This is picking and choosing of the highest order!
This was the reaction of one of my friends, someone with a long experience of energy policymaking, on reading Treasurer Wayne Swan’s media statement about the Productivity Commission report on international carbon policies.
And, of course, it is.
It was always going to be.
Swan could be relied on to cherry pick from the careful, detailed commission findings to sell the Canberra Press Gallery his version of the message. After all, the government has had about a fortnight with the report in its hands to craft its media attack.
What’s perhaps surprising is how clumsily Swan has gone about his work.
The commission examined 1,000 policies in nine countries – and found we almost lead the pack for the number of policies already in place. The Americans (with 50 states and their federal government) have 307. With six states, two territories and the federal government, we have 237, more than double Britain’s programs (104) and nearly double Germany’s (131).
Modelling by the commission suggests that our abatement from existing policies for electricity “could have been achieved at a fraction of the cost.”
All policies, the PC points out, impose costs that someone must pay.
In Britain, for example, explicit carbon pricing appears to have been “a cost-effective way of achieving considerable abatement” – and to have had impacts on electricity prices of more than 10 per cent.
Swan’s take? “The commission identified over 1,000 policy measures to reduce pollution, showing yet again that the world is moving towards a cleaner future.”
And, of course, the government’s Big Lie always has to be included: a carbon price “will only apply to the biggest polluters in our economy, of which there are less than 1,000.”
What did the PC find about our emissions?
Metal products directly account for 30.65 million tonnes out of a manufacturing total of 66.6 million tonnes. The indirect manufacturing emissions from electricity use account for almost 63 million tonnes out of a power generation total of 196 millon tonnes.
For electricity production, that leaves 133 million tonnes of emissions not coming from “big polluters” – aka big employers.
(The Minerals Council says there are 950,000 people working in Australian mining and manufacturing.)
On my estimate, at a $26 per tonne carbon price, that leaves about $3.5 billion a year to be recovered from other than the “big polluters” before one takes in to account what manufacturers pass through to the community of their additional costs.
And $26 a tonne will not be anywhere near enough for Australia to “build a clean energy economy and protect our precious natural environment for future generations,” to quote Swan’s rousing media statement climax.
(Actually, after Gillard and Combet waved around those maps of alleged future inundated urban areas, I thought their latest sell was that we needed a carbon price to save our precious city real estate.)
The commission usefully includes a table of levelised electricity technology costs: combined-cycle gas turbines $97 per MWh, wind $150 to $214 and medium-sized solar PV systems $400 to $473.
And we already know what the government thinks abatement policies will deliver in 2020: 43 per cent from coal generation, 37 per cent from burning gas , 12 per cent from wind farms and eight per cent mostly from existing hydro-power.
As I have asked asked over and over: when will the government match its “clean energy” rhetoric to a carbon price needed to deliver what it claims to be pursuing?
Michael Hitchens, who is chief executive of the Australian Industry Greenhouse Network, an eclectic collection of associations and companies representing a large part of the energy consumption in this country (and, by way of disclosure, which I helped to found in the 1990s and chaired for a time), is one who finds the Treasurer’s latest spin all too much.
“Perhaps he has a different version of the report,” he says, “but nowhere can I find two results he claims are key.”
On the Swan hype about all that the world is doing, Hitchens points out that the PC, in effect, says the policies being pursued “are costing a lot and doing bugger all in terms of emissions reductions.”
He comes up with an interesting calculation, too: “In electricity, on the most optimistic terms, the commission shows that all these policies (internationally) are saving just 210 million tonnes of carbon dioxide for a total cost, as measured by subsidy equivalent, of more than $18 billion per year.”
Secondly, Swan somehow finds the report to be evidence that Australia is in danger of falling behind the rest of the world on abatement.
As Hitchens points out, the commission, in fact, warns over and over that nothing it says can be used to conclude that we are ahead, behind or average when it comes to measuring even current comparable efforts.
The question of future effort was outside its terms of reference.
Hitchens says there are different take-home messages from the report from those Swan wants us to receive.
One is that Australia is about average in terms of the amount of money being wasted on bad policies.
Economy-wide emissions pricing is likely to be a least-cost solution, but no-one has yet adopted it.
If we go down this route here, then a majority of the 237 local policies have to be dumped – not least because some of them will at best negate the carbon price. The Greens are already leaping up and down about this.
Nothing in the report, Hitchens asserts, points to Australia being a “laggard” in abatement compared with other countries, nor that the current pledge to achieve a 2020 target here should be increased.
So there you have it: on carbon policy, the Treasurer in spin mode is an ugly duckling after all.