E&OE….
Topics: Emissions Reduction Fund first auction results
DAVID SPEERS:
Well we’re going to return now to our top story and the results of the first auction of the Emissions Reduction Fund, the centrepiece of the Government’s Direct Action plan. As we showed you earlier, a lot of criticism about this idea from the moment it was conceived. It’s been formulated by the Environment Minister Greg Hunt.
Economists, climate experts, a lot of commentators have doubted this all along, but the Minister says it’s a stunning result, the first auction – 47 million tonnes of abatement has been delivered. For a $660 million spend, that equates to just under $14 per tonne of carbon that’s going to be removed from the economy. The Environment Minister Greg Hunt joins me now.
Thank you for your time. You’re obviously very happy with the outcome…
GREG HUNT:
G’day David.
DAVID SPEERS:
…can I ask you for a bit of detail on what sort of projects have won support under this first auction?
GREG HUNT:
So what we have here is a range of different projects, delivering all up 47 million tonnes of emissions reduction or abatement, which is four times, just in this first auction, the entire amount achieved under the carbon tax at one-ninetieth of the cost – or actually, less than one-ninetieth of the cost.
Examples of types of projects: in Tasmania, Forests Alive has a project which is reforesting cleared land, so capturing carbon in trees in bushland. We have LMS, which is reducing emissions from landfill, so cleaning up local environments, making a 3.5 million tonnes emissions reduction. We have savannah burning in Queensland, we’re managing landscapes to get better landscape outcomes.
You have Indigenous involvement and these are reducing emissions as well as that. You have soil carbon projects in different places around the country. You have projects for capturing carbon by additional forestation. You have avoided deforestation, you have piggery projects to reduce emissions or methane from those facilities. So, this is just the start of the process. There is a huge energy efficiency opportunity that is coming down for the second and third and fourth auctions, industrial efficiency for the coming auctions. We have agricultural efficiency for future auctions, so…
DAVID SPEERS:
Well I was going to ask you about this, because…
GREG HUNT:
…we’ve seen a tremendous first round.
DAVID SPEERS:
All of those projects sound very worthy, but there aren’t – correct me if I’m wrong – any of the big emitters – power stations, coal mines or any other mines that have been involved in this first auction.
GREG HUNT:
Well it’s fascinating, of course. The ALP said it would be the so-called big polluters that would be paid. In fact, it’s on-farm activities, it’s waste landfill projects. It’s not the sorts of people that they were paying to continue doing business. I do expect that we will be able to clean up coal-fired power stations in subsequent auctions. I do expect that we will have…
DAVID SPEERS:
What gives you reason to think that…
GREG HUNT:
…other forms of industrial efficiency…
DAVID SPEERS:
I’m just interested…
GREG HUNT:
…they will come further down the trail.
DAVID SPEERS:
Right. How does that work? I would have assumed all the most cost-effective emissions reductions would have happened in this first auction. Why are you expecting those particular types will come in the subsequent auctions?
GREG HUNT:
Well many of those methodologies have only recently been developed or are being developed. We had 39 methodologies in place, another nine that are formally under development and other ones that are being considered. What does that mean? It means that the – we always expected that the first auction would see a tremendous outcome in terms of the land sector, but this has exceeded our expectations by eight to tenfold.
We now think that the second auction and the third auction will have a very significant proportion of energy efficiency because we’ve been informed that those projects are under development, industrial projects under development. We know that there’s a significant opportunity to clean up Victoria’s brown coal power stations. Under Labor, they were gifted $5.5 billion to just keep doing what they do.
It’s incredible that that isn’t a national scandal of a $5.5 billion gift to brown coal generators under Labor. Under us, they don’t get anything, but we might well be able to clean up and reduce what they do. So they don’t get any windfall under us, they got $5.5 billion under Labor. But we can actually see the real prospect of, for the first time, dramatically cleaning up those stations. So…
DAVID SPEERS:
Right. Let’s look at the…
GREG HUNT:
…a great start, a phenomenal start, but much more to come.
DAVID SPEERS:
You’ve been able to achieve, as you said, 47 million tonnes of abatement. You’ve got to achieve 236 million tonnes to achieve the five per cent target…
GREG HUNT:
Correct.
DAVID SPEERS:
…that you’ve set by – so that’s about, I think about 15 per cent of the target. You’ve spent, however, about a quarter of the money in the Emissions Reduction Fund.
GREG HUNT:
Look, I’ve seen this criticism, but of course the 236 million tonnes is an exceptionally conservative figure. As I said when that came out, we expected that it would come down. I had a briefing from the department today that we are well ahead of our – of beating our targets for this particular financial year and so we’ll beat that target…
DAVID SPEERS:
So you won’t need 236 million tonnes of abatement?
GREG HUNT:
No. You are correct in that statement, absolutely. But more than that, we also have the safeguard mechanism. So we have a whole new range of methodologies, we have additional auctions to come, we have a safeguard mechanism which will be put in place by 1 July 2016. The critics who said this – we’d never repeal the carbon tax were wrong, who said that we would never get electricity prices to fall were wrong.
We’d never pass the Emissions Reduction Fund were wrong and who said that we would not have any demand and if we did, it would be at a massive price, were fundamentally wrong. The ALP is out of the game. They were wrong all along and their critics, their fellow critics were wrong all along. For Australia, this means we can achieve our targets without a massive new electricity tax.
DAVID SPEERS:
Now, the price, the effective price, is as you’ve said $13.95 a tonne. The European price…
GREG HUNT:
Correct.
DAVID SPEERS:
…is under $10 a tonne. The difference of course with the price here is that it’s the taxpayer paying that price. Under a carbon trading scheme, emissions trading scheme, whatever you call it, like in Europe, it’s not the taxpayer paying that.
GREG HUNT:
No, with great respect, you’ve confused two completely different concepts. Under a carbon tax, every tonne of emissions that are taxed represents a tonne of emissions that are occurring. It doesn’t represent any reduction whatsoever. So, for example, when you take the two years of the carbon tax under the ALP, there were a maximum on the best, most generous assessment, of 11.7 million tonnes of emissions reduced, but there was a total tax take of $15.4 billion.
That equates to $1,300 per tonne of emissions reduced. The real economic figure, the one that the ALP will never embrace, is what is the real cost of reducing emissions? Under the carbon tax, it was $1,300 per tonne. Under us…
DAVID SPEERS:
How do you get at that figure?
GREG HUNT:
…just over one per cent. Thirteen hundred dollars per tonne is just less than 12 million tonnes of emissions reduced at a total cost of $15.4 billion. That equates to $1,300 per tonne. That was the real cost.
DAVID SPEERS:
That involves…
GREG HUNT:
Why the carbon tax was such a fundamental failure.
DAVID SPEERS:
Okay. Let me ask you a final one…
GREG HUNT:
By comparison, we are just over one per cent of that cost for reducing emissions. The carbon tax wasn’t about reducing emissions. You only pay the tax when you’re actually increasing emissions. You pay the tax when – as a licence to pollute. So every time somebody pays it, it’s not an emissions reduction, it’s an emissions increase.
DAVID SPEERS:
Okay. A final question; you’ve said that obviously this is a fantastic start and you’re hopeful you’ll be able to surpass, exceed the five per cent target by 2020. Will that then feed into your thinking on the target that you set post-2020, where you’re obviously considering at the moment?
GREG HUNT:
Yes, of course it does. This lifts the speed limits for Australia. It says that we can achieve real emissions reductions. We achieved our first round of Kyoto targets for 2008 to 2012, we will beat our Kyoto targets from now until 2020 and it gives us the chance to be deeply constructive on the international stage in the post-2020 negotiations.
And the end of the day, it also says something not just to Mr Shorten, but to the world. You can reduce emissions in a real way without a massive electricity tax. I think it’s time for the ALP to run up the white flag and to rule out a new electricity tax.
DAVID SPEERS:
And I’ll squeeze in one more question if I can, Minister. There’s been controversy over the decision to…
GREG HUNT:
Sure, of course.
DAVID SPEERS:
…spend $4 million of taxpayers’ money on Bjorn Lomborg’s climate think tank, it’s called the Copenhagen Consensus Centre. Were you consulted on this, are you happy to see that money spent?
GREG HUNT:
Look, I was aware of it and I’m more than happy for a small investment in that space. By the way, his is actually an economic and analytical think tank. He’s a deep believer, contrary to the misrepresentation, a deep believer in the fact and the reality of human-induced climate change. A deep believer. I’ve had these conversations with him and what he’s always pointed out through his work is that a carbon tax is fundamentally a failure.
The Nobel laureates he brought together found that of the 15 different mechanisms for reducing emissions, they took that as their starting proposition, three versions of the carbons tax were the 13th, 14th and 15th least effective.
DAVID SPEERS:
Alright. Greg Hunt, Environment Minister, thank you very much for joining us this afternoon.
GREG HUNT:
Thanks David.
(ENDS)