E&OE….
Topics: Climate change, Emissions Reduction Fund, post-2020 targets
TOM CONNELL:
Greg Hunt, thank you for your time.
GREG HUNT:
Pleasure.
TOM CONNELL:
Now, there were reports on Monday, and I spoke about them on the program, that Australia’s been given a please explain of sorts from various countries about the ongoing process when it comes to the carbon emissions reduction strategy, of course ahead of talks in Paris. China, for example, asking if it’s fair that we ask developing nations to do the heavy lifting. Your response to those reports yesterday?
GREG HUNT:
Look I did see those reports, and frankly they were ridiculous and misleading and an airbrushing of a process which is a common standard part of the international negotiations. You would have thought…
TOM CONNELL:
So to have 36 questions asked of Australia are pretty standard procedure you say?
GREG HUNT:
Correct. Over 600 questions have been asked of 41 countries through this process. You would have thought reading that report from Tom Arup and Adam Morton that no other countries were being asked questions. It was as if this was Australia being singled out.
I think those journalists ought to know better and they ought to clarify it, because what we see is that 41 countries have been going through a standard process under the UN – as should happen – to talk about targets. There were similar number…
TOM CONNELL:
The questions- sorry, the questions are about transparency, basically, has been your argument.
GREG HUNT:
Correct. Well, the questions from China are almost identical to the ones they’ve asked other countries such as the US, and Canada, and Japan. Yet that was airbrushed from the reports. The real point here is there is an international negotiation, more questions- well, more countries have asked questions of the EU and the US, Russia, and Canada, than were asked of Australia.
TOM CONNELL:
Okay.
GREG HUNT:
But there’s no problem. We’ve asked questions of other countries. It’s a standard process where each of 41 countries has been asked questions. There’s nothing unusual here. It would be unusual if questions were not asked. We’re asking other countries, everybody’s in there asking, and China is asking a similar set of questions to a variety of countries.
TOM CONNELL:
Alright. Let’s get to your policy, because we’ll learn the results of the reverse auction for the Emissions Reduction Fund on Thursday I believe.
GREG HUNT:
Correct.
TOM CONNELL:
Interested on your expectations there, and whether you assess those winning bids to see if they will indeed deliver on what they’re saying they will.
GREG HUNT:
So the process has been run by the Clean Energy Regulator and I have not seen any of the bids and to this date I don’t know who the bidders were or what they were bidding. We set that up as a proper probity process and there’s an independent probity assessment. Broadly we have been hoping for three, four, maybe five million tonnes of abatement.
I am hopeful that that will be achieved, if not beaten. And so the general reports from the Regulator are very good, very positive, and indeed there’s a good chance that we may well beat our expectations. But three, four, five million tonnes would represent a major success in terms of actual emissions reduced for the first auction of what will be a number of auctions over the coming years for a process which doesn’t stop in 2020; this is a policy in perpetuity, and we’re well ahead of our expectations as a country.
We recently saw that our emissions were 1.1 billion tonnes lower for the eight-year period out to 2020 compared with what Labor had said they were going to be just a few years ago.
TOM CONNELL:
Okay. We’ll get to the drilling down of the tonnes in a moment, but the safeguard measures within this policy as well, I’m interested how you can know the overall level of abatement you’ll get when you still haven’t decided the baseline emissions for these companies – at what point they’ll be penalised, and at what point you’ll decide that that’s where their emissions are flat going forward.
GREG HUNT:
Look that’s a really first-class question, and there are two parts to the process of what we do. There is an auction where the Government is investing in reducing emissions. We’re finding the lowest cost emissions, and the Clean Energy Regulator has received the bids and is currently going through the probity checks and determining the winning bids based on price.
So it’s very clear single criteria, genuine abatement based on price. And then beyond that, commencing on 1 July 2016 we have what is called the safeguards mechanism, which essentially sets a ceiling above which companies would face a penalty, below which they would receive a credit.
TOM CONNELL:
Because without knowing that at the moment, we don’t know the net abatement, if you like. And that’s not set until 2016. So whilst you might announce something on Thursday, in a net sense we still don’t really know where we’ll be.
GREG HUNT:
Well, many of these projects fall into the category of land sector abatement, or emissions reduced through avoided deforestation, through protecting of forests, through planting, through soil carbons, through reduction of activities which would otherwise have been occurring, such as methane reduction – whether it’s from waste coal mine gas, from landfill gas. These are activities that might well not be covered under the safeguards, or where they are there’s a commitment to go below business as usual.
TOM CONNELL:
Okay. Climate Change Authority releases its draft on future emissions targets tomorrow, and you’ll be setting your target we understand in the middle of the year, but the Authority has previously said you should go beyond 5 per cent. Given the movements of some of our trading partners lately, is that in your mind?
GREG HUNT:
Look, you can understand I won’t pre-empt a public consultation process, but we are committed to being a country which has beaten our first round of Kyoto targets, we are on track to meet, or I believe, well and truly beat our second round or 2020 Kyoto target and we will set a very serious post-2020 target.
So, let me repeat: we will set a very serious post-2020 target. We’ve released a consultation paper, we’re currently going through that process, I’ll be holding consultation discussions around the country over the coming weeks and I think that what you’ll find is Australia is one of the few countries in the world to meet or beat both their first and second round, which is the 2020 Kyoto target.
TOM CONNELL:
Okay. Look…
GREG HUNT:
And set a very constructive third round.
TOM CONNELL:
There’s already plenty of commentary though on what it would be beyond 2020. There are people out there saying a good figure could be 25 per cent. I know this is hypothetical, but with that 25 per cent figure, is there any idea of what that would cost under the Direct Action plan?
GREG HUNT:
Sure. Remember, the Direct Action plan as we’ve just discussed has two elements. There is the emissions reduction purchasing or investments through the auction and then there is the safeguards mechanism. And so those two things together combine to reduce emissions. I won’t pre-empt the outcomes of the auction…
TOM CONNELL:
No, but just broadly speaking…
GREG HUNT:
…which is effectively what you’re asking me to do.
TOM CONNELL:
I suppose what I’m asking though as well is if – has there been modelling done under this current plan, because the Government’s been quite gung-ho about Direct Action certainly meeting five per cent and getting beyond that within cost, $2.55 billion.
GREG HUNT:
Absolutely, we will do that.
TOM CONNELL:
So I’m wondering if at 10, 15, 20 per cent, is there modelling that’s been done to see what that cost would be, given it’s a two way system with I guess punishments on one side, inducements on the other. Any idea what the cost might be?
GREG HUNT:
Look, I won’t pre-empt a process which will look out to the periods of 2025 and 2030 for good reason and that is, we’re right in the process of having that discussion and that feedback from industry and from the community as to what the likely trends of technology will be over the next 15 years, the likely trends in relation to energy efficiency and also agricultural productivity will have an impact on our model.
TOM CONNELL:
Sure.
GREG HUNT:
So we’re actually gathering the data through this process which will determine the targets that we set. So it’s a genuine process of community consultation for an announcement in the middle of the year, the end of June, the start of July.
TOM CONNELL:
Given though, I guess, that the Climate Change Authority that they recommended – and I get there’s another report coming out tomorrow – but they’d previously spoken about 15 per cent or more by 2020. So I guess I’m interested if you fed that into your models and said: this is how much more we’d need in the Emissions Reduction Fund, for example.
GREG HUNT:
Well, I think there is an important point here and that is – when you compare apples with apples, the United States sees framed in terms of reductions from 2005 to 2020, that’s presented as a minus 17 per cent, we actually come out at minus 13 per cent. So at the moment we are on track to achieve at least a minus 13 per cent reduction in our emissions, when you use the same base and period as the United States.
TOM CONNELL:
Just to sum up then, I guess, at the moment what you’re saying is – you’ve done the Direct Action, you’re confident of what that will do in terms of five per cent plus by 2020. Beyond that, you want to know about other potential changes, but…
GREG HUNT:
Correct.
TOM CONNELL:
But do you think it could be a model, I guess, basically, to get to 25 per cent?
GREG HUNT:
Look, I won’t put a figure on it, other than to say we’re already on track for minus 13 per cent against 2005 by 2020. I am certain that we can obviously set against that background a very comprehensive, a very constructive target.
TOM CONNELL:
Okay.
GREG HUNT:
I’m serious about this. We are doing things which other countries in many cases are not. We’re having real reductions. Over the same period of time, from 1990 to 2020, China will have quadrupled its emissions from just over three billion tonnes to well north of 13 billion tonnes. So they will have quadrupled their emissions – and I don’t say that critically, they’re going through the great task of bringing people out of poverty.
TOM CONNELL:
Taking us along for the ride in terms of growth as well?
GREG HUNT:
Well, for Australia, it has been a very important part of our economy. But the fascinating thing is, we’ve had an 88 per cent increase in our real GDP, our real gross domestic product, but we have actually reduced emissions now. Our current figure of 548 million tonnes for Australia is less than our 1990 figure of 563 million tonnes. So in other words, we’ve nearly doubled our economy, but in real terms, we’ve reduced our emissions. We are…
TOM CONNELL:
A lot of technology as well.
GREG HUNT:
… a global success story.
TOM CONNELL:
Yeah. We’ve had a lot of technological advances along the way.
GREG HUNT:
Absolutely.
TOM CONNELL:
A week ago on Twitter, you committed to this two degrees temperature increase, a limit of that. Do you subscribe to the Climate Council’s view that that means developed nations need to be entirely decarbonised by 2050?
GREG HUNT:
Look, I subscribe to the view that the world should work – and Australia is absolutely part of this – and must work towards the two degree objective and limit. I think that each country will take the necessary first steps to achieve that at the Paris Conference at the end of the year.
I don’t see that that is the end of the road. I recently met with the French Environment or Ecology Minister, Segolene Royal, and we talked about the fact that this is a critical step, but nobody should imagine it’s the end of the road.
TOM CONNELL:
No, no.
GREG HUNT:
It’s part of an incremental process – an ambitious incremental process. I would say this: we can deal with this challenge and we will. And what we’re seeing is when a country like Australia can nearly double its economic output but actually reduce their emissions. That is a powerful and great message to the world.
TOM CONNELL:
That figure though, to entirely decarbonise by 2050? I suppose that’s essentially 100 per cent reductions, if you like, on emissions, from whatever you’re going from. Where does that fit in with Tony Abbott’s comments that coal will be the world’s main energy source for decades to come?
GREG HUNT:
Look, I think whether you look at any of the international organisations such as the International Energy Agency or others – they say realistically there will be a major role for fossil fuels. But the question is whether we can continue to radically reduce the emissions from those fuels. And I think that that is very possible, both in Australia and around the world, and that’s why we’re helping lead through the CSIRO, some of the technology analysis in relation to reducing emissions from fossil fuels.
TOM CONNELL:
Yeah. And I know there’s talk about clean coal, but AGL is the largest holder of coal-powered stations. Coal fire powered stations, said on Friday, it’s going to be positioning away from coal the next three decades.
GREG HUNT:
Yes, I did notice they committed to three and a half decades more of continued coal production – or alternatively ending in 2050. But on the one hand, they make your point, because they just committed to 35 years more of production, using existing resources. I hope they can do it dramatically more efficiently, and my discussions with the company indicate they believe they can do it dramatically more efficiently.
On the other hand they’re saying that come 2050 when hopefully we’re both still here, but I suspect you probably will be, I may not be – then at that point they may transition out. And I hope they can make dramatic reductions in their emissions and that they don’t plan to just continue at the same level of emissions for the next three and a half decades.
TOM CONNELL:
One of the biggest parts of course of the last Government was this long argument about the carbon tax and the central argument that you said quite often, was that it was hurting business and didn’t decrease emissions. But if we look at the latest CEDEX chart, electricity demand steadily down from June 2010, so it was going down anyway before the carbon tax came in.
But when the carbon tax takes effect, electricity emissions begin to drop more than demand – it decouples and they’re going down more than demand, lower emissions energy is being used, clearly, there, for whatever reason. From June 2014 when it was repealed, there’s a real spike upwards at the same time as more and more brown coal is being used. I know you say it wasn’t good for business, but did the carbon tax work according to this chart?
GREG HUNT:
When you look at the overall picture, there was a fascinating set of figures recently released by the Department of the Environment. And that is that in the six years before the carbon tax, Australia’s emissions reduced by 55 million tonnes per annum. In the two years of the carbon tax, they reduced by 12 million tonnes per annum.
So it’s very, very clear that there has been a downwards trajectory in Australia’s emissions. Fascinatingly, the six years before the carbon tax produced a far greater reduction in our emissions than the two years of the carbon tax.
TOM CONNELL:
But looking specifically though at that – electricity emissions – intensity, the first steady uptick we’ve had for several years now was months onwards, the nine months onwards from when the carbon tax was repealed.
GREG HUNT:
I think you’ll find that as the Emissions Reduction Fund kicks into action, I think you’ll also find the seasonality of hydro. The way it works is they’ll run it one year and run it down in terms of electricity production, the next year, whilst they build up their stocks of water – that there will be a progressive flattening out on that front.
So I am very confident knowing the sorts and types of projects that are in the pipeline under the Emission Reduction Fund – also on the advice I had from the hydroelectricity sector, the way they operate and the fact that this fluctuates from year to year, that we will see a continued decrease in Australia’s overall emissions and a continued decrease in our sectoral emissions.
TOM CONNELL:
Just finally – how many more years do you think we’ll be burning brown coal in your State of Victoria?
GREG HUNT:
Look, I won’t try to put a figure on that. What I am committed to is seeing us dramatically reduce emissions.
TOM CONNELL:
It’s hard to do with brown coal, though, isn’t it?
GREG HUNT:
Well, no, it’s not. We are about to see over the next decade what I think is a step change in efficiency. Whether that is less brown coal generated electricity, or whether that is a reduction in the emissions from brown coal – that opportunity is increasingly emerging. I know from our discussions with companies that they are very focused on the Emissions Reduction Fund as a means of transforming emissions within Victoria and dramatically lowering those emissions in way which nobody’s anticipated to date.
TOM CONNELL:
Greg Hunt, you’ve been generous with your time, thank you today for your time on Sky News.
GREG HUNT:
Thanks for that.
(ENDS)