Okay, okay.
GREG HUNT:
…game over (inaudible) as we go forward.
ELLEN FANNING:
You’re always very, very confident about this. You are very confident in this Direct Action thing, and you – and…
GREG HUNT:
…were expecting yesterday.
ELLEN FANNING:
Yeah.
GREG HUNT:
The critics had been hit out of the tar and now there’s a sort of a vaguely desperate attempt to still be critical, but I would say everybody should be delighted. We’re actually reducing emissions, we’re doing it at low cost, and we’re helping to transform the economy…
ELLEN FANNING:
And you – and can I just – can I sneak in a question? Can I sneak in this question? Have you – when we look at these figures as we await the Federal Budget, as we run stories about wages plateauing in Australia and all the rest of it – just for the anxious taxpayer listening, Minister – and we hear people say, look, he spent too much money yesterday, 25 per cent of the honey pot, just – just – if I may, to buy up 15 per cent of the pollution. Just hand on heart, have you received any advice from your department that you’re going to need to ask for more money to meet that 5 per cent target by 2020?
GREG HUNT:
No. Actually, the advice from yesterday that I received is that just for this year alone we’re likely to be some millions and millions of tonnes less in terms of our emissions budget for this year than had previously been assessed. So through the Emissions Reduction Fund alone, we’ll meet our targets.
ELLEN FANNING:
Alright.
GREG HUNT:
You have a multiple set of other measures, as I say…
ELLEN FANNING:
Indeed.
GREG HUNT:
…the reforestation…
ELLEN FANNING:
Yes, indeed.
GREG HUNT:
…the vehicle efficiency measure for future auctions…
ELLEN FANNING:
So you remain confident? You remain confident.
GREG HUNT:
I remain certain that we will meet and beat our targets and we’ll do it without an electricity tax and Australia now has guaranteed proof you don’t need massively higher electricity prices to reduce emissions.
ELLEN FANNING:
Okay.
GREG HUNT:
You do have massively higher (inaudible)…
ELLEN FANNING:
Very, very…
GREG HUNT:
It doesn’t necessarily reduce emissions.
ELLEN FANNING:
My apologies for interrupting, but time is short. Just one final question. On this Danish academic Bjorn Lomborg given $4 million to set up this climate institute at the University of WA, when…
GREG HUNT:
It’s not a climate institute…
ELLEN FANNING:
Pardon me?
GREG HUNT:
It’s an economic analysis unit.
ELLEN FANNING:
Okay. When you announced the axing of the Climate Commission in September 2013, which was the commission set up to provide Australia with facts about global warming, you specifically spoke about savings to the Budget and annual funding of up to $1.6 million in future years. So in the context of this budgetary situation, do you feel relaxed about giving Mr Lomborg $4 million over four years?
GREG HUNT:
Look, I feel very comfortable. This is a – obviously, a decision in the education area but this is somebody who has been engaged by the UN who is a deep believer, by the way, in climate science and the fact of human impact on climate…
ELLEN FANNING:
But not on the need to do anything radical about it?
GREG HUNT:
It’s – he brought together a panel of Nobel economic laureates to look at the most efficient way to do it, and the fascinating thing is of 15 mechanisms all based on the presumption of a need to act and a need to act quickly, of the 15 mechanisms that his panel of Nobel laureates considered, the worst three – the least effective – were all variations of the carbon tax.
The real point why he’s criticised is it doesn’t fit the narrative of those who want to punish people with higher electricity and gas prices. He’s saying you can reduce emissions; you just don’t need a massive electricity and gas tax.
ELLEN FANNING:
Minister, thank you so much for your time this morning. Always great to talk and debate these issues.
GREG HUNT:
No, I really appreciate it. Thanks very much.
ELLEN FANNING:
Greg Hunt, the Federal Minister for the Environment, and he was on the line there from Melbourne.
(ENDS)