E&OE….
Topics: Emissions Reduction Fund first auction results
GREG HUNT:
Good afternoon. I want to welcome the first Emissions Reduction Fund auction results today, announced by the Clean Energy Regulator. This is a stunning outcome. It far exceeds all of our expectations. And it achieves an outcome in the first auction – the first auction – which is more than four times the entire emissions reduction produced during the carbon tax period at a fraction of the cost. The emissions reductions have occurred at less than one-ninetieth the cost per ton of emissions reductions under the carbon tax.
So let me deal with some of the facts from the first of the Emissions Reduction Fund auctions. Total abatement – total emissions reduction will be over 47 million tons. The number of contracts delivered will ensure that there are 144 successful projects. The average price per ton of emissions reduction will be $13.95. This compares with the average price per ton of emission reduction under the carbon tax of over $1,300.
What we see here as well is that the types of projects covered are real-world examples of reducing emissions. Avoided land clearing, waste diversion, landfill gas campaigns, environmental planning, soil carbon, capture of methane from piggeries. Savannah burns and transportation activities. And there is significantly more to come in coming auctions, as new methodologies are rolled out.
Already we have 39 methods available. Another nine are currently under development. More will be developed over the coming months and years. What does this mean? It means that we have a range of different projects. One hundred and forty-four projects around the country, ranging in size, from 12,000 tons to 3.5 million tons. We have activity right across the country, in all States. We have projects across a variety of different activities.
And very significantly, when you compare the carbon tax with the Emissions Reduction Fund, you have an example of failure and an example of success. The carbon tax, at best, on the most generous interpretation, achieved less than 12 million tons of emissions reduction at a cost of $15.4 billion. That $15.4 billion equates to over $1,300 per ton of emissions reduction. The Emissions Reduction Fund, Coalition Government’s policy, has produced more abatement at lower cost.
In fact, it’s produced dramatically more abatement at a dramatically lower cost and in just the first auction, four times the amount of (inaudible) at less than one-ninetieth of the cost. Just over one per cent per ton of emissions reduction for the Emissions Reduction Fund by comparison with the cost under the carbon tax.
This is a stunning repudiation of Bill Shorten’s carbon tax. It is a response to all the critics associated with the ALP. They said that we would never repeal the carbon tax. But we did. They said that if we did repeal the carbon tax, electricity prices would never drop. In fact, they dropped by the highest amount on record. They said that we would never pass the Emissions Reduction Fund legislation. But we did. And they said that if we did pass the emissions reduction fund legislation it would never deliver volume.
When I spoke earlier this week, on Sky, I had a genuine hope and expectation that if we were fortunate, we might be able to achieve three or four or five million tons of emissions reduction in the first auction. Instead, our expectations have been beaten ten-fold. The price is lower than we expected.
What this says is that a genuine market mechanism and a genuine auction approach can achieve real reductions. And that’s because the alternative was actually a license to pollute. And if somebody was paying the carbon tax, they were actually paying to emit and therefore as a consequence every time somebody paid carbon tax, emissions were going up.
Here, any time there are payments for emissions reductions, emissions are going down. So I will say to Bill Shorten, the carbon tax has been shown to be a comprehensive failure. The Emissions Reduction Fund has been shown to be a comprehensive success. It is time to drop plans to reintroduce a massive punitive electricity tax forever.
My final comment is this. That this will make a difference to the planet. It will make a difference in reducing Australia’s emissions both in the short and in the long term. And it will mean that we can go further as we go forward. We will meet our targets. We will meet and beat our 2020 targets.
We will become one of the few nations to have beaten their first round Kyoto targets, to have beaten their second round of Kyoto targets, and have a system which will now reverberate around the world, as a model in line with the UN Clean Development mechanism, which can see real emission reductions and practical projects.
Whether it’s landfill emissions reduction. Whether it’s protecting forests. Whether it’s reforestation, whether it’s soil carbon, whether it’s cleaning up piggeries. Real things reducing emissions as opposed to a massive hit on family, small business and industry electricity prices. There is no longer a choice that needs to be made. We have a system that’s reducing emissions and this is a stunning result for Australia, a stunning result for the Government, but most importantly, it’s a stunning result for the environment.
JOURNALIST:
You said you spent more than a quarter of the Emissions Reduction Fund budget – $660 million. Are you concerned you’ll run out of money without reaching the required emissions and are you prepared to top up the budget?
GREG HUNT:
No, this is far in excess of what we were expecting, at a lower price than we were expecting. We have subsequent auctions which will have a far broader range of methodologies available. I expect that there will now be very significant energy efficiency projects brought forward. Industrial efficiency projects brought forward, emissions reduction in agriculture with new methodologies.
We also have safeguards mechanism to come and I also believe on the advice that I have, just from the Department of the Environment today, that when we recalibrate and recalculate our next emissions task for Australia, it will be significantly lower than the 236 million tons which was announced. We will meet our targets; we will beat our targets. And we will be in rare company in terms of countries that have met and beaten both their first and second round Kyoto targets.
JOURNALIST:
What’s the Department saying that that new cumulative task will be? If it’s not 236, what’s it come down to now?
GREG HUNT:
Well, that’ll be determined over time. But the early advice – the early indications are that we are well ahead of where we were expected to be for this financial year – in other words the projections that we made for this financial year will be beaten. That means our emission will be lower than we have projected or expected for this financial year. And you then add the Emissions Reduction Fund results – remembering always, the Labor Party said this would fail.
The critics who are associated with the ALP said we would never get any significant volume. In fact, we’ve got a stunning volume. Four times larger than the entire carbon tax era emissions reduction at a fraction of the cost. So you then add the emissions reduction which we’ll clear from the safeguards mechanism and Australia is incredibly well-placed to not just meet but to beat our 2020 target.
JOURNALIST:
Minister, this roughly breaks down a purchase of about well under nine million tons of carbon credits annually at a cost to the taxpayer of about $94 million a year. In the last year of the carbon price scheme, about 11 million carbon credits were created, and they were purchased by companies, at no cost to the taxpayer. So aren’t we in fact worse off, rather than better off?
GREG HUNT:
No. I spoke with the Clean Energy Regulator today about the requirement under the law that all abatement is additional and the Regulator confirmed that, indeed all of this had been audited by Deloitte.
Let me go further. This is just the first auction. And remembering that the emissions reduction, the net emissions reduction under the carbon tax was if you ascribe every unit of emissions reduction that occurred during those two years was at best 11.7 million tonnes, or less than 12 million tonnes, here in just the first auction – and there will be multiple auctions, and therefore they will run concurrently – in the first auction we have more than four times that amount of reduction.
As a counterpoint in history, I would point this out as well – in the six years before the carbon tax emissions fell by 55 million tonnes on an annualised basis. In the two years of the carbon tax, they fell by 12. So, the emissions reduction trajectory actually slowed under the carbon tax in Australia. And that’s an incredible indictment of a system which was meant to reduce emissions.
Before that, emissions were reducing cumulatively by an addition nine million every year. During it, it was less than six million a year. And so in other words, to go right to the heart of the matter, we have produced four times the emissions reduction as occurred under the entire carbon tax era in just the first auction, with multiple auctions still to come, and the safeguards mechanism to be put in place.
JOURNALIST:
Would you hope the price per tonne will go down? Because on the current abatement entitlements you run out of money before you get to the 236 million tons.
GREG HUNT:
Well we are not expecting that that will be the final trajectory on the latest advice that I had from the department just today. On what we have here we will purchase enough to achieve our targets on this alone, on all the expectations that I have, without accounting for the safeguards mechanism, and without assuming any decrease in price, which is very, very possible. Because what we see going forwards from here is a significant expansion in the range of methodologies.
So in other words, the pool people who can participate in the Emissions Reduction Fund process will continue to increase and multiply. We move to commercial and industrial and domestic energy efficiency, we have irrigated cotton technologies; we have advanced soil carbon methodologies, over and above those which were available for the first auction. We have different forestry methodologies.
And stepping back, the other thing that’s happened here of course is that there are huge environmental co-benefits. Forest protection in Tasmania, forest protection and land conservation in New South Wales. We have better savannah management in parts of Northern Australia, in particular in Queensland.
So enormous co-benefits as well as the emissions reduction at a fraction of the cost of the carbon tax. I would say to Bill Shorten, when it comes to the carbon tax versus the Emissions Reduction Fund – case closed. Four times as much emissions reduction at less than one-ninetieth of the price.
JOURNALIST:
So just do the maths here, you’re saying that there- you expect savings from the safeguard mechanisms. Can you put a number on that? What is the estimate that you’ve been given by your department, or…
GREG HUNT:
No I won’t put a figure down until we release the final forms of the safeguard mechanism. It would be inappropriate for me to do that.
JOURNALIST:
Are you saying that you now believe, and I don’t think you’ve said this before, that the ERF alone will get us to our 5 per cent targets?
GREG HUNT:
Yes.
JOURNALIST:
Is that what you are saying?
GREG HUNT:
Yes.
JOURNALIST:
And that’s based on a combination of the results from this auction, and the revised advice from the…
GREG HUNT:
And the declining trajectory of Australia’s emissions. So a combination of the Emissions Reduction Fund and declining trajectories I believe will get us to our target. But we also have, we also have the safeguards mechanism. And we will reach our targets. We will beat our targets. We will be in a position, I believe to be a world leader in having achieved the first and second rounds of our Kyoto or international obligations.
There are very few countries that can say that. And so to the critics, and in particular I address the Labor Party but to some others, I would put this point – when they said that we wouldn’t repeal the carbon tax, they were wrong; when they said that we wouldn’t have electricity prices reduce, they were wrong; when they said that we’d never pass the Emissions Reduction Fund legislation they were wrong; when the said that there simply wouldn’t be demand or the price would be too high for the Emissions Reduction Fund they were fundamentally wrong. And it’s important to put in context the two approaches.
The Labor Party put in place Pink Batts, Green Loans, Cash for Clunkers, the Citizens’ Assembly, and a carbon tax at $1,300 per tonne of emissions reduction. We have put in place the Green Army, I was visiting that today, which has seen thousands of young people out in the fields having transformative experience in helping the local environment, a Reef 2050 Plan, we’ve put in place a once in a century end to the practice of dredge disposal in the Great Barrier Reef Marine Park, we’ve cleared more than a trillion dollars of project proposals that were back-logged and put in place the One-Stop Shop.
And now today we’ve seen that the Emissions Reduction Fund, despite all the criticism from the Labor Party and their fellow critics, has been a stunning success.
JOURNALIST:
Can I just ask, are you going to release the highest successful price?
GREG HUNT:
The advice of the Clean Energy Regulator is that for commercial-in-confidence reasons, and for competitive tensions, they will release the weighted average price, the lowest volume, which is 12,000 tonnes, the highest volume, which is 3.5 million tonnes.
I did make that request of the Clean Energy Regulator as to what would be appropriate, and their advice was that would represent a breach of commercial-in-confidence material.
JOURNALIST:
What about accountability for taxpayers that don’t know what they’re paying for under the scheme?
GREG HUNT:
Well there couldn’t be greater detail – 47 million tonnes, 144 projects, $660 million of contracts, a weighted average price of $13.95 per tonne. And this, by the way, is exactly what we said we’d release all along, knowing that we certainly do not want to breach commercial-in-confidence material.
The volumes and names and types of projects for each of the successful proposals, contracts, and- have been released. And so I think that we have not just been transparent, we’ve been excessive about probity – Deloitte was involved throughout the process. And the material we’ve released by the way is all that I know. The Clean Energy Regulator is the custodian of the commercial in confidence material, and that is not available to me.
JOURNALIST:
So you don’t know the prices paid for individual projects?
GREG HUNT:
No I don’t.
JOURNALIST:
How many projects were former CFI accredited projects that won contracts?
GREG HUNT:
Look, you’ll have to speak with the Clean Energy Regulator about the status of individual projects. I was only advised of the results late last night. I received a general briefing just after 5pm, and about 10:30 last night I saw the individual proposals. This was a locked-box market process. This was an auction conducted by an independent regulator.
And I want to congratulate the Clean Energy Regulator, both the organisation and Chloe Munro who is the specific regulator. They have done an amazing job and this is a model of how a successful environmental and climate policy should be done. Remember this – the previous model, the ALP ran Pink Batts, Green loans, Cash for Clunkers, the Citizens’ Assembly, and a carbon tax which came in at $1,300 per tonne of emissions reduction.
By comparison, what we have today is the latest success with real-world outcomes, the first of the abatement projects will receive credits given to the Commonwealth next month. Real outcomes commencing immediately which will see real emissions reductions.
Thank you very much.
(ENDS)