tag:theconversation.com,2011:/africa/topics/emissions-trading-3358/articlesEmissions trading – The Conversation2024-02-16T16:17:37Ztag:theconversation.com,2011:article/2135012024-02-16T16:17:37Z2024-02-16T16:17:37ZState-owned energy companies are among the world’s most polluting – putting a price on carbon could help<figure><img src="https://images.theconversation.com/files/575920/original/file-20240215-30-unjkap.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6000%2C3997&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/leh-ladakh-india-aug-7-petrol-316059917">Tooykrub/Shutterstock</a></span></figcaption></figure><p>Existing measures to cajole companies to decarbonise, with subsidies for renewable energy and carbon taxes, have failed to prevent <a href="https://theconversation.com/fossil-co-emissions-hit-record-high-yet-again-in-2023-216436">global emissions rising</a>. Does state ownership, particularly in the energy sector, make this process easier? </p>
<p>State-owned energy firms that search for, produce and refine fossil fuels are among the most polluting organisations in the world. But because governments have a big say in how they operate, it might be considered easier for their emissions to be rapidly phased out by treating them as extensions of the government, without needing to rely on the incentives, fines or sanctions usually necessary to make private firms act. </p>
<p>So far, however, things have not proved to be so simple.</p>
<h2>A blessing or a curse?</h2>
<p>When it comes to climate change, ownership of a polluting company creates a dilemma for a government. On the one hand, state-owned firms are better equipped to bear the costs of decarbonisation as they can draw from a tax base (a more reliable revenue source) to subsidise green measures.</p>
<p>But ownership of a polluting, state-owned firm also creates conflicting incentives within and across different branches of a government. Some ministries may rely on the income generated from these industries (such as the <a href="https://www.aramco.com/en/sustainability/responsible-business/supporting-communities?gclid=Cj0KCQiAsburBhCIARIsAExmsu43EJVq6WyagPW7-djngYoguvH71aG8vsLPB1LyawZscVYGVnKvTZIaAr5YEALw_wcB">Saudi Arabian Oil Group</a>) to finance public services or <a href="https://www.nbim.no/en/the-fund/about-the-fund/">support pensions</a>. Other ministries, perhaps responsible for environmental protection, will be tasked with curtailing the activities of these firms to cut pollution.</p>
<p>This conflict indicates that state-owned firms are not simply “instruments of the state” that can be easily directed to cut emissions quickly. The ability of governments to use state-owned firms to tackle climate change depends on various governance issues <a href="https://doi.org/10.1017/mor.2021.25">within the state bureaucracy</a>.</p>
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<img alt="A yellow oil platform in a fjord with a red ship nearby." src="https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=403&fit=crop&dpr=1 600w, https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=403&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=403&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=506&fit=crop&dpr=1 754w, https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=506&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/575922/original/file-20240215-28-7iwhzo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=506&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Surplus revenue of the Norwegian petroleum sector is invested in a government pension fund.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/oil-platform-tromso-189016517">V. Belov/Shutterstock</a></span>
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<p>Governments attempting to reform state-owned entities can face resistance from various stakeholders – ranging from the workers and managers of these firms to the users of subsidised services, who may object to higher tariffs to fund a transition to renewable energy. </p>
<p>State-owned utilities such as the Federal Electricity Commission in Mexico and Eskom in South Africa have previously defended their energy market monopolies against smaller competitors – in some cases, preventing more decentralised renewable energy generation. State-owned firms can exploit their close contact with policymakers to do this, and may even <a href="https://doi.org/10.1016/j.esd.2022.06.006">refuse to sign</a> purchasing agreements with independent power generators.</p>
<h2>State-owned firms and emissions</h2>
<p><a href="https://www.sciencedirect.com/science/article/pii/S1090951620300882">Our research</a> showed that for some countries with high CO₂ emissions per capita, the state played a big role in their major polluting industries. Countries such as China, India, Russia, Japan, Iran and Saudi Arabia, where state ownership is extensive in the energy sector, are among the world’s ten biggest emitters.</p>
<p>In countries with established state entities to manage the production of fossil fuel reserves, commitments to cut CO₂ emissions are often overridden by the incentive to generate revenue from oil. Yet, we also found that regulatory measures, such as “cap-and-trade” systems, can complement state ownership and produce positive outcomes by resolving conflicts between different government departments.</p>
<p>Cap-and-trade regulations compel firms to buy carbon emission allowances and pay fines if they exceed them. Under a cap-and-trade system designed to limit the total amount of pollutants a company can emit, firms can also sell unused allowances. Take <a href="https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en">the EU Emissions Trading System (ETS)</a>: state-owned companies within it have lower emissions than their equivalents elsewhere that are not covered by such schemes. </p>
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<img alt="An industrial scene on the banks of a river." src="https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/575938/original/file-20240215-18-ob6ko4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Carbon pricing schemes attempt to lower pollution by making emissions expensive.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/ijmuiden-nederland-08-22-2022tata-steel-2199596409">BZ Travel/Shutterstock</a></span>
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<p>This finding contradicts <a href="https://cepr.org/voxeu/columns/inefficiency-carbon-pricing-government-owned-companies">economic literature</a> that has argued state-owned firms are not sensitive to prices on carbon – the thinking being that state ownership shelters them from the same pressures private firms face to stay competitive, as fines from exceeding emissions allowances eat into private profits.</p>
<p>This puzzle can be solved by what we call the legitimacy effect. Governments that publicly commit to cap-and-trade or similar carbon pricing schemes have stronger incentives as a result of public pressure to ensure state-owned firms reduce emissions, compared with governments that opt out. While other obstacles to achieving this goal remain, the government’s commitment goes some way to generating the necessary pressure on state-owned firms – above and beyond the pricing itself.</p>
<p>So, while the <a href="https://www.ineteconomics.org/perspectives/blog/carbon-pricing-isnt-effective-at-reducing-co2-emissions">the effectiveness of carbon pricing schemes</a> is debatable, our research provides one reason to stick with them. Namely, that they constitute a means of tying a government’s reputation to emissions reduction, and so create incentives for that government to get serious about the emissions of its state-owned firms.</p>
<p>Given that these firms are often among the worst polluters, this can make a difference.</p>
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<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>Aldo Musacchio is affiliated with the National Bureau of Economic Research (NBER) as a Research Fellow. He also receives funding from the World Bank and the Inter-American Development Bank for projects associated with state-owned enterprises. </span></em></p><p class="fine-print"><em><span>Anna Grosman and Gerhard Schnyder do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Governments that publicly commit to carbon pricing are compelled to get their own house in order.Anna Grosman, Reader in Innovation and Entrepreneurship, Loughborough UniversityAldo Musacchio, Professor of Management and Economics, Brandeis UniversityGerhard Schnyder, Professor of International Management & Political Economy, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2147092023-10-04T19:05:43Z2023-10-04T19:05:43ZMade in America: how Biden’s climate package is fuelling the global drive to net zero<p>Just over a year since US President Joe Biden signed the <a href="https://en.wikipedia.org/wiki/Inflation_Reduction_Act">Inflation Reduction Act</a> (IRA) into law, it’s becoming clear this strangely named piece of legislation could have a powerful impact in spurring the global transition to net zero emissions by 2050.</p>
<p>But the vast amount of investment unleashed by the IRA has raised tensions with some of the United States’ closest allies, and creates risks, as well as opportunities, for Australia’s transition to clean energy sources.</p>
<p>In his 2020 presidential campaign, Biden promised <a href="https://www.theguardian.com/us-news/2021/dec/08/biden-signs-order-government-net-zero-emissions-2050">to commit the US to net zero</a> by 2050, and to spend US$2 trillion to get there – the biggest investment in manufacturing since World War II. Biden is delivering on those promises.</p>
<p><a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/11/06/fact-sheet-the-bipartisan-infrastructure-deal/">The 2021 Infrastructure Investment and Jobs Act</a> included about $100 billion for electric vehicles and for speeding the electricity grid’s transition to clean energy sources.</p>
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<h2>The IRA changes the landscape</h2>
<p>Passage of the IRA, in August 2022, ensured a swathe of green technologies would benefit from tax credits, loans, customer rebates and other incentives.</p>
<p>The original announcement estimated that uncapped subsidies over ten years would be US$369 billion, but <a href="https://www.goldmansachs.com/intelligence/pages/the-us-is-poised-for-an-energy-revolution.html">Goldman Sachs Research now estimates that total subsidies</a> could reach US$1.2 trillion and attract US$3 trillion investment by industry. That’s trillion, not billion.</p>
<p>Already, <a href="https://climatepower.us/wp-content/uploads/sites/23/2023/07/Clean-Energy-Boom-Anniversary-Report-1.pdf">272 new or expanded clean energy manufacturing projects</a> in the US, including 91 in batteries, 65 in electric vehicles and 84 in wind and solar power, have been announced. These projects are estimated to <a href="https://climatepower.us/wp-content/uploads/sites/23/2023/07/Clean-Energy-Boom-Anniversary-Report-1.pdf">create 170,000 jobs</a>, predominantly in Republican-led states.</p>
<p>The IRA is all carrot, no stick. It contains no carbon taxes or emissions trading schemes. Instead, tax credits for capital expenditure and production costs encourage companies to invest in solar, wind, hydrogen, batteries, electric vehicles and other zero emissions technologies.</p>
<p>This approach is shifting the debate on the best way to reach net zero emissions. To free-market economists who ask why government should invest in private sector industries, the answer is that the green energy transition is not natural. Renewable energy would never have advanced without Germany subsidising solar and Denmark subsidising wind.</p>
<p>Subsidies and mandates are also crucial in explaining why, last year, Chinese vehicle manufacturers produced 64% of the global total of 10.5 million electric vehicle sales, and deployed about half of the global capacity additions in solar and wind power.</p>
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<h2>Industrial policy to protect the climate</h2>
<p>The IRA is America’s response. More than climate policy, it is industrial policy, replete with made-in-America provisions. Companies are more likely to obtain tax credits if they employ unionised labour, train apprentices and set up shop in states that are transitioning out of fossil fuels.</p>
<p>Consumers will earn a $7,500 federal tax credit on an electric car only if that car is assembled and at least half the battery made in America. Similarly, wind and solar projects will earn tax credits only if half of their manufactured components are made in America.</p>
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<p>These policies were made with China in mind. Both main US parties agree the US must reduce its dependence on sourcing minerals and products from China, and move towards a new form of “<a href="https://ecfr.eu/article/a-united-front-how-the-us-and-the-eu-can-move-beyond-trade-tensions-to-counter-china/">strategic economic nationalism</a>”.</p>
<p>Yet while America’s strongest allies are also alarmed by the challenge from China, they are disturbed by aspects of the IRA. They fear that to benefit from its subsidies, their own clean energy companies might pack up shop and establish plants in the US.</p>
<p>The European Union, for example, has praised the IRA’s overall approach, but <a href="https://energywatch.com/EnergyNews/Policy___Trading/article14567471.ece">fiercely criticised</a> its made-in-America provisions. French President Emmanuel Macron called the Act “<a href="https://www.reuters.com/world/europe/macron-visits-nasa-talks-space-cooperation-us-visit-begins-2022-11-30/">super aggressive</a>” toward European companies. European leaders say the IRA violates trade rules by discriminating against imported products, and could “<a href="https://www.reuters.com/business/autos-transportation/automakers-foreign-governments-seek-changes-us-ev-tax-rules-2022-11-08/">trigger a harmful global subsidy race to the bottom</a> on key technologies and inputs for the green transition.”</p>
<p>Yet even as it criticises the US, the EU <a href="https://www.politico.eu/article/eu-united-states-inflation-reduction-act-subsidies-investment-threat-data/">has responded to the IRA</a> by relaxing its rules and allowing individual states to provide direct support to clean energy companies to stop them taking their projects to the US.</p>
<p><a href="https://financialpost.com/commodities/mining/how-inflation-reduction-act-changed-canada">Canada</a>, worried about investment flowing south to benefit from the IRA even though its free trade agreement with the US should give its companies access to the subsidies, has also announced tax credits and programs to boost clean energy production. <a href="https://japannews.yomiuri.co.jp/politics/politics-government/20230513-109457/">Japan</a> and <a href="https://www.bloomberg.com/news/articles/2023-03-15/samsung-drives-400-billion-south-korea-plan-to-propel-key-tech?sref=wpjMCURG">South Korea</a> have announced similar programs.</p>
<h2>Why the IRA challenges Australia</h2>
<p>In Australia, before the IRA was legislated, the Morrison government <a href="https://www.exportfinance.gov.au/newsroom/transforming-australia-s-critical-minerals-sector/">provided a A$1.25 billion loan</a> to Iluka Resources to fund construction of an integrated rare-earths refinery in Western Australia. The refinery will produce separated rare earth oxide products that are used in permanent magnets in electric vehicles, clean energy generation and defence.</p>
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<p>But Australia risks being left behind in the race to build clean energy industries. The US could so heavily subsidise <a href="https://www.dcceew.gov.au/energy/hydrogen">green hydrogen production</a> that our own planned industry – seen as a foundation of our aspiration to be <a href="https://www.csiro.au/en/news/all/articles/2023/july/australia-energy-future#:%7E:text=Australia%20has%20vast%20amounts%20of,change%20from%20challenge%20to%20opportunity.">a clean energy superpower</a> – will be uncompetitive, leading our aspiring manufacturers to set up shop in the US.</p>
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<p>The IRA, however, brings Australia many potential benefits. The US wants to source the raw and refined materials it needs from countries, such as Australia, with which it has a free trade agreement. To respond to this interest, Australian industry, transport and mining must have access to low-emissions electricity.</p>
<p>The US will be an essential market for our <a href="https://news.climate.columbia.edu/2023/04/05/the-energy-transition-will-need-more-rare-earth-elements-can-we-secure-them-sustainably/">rare earths</a> such as neodymium, praseodymium, dysprosium and terbium, used to make the powerful permanent magnets in wind turbines and electric car motors. Australia can also build new industrial processes and supply chains so that we earn more from decarbonised metallic iron, aluminium and nitrogenous fertiliser. We can ship our renewable energy in the form of hydrogen and ammonia.</p>
<p>In this race, Australia’s friendship with the US and volatile relationship with China could be decisive. The IRA does not spell out the concept of <a href="https://www.csis.org/analysis/onshoring-and-friend-shoring-us-ev-supply-chains-what-are-boundaries">friend-shoring</a> but nevertheless it seeks “to onshore and friend-shore the electric vehicle supply chain, to capture the benefits of a new supply chain and reduce entanglement with China,” according to the US Centre for Strategic and International Studies.</p>
<p>The IRA denies electric vehicle tax credits when any component or critical mineral in the vehicle is sourced from China or any “foreign entity of concern.” </p>
<p>A clean energy trade war is just one of the potential obstacles that could prevent the full benefits of the IRA being realised. Many communities in the US and Australia are resisting the installation of new transmission lines, wind farms and other clean energy infrastructure, and these objections are often on environmental grounds – the so-called <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4443474">Greens’ Dilemma</a>. And a win for Donald Trump in next year’s presidential election could reverse American climate policy.</p>
<p>Yet on balance, the IRA can only be good for getting to net zero. It brings the US in from the climate wilderness to be a leader in emissions reduction, helping to drive new technologies and lower costs that will benefit not only America but the world.</p><img src="https://counter.theconversation.com/content/214709/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Finkel is chair of the Hysata Advisory Council and an investor in the company. He is a member of the Rio Tinto Innovation Advisory Council. </span></em></p>The Biden Administration’s signature climate legislation is unleashing a wave of clean energy investment, along with some opportunities and risks for countries like Australia.Alan Finkel, Chair of ARC Centre of Excellence for Quantum Biotechnology, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1980722023-01-23T13:24:12Z2023-01-23T13:24:12ZAs US-EU trade tensions rise, conflicting carbon tariffs could undermine climate efforts<figure><img src="https://images.theconversation.com/files/505410/original/file-20230119-5268-omk19c.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C3000%2C1922&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The U.S. and EU are headed in different directions with tariffs, including on steel.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/worker-cuts-through-a-glowing-2-000-degrees-fahrenheit-news-photo/1463835"> David McNew/Getty Images</a></span></figcaption></figure><p>Rising trade tensions between the U.S. and the European Union, two of the most important global leaders when it comes to climate policy, could undermine key climate initiatives of both governments and make it harder for the world to put the brakes on climate change.</p>
<p>The two have clashed over the <a href="https://www.mckinsey.com/industries/public-and-social-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it">2022 Inflation Reduction Act’s</a> requirements that products be made in America to receive certain U.S. subsidies. The EU recently announced plans for <a href="https://www.politico.eu/article/eu-hits-emergency-button-to-save-european-industry/">its own domestic-only</a> clean technology subsidies in response.</p>
<p>The U.S. and EU also now have competing carbon tariff proposals, and these could end up undermining each other.</p>
<p>In December 2022, the EU reached a <a href="https://www.consilium.europa.eu/en/press/press-releases/2022/12/13/eu-climate-action-provisional-agreement-reached-on-carbon-border-adjustment-mechanism-cbam/">provisional agreement</a> on a carbon border adjustment mechanism. It will put carbon-based <a href="https://www.europarl.europa.eu/news/en/press-room/20221212IPR64509/deal-reached-on-new-carbon-leakage-instrument-to-raise-global-climate-ambition">tariffs</a> on steel, aluminum and other industrial imports that aren’t regulated by comparable climate policies in their home countries. The Biden administration, meanwhile, proposed a “<a href="https://www.nytimes.com/2022/12/07/business/economy/steel-tariffs-climate-change.html">green steel club</a>” of nations that would cooperate on reducing emissions by levying tariffs on relatively high-emission imports.</p>
<p>At first glance, the two approaches might seem similar. But the EU and U.S. proposals reflect starkly different and arguably incompatible visions for the intersection of climate and trade policies.</p>
<p>A failure to align approaches risks further stoking trade tensions and would likely have international repercussions. Without multinational coalitions, dirtier, lower-cost competition will undercut emerging low-carbon technologies. </p>
<p>A strong transatlantic partnership is a prerequisite to greening the global economy. Without creative compromises and skillful diplomacy, the EU may find that its tariffs lead to reprisals rather than reciprocal action, and the U.S. quest to create climate clubs will not get off the ground.</p>
<h2>EU’s textbook approach to tariffs</h2>
<p>The carbon border adjustment mechanism, or CBAM, is tied to the EU’s flagship climate policy, <a href="https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets/development-eu-ets-2005-2020_en">its emission trading system</a>. The system requires large European factories and other greenhouse gas emitters to purchase allowances for each ton of carbon dioxide they release. It’s a form of a carbon price.</p>
<p>However, if only European industries have to pay this carbon price, the EU risks domestic production’s losing out to imports from countries with weaker regulations on emissions. This phenomenon, referred to as “carbon leakage,” can result in even dirtier industrial production.</p>
<p>To date, the EU has avoided carbon leakage by compensating domestic producers of certain industrial products with free emissions allowances. But that approach is becoming increasingly expensive as the <a href="https://www.catf.us/2022/08/why-are-carbon-contracts-difference-gaining-popularity-europe/">carbon price rises</a>, with a recent trading range of 70 to 100 euros per metric ton. <a href="https://ec.europa.eu/commission/presscorner/detail/en/qanda_21_3661">The CBAM</a> makes it possible to phase out these free allowances by phasing in tariffs on imports from countries without comparable carbon pricing policies. Once finalized, the tariffs could be applied starting in 2026.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/e-gc682xVcg?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">How the EU’s carbon border adjustment would work.</span></figcaption>
</figure>
<p>The CBAM has been met with some international outrage, with the “<a href="https://www.cnbc.com/video/2022/09/12/brics-how-a-goldman-sachs-acronym-became-a-strategic-economic-bloc.html">BRICS” countries</a> – Brazil, Russia, India, China and South Africa – calling it “<a href="https://timesofindia.indiatimes.com/india/brics-nations-join-india-in-opposing-eu-carbon-tax/articleshow/85704371.cms">discriminatory</a>” and a U.S. senator accusing the EU of going “<a href="https://www.wsj.com/articles/the-eu-goes-rogue-on-climate-policy-clean-energy-greenhouse-gas-carbon-tax-policy-emissions-environmental-standards-11671054303">rogue</a>.”</p>
<p>In reality, the CBAM treats domestic products and imports equally by applying the same carbon price, just as any economics textbook recommends. It also aims to further global climate action by giving other countries the incentive to implement their own carbon pricing policies.</p>
<h2>Biden’s climate club approach</h2>
<p>Unlike the EU, the U.S. has failed to adopt a national carbon price despite <a href="https://epic.uchicago.edu/news/lessons-learned-from-the-last-major-u-s-climate-bill-lobbying-takes-its-toll/">several attempts</a>. The Inflation Reduction Act instead fills the federal climate policy void largely by offering subsidies for producing clean energy.</p>
<p>However, subsidies to American producers won’t reduce emissions from other countries’ production of internationally traded products.</p>
<p>For example, steel <a href="https://www.globalefficiencyintel.com/steel-climate-impact-international-benchmarking-energy-co2-intensities">accounts for 11% of global</a> carbon dioxide emissions, with the vast majority from East Asia, including 53% of global production from China. Transforming Chinese production is therefore critical to lowering emissions.</p>
<p>Encouraging a global shift to cleaner production methods will require international cooperation, including trade measures that enable expensive low-carbon investments and penalize high-emissions steel production.</p>
<p>President Joe Biden needed an approach to climate tariffs that would benefit U.S. producers without requiring a politically untenable carbon price. His <a href="https://www.nytimes.com/2022/12/07/business/economy/steel-tariffs-climate-change.html">proposed</a> green steel club is an agreement among countries that would commit their steel and aluminum industries to meeting certain emissions standards. Tariffs would be imposed on imports that exceed the standard or come from countries that are not signatories to the agreement.</p>
<p>Most U.S. manufacturers would benefit. U.S. steel typically produces fewer emissions than its competitors. The desire to exploit this “<a href="https://clcouncil.org/report/americas-carbon-advantage/">carbon advantage</a>” has taken hold with politicians on <a href="https://www.eenews.net/articles/republicans-propose-border-carbon-tax/">both</a> <a href="https://www.coons.senate.gov/news/press-releases/sen-coons-rep-peters-introduce-legislation-to-support-us-workers-and-international-climate-cooperation">sides</a> of the aisle.</p>
<p>Biden’s plan could be the first “climate club” of nations, consistent with the recommendations of an increasing <a href="https://rooseveltinstitute.org/publications/a-green-steel-deal-towards-pro-jobs-pro-climate-trans-atlantic-cooperation-on-carbon-border-measure/">number</a> of <a href="https://www.nature.com/articles/s41558-022-01383-9">policy experts</a>. In <a href="https://press.princeton.edu/books/hardcover/9780691224558/fixing-the-climate">a recent book</a>, Charles Sabel and David Victor suggest building on the international success in phasing out ozone-depleting chemicals: <a href="https://www.unep.org/ozonaction/who-we-are/about-montreal-protocol">The Montreal Protocol</a> used a combination of cooperative learning, penalties and pools of resources for countries in need of technical and financial support.</p>
<h2>Creative ways to cooperate</h2>
<p>The two visions for climate policy tariffs involve different paths toward somewhat different goals, so they cannot easily be reconciled. The premise of the EU strategy is that tariffs are necessary to ensure that climate policies impose the same costs on domestic and foreign emitters. In contrast, the U.S. is proposing tariffs that penalize producers with high emissions.</p>
<p>The U.S. cannot pursue the EU approach without some form of a national carbon price. At the same time, the EU is unlikely to abandon its long-planned and laboriously negotiated CBAM, particularly to partner with a White House that may have a different occupant in two years.</p>
<p>There are, however, pathways forward that blend elements of both visions.</p>
<figure class="align-center ">
<img alt="Two men in business suits, one with dark hair and one with white hair, gesture as they talk to each other and walk along a formal colonnade." src="https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/505456/original/file-20230119-13-enre46.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Biden and French President Emmanuel Macron have clashed over subsidy rules in the Inflation Reduction Act.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/president-joe-biden-and-french-president-emmanuel-macron-news-photo/1245271895">Jim Watson-Pool/Getty Images</a></span>
</figcaption>
</figure>
<p>For example, parts of the CBAM, including the linkage to the EU carbon price, could be included as elements of climate clubs, including Biden’s green steel club. That may enable the EU to retain hard-fought progress on its emissions trading system.</p>
<p>Alternatively, some U.S. senators <a href="https://www.whitehouse.senate.gov/news/release/whitehouse-and-colleagues-introduce-clean-competition-act-to-boost-domestic-manufacturers-and-tackle-climate-change">are pushing legislation</a> to create a U.S. carbon border adjustment, including a domestic carbon price and a tariff on imports of some energy-intensive products like steel and aluminum. Bipartisan support for such legislation would create a basis for a durable compromise with the EU. However, even a narrow carbon price on industrial products may not be politically viable in the Republican-controlled House of Representatives.</p>
<h2>Looking ahead</h2>
<p>Any unilateral use of tariffs will strain sensitive geopolitical relationships.</p>
<p>By pursuing compromise rather than conflict, the U.S. and EU can leverage their joint economic strength to create a powerful coalition that encourages low-carbon industrial production around the globe, including in China and India, without ceding domestic advantages.</p>
<p>In our view, both sides have ample reasons to find common ground.</p><img src="https://counter.theconversation.com/content/198072/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Noah Kaufman is a research scholar at Columbia University's SIPA Center on Global Energy Policy. He was previously a senior economist at the Council of Economic Advisers. </span></em></p><p class="fine-print"><em><span>Chris Bataille is an Adjunct Research Fellow with the Center for Global Energy Policy (CGEP) of Columbia University’s School of International and Public Affairs (SIPA).</span></em></p><p class="fine-print"><em><span>Gautam Jain is a Senior Research Scholar at the Center on Global Energy Policy (CGEP) of Columbia University’s School of International and Public Affairs (SIPA)</span></em></p><p class="fine-print"><em><span>Sagatom Saha is an adjunct research scholar at Columbia University's SIPA Center on Global Energy Policy. He previously served in the International Trade Administration at the U.S. Commerce Department and the Office of the Special Presidential Envoy for Climate.</span></em></p>Both sides have reason to find common ground, says a group of energy and climate policy analysts.Noah Kaufman, Research Scholar in Climate Economics, Columbia UniversityChris Bataille, Research Fellow in Energy and Climate Policy, Columbia UniversityGautam Jain, Senior Research Scholar in Financial Markets, Columbia UniversitySagatom Saha, Research Scholar in Energy Policy, Columbia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1739222021-12-17T16:50:58Z2021-12-17T16:50:58ZCOP26 agreed rules on trading carbon emissions – but they’re fatally flawed<figure><img src="https://images.theconversation.com/files/438215/original/file-20211217-27-193qg9l.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6000%2C3071&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/jiujiang-china-jan10-2021-smoky-smokestacks-1891775509">Humphery/Shutterstock</a></span></figcaption></figure><p>One surprise from COP26 – the latest UN climate change conference in Glasgow – was an agreement between world leaders on a new set of rules for regulating carbon markets. This would allow countries to trade the right to emit greenhouse gases.</p>
<p>Carbon trading is part of how countries intend to meet their obligations for reducing emissions under the Paris Agreement. Unfortunately, the manner in which countries agreed these rules may hobble the Agreement in its goal of averting catastrophic warming.</p>
<p>Carbon markets were central to the design of the Paris Agreement’s predecessor, the 1997 Kyoto Protocol, which created three different mechanisms for trading carbon. Developing countries had become accustomed to attracting investment via one called the “Clean Development Mechanism” (CDM) which allowed industrialised countries to invest in projects to reduce emissions in developing countries and count them against their own targets under the Kyoto Protocol. Many industrialised countries wanted to retain this sort of flexibility in how they met their own treaty obligations.</p>
<p>As a result, most governments were keen to keep carbon markets as part of the Paris Agreement. In Paris in 2015, the bare bones of mechanisms similar to those in the Kyoto Protocol were agreed, but without the details needed to put them into practice.</p>
<p>Why then did it take six years to agree the rules which would govern these markets? This was more than the four years it took countries to do the same in the Kyoto Protocol and, in effect, they were recreating the same mechanisms. The problems in reaching an agreement this time were three-fold, and they weren’t satisfactorily resolved in Glasgow.</p>
<h2>Going backwards from Kyoto</h2>
<p>Various states, and many environmental campaign groups, suspect that carbon markets weaken the overall effort to reduce emissions. As climate change has accelerated over the past decade these concerns have become more acute. Why trade emissions if everyone is trying to get them to zero? There is <a href="https://iopscience.iop.org/article/10.1088/1748-9326/abdae9/meta">considerable evidence</a> that carbon offset projects – such as wind farms, which emissions trading can fund – have failed to deliver a reduction in overall emissions. A 2017 study led by the EU Commission found that <a href="https://ec.europa.eu/clima/system/files/2017-04/clean_dev_mechanism_en.pdf">85% of projects</a> funded by the CDM hadn’t reduced emissions. </p>
<p>There are also fundamental design issues in the Paris Agreement that make setting up carbon markets under it much more difficult. The Kyoto Protocol expressed the obligations of industrialised states to reduce their emissions as targets. These could be translated into a fixed number of emissions allowances that provided carbon markets with a clear set of accounting rules and indicators of market demand.</p>
<p>No such set of rules exists in the Paris Agreement. Instead, all states submit their nationally determined contributions (NDCs) – national plans for reducing emissions. They may or may not have an emissions target and they vary in how they account for emissions or which sources of emissions they include in their plans. How can a market function if there is no clear way of measuring what is being traded? And how should a country trading with another adjust its own NDC to avoid double-counting, when the design of each country’s NDC varies so much?</p>
<p>And what should countries do with all the credits created in the Kyoto Protocol’s system? Should they just be rolled over to be used in the new markets? Should they be simply abandoned? Or is there some way of allowing them in but controlling their use? A lot of CDM credits in particular remain, and they could flood the new markets and undermine the integrity of the NDCs.</p>
<h2>A cop out</h2>
<p>In the first week of COP26, it looked like these issues would continue to dog the negotiations. India supported unrestricted use of CDM credits in the new mechanism while the Solomon Islands (representing the Least Developed Countries group) opposed using them at all. In week two, these issues were either fudged or hastily agreed. The <a href="https://www.ieta.org/page-18192/12124951">carbon traders were happy</a>, as were the managers of the COP26 process – the UN secretariat and the UK government. We can now see the cost of failing to grapple with these thorny issues.</p>
<p>The Glasgow decisions on both Article <a href="https://unfccc.int/sites/default/files/resource/Art._6.2%2520_draft_decision.pdf">6.2</a> and <a href="https://unfccc.int/sites/default/files/resource/Art.6.4%2520draft_decision.v4.pdf">6.4</a> of the Paris Agreement are extraordinarily unclear compared with the equivalent ones for the Kyoto Protocol. Specialists in this field are still decoding precisely what they mean in practical terms. It’s likely that states will be able to use this opacity to double-count and claim credit for the same emissions-reducing activities.</p>
<p>Countries are supposed to set new NDCs regularly. At the same time, countries will be negotiating individual emission trades. The possibility for a country to game its NDC – making it appear more ambitious than it really is by counting already agreed trades within them – is impossible to avoid. It’s hard to see how this doesn’t fundamentally weaken the ambition of countries when updating their NDCs.</p>
<p>Monitoring how these mechanisms work in practice and whether they have the desired effect will be important over the coming years. While heralded at the time as a breakthrough in implementing significant tracts of the Paris Agreement, the Glasgow pact on carbon markets might instead be remembered as its undoing.</p>
<hr>
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<img alt="Imagine weekly climate newsletter" src="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/434988/original/file-20211201-21-13avx6y.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p class="fine-print"><em><span>Matthew Paterson is a member of the Green Party. </span></em></p>The dust has settled on COP26 and one of the summit’s few achievements looks decidedly less impressive.Matthew Paterson, Professor of International Politics, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1725582021-11-29T18:19:10Z2021-11-29T18:19:10ZWe were at COP26: It had mixed results<figure><img src="https://images.theconversation.com/files/434001/original/file-20211125-13-196zh4q.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C5982%2C3970&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Delegates having worked on Article 6 of the Paris Agreement pose for a photo in Glasgow on Nov. 13, 2021. </span> <span class="attribution"><span class="source">(AP Photo/Alberto Pezzali)</span></span></figcaption></figure><p>The recent COP26 was eagerly awaited. Originally planned for 2020, <a href="https://unfccc.int/news/cop26-postponed">the event was postponed due to the COVID-19 pandemic</a>. It was also meant to be a major step toward implementing the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris Agreement</a>.</p>
<p>According to the <a href="https://www.ipcc.ch/assessment-report/ar6/">Sixth Report of the Intergovernmental Panel on Climate Change</a> (IPCC) published in August 2021, the climate crisis has never been more urgent. A couple of weeks after the summit and the adoption of the <a href="https://unfccc.int/sites/default/files/resource/cop26_auv_2f_cover_decision.pdf">Glasgow Climate Pact</a>, it’s time to look back at the event, both on paper and on the ground.</p>
<p>We are researchers in environmental law and governance from the University of Ottawa and the University of Cambridge. Three of us were on site in Glasgow and had the privilege of observing COP26 first-hand for the <a href="https://www.cqde.org/en/">Centre Québécois du droit de l'environnement (Québec Centre for Environmental Law)</a>.</p>
<figure class="align-center ">
<img alt="A woman surrounded by two men in front of a COP26 poster" src="https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432691/original/file-20211118-16-1295o5f.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">From left to right: Thomas Burelli, Lauren Touchant and Alexandre Lillo, the three representatives of the Centre Québécois du droit de l'environnement at COP26.</span>
<span class="attribution"><span class="source">(Thomas Burelli)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Access, inequalities and transparency</h2>
<p>COP26 had a strange flavour, having been organized in the middle of a pandemic. Preparations were marked by <a href="https://www.cnn.com/2021/09/07/world/groups-call-for-cop26-postponement-covid-climate-intl/index.html">complexity and uncertainty</a>, and access issues were omnipresent.</p>
<p>Physical access to the site was a <a href="https://twitter.com/COP26/status/1455522548146393097?s=20">challenge from the start</a>. The combination of health restrictions and security measures meant that there were long waiting times for many participants, <a href="https://twitter.com/Emilia_Equidad/status/1455126526555566081?t=GvjW8XDUWRy5s1YZGWI-dQ&s=19">sometimes up to several hours</a>. </p>
<p>The congestion was predictable: the event had a <a href="https://www.bbc.com/news/uk-scotland-59150987">single entry point</a>. Nearly <a href="https://unfccc.int/sites/default/files/resource/PLOP_COP26.pdf">40,000 accreditations</a> were distributed, while health restrictions meant that the capacity of the venue was <a href="https://unfccc.int/cop26/Covid-19-protection-measures#eq-1">limited to about 10,000 people</a>. The access issues quickly turned into equity ones.</p>
<figure class="align-center ">
<img alt="Alok Sharma, COP26 president" src="https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432689/original/file-20211118-19-ib5btc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">COP26 President Alok Sharma faced complex organizational problems.</span>
<span class="attribution"><span class="source">(AP Photo/Alberto Pezzali)</span></span>
</figcaption>
</figure>
<p>First, there were incidents about <a href="https://www.bbc.com/news/world-59128618">accessibility standards</a>. There was also <a href="https://www.theguardian.com/environment/2021/oct/30/cop26-will-be-whitest-and-most-privileged-ever-warn-campaigners">criticism</a> of the obstacles that delegates from developing countries faced in getting to the negotiation tables. </p>
<p>Travel restrictions, visa problems, access to the COVID-19 vaccine and affordable lodging explained why <a href="https://www.weforum.org/agenda/2021/11/covid19-challenges-cop26-climate-talks-ledcs/">several countries and citizens’ movements were absent</a>, making this COP even <a href="https://www.cnbc.com/2021/11/05/cop26-sharply-criticized-as-the-most-exclusionary-climate-summit-ever.html">more exclusive</a> than past ones. <a href="https://www.theguardian.com/environment/2021/nov/02/cop26-indigenous-activists-climate-crisis">The presence</a> and <a href="https://www.cnn.com/2021/11/09/world/cop26-climate-talks-race-intl/index.html">role</a> of Indigenous representatives also became points of contention in public debates during the event.</p>
<p>In addition to access issues, there were ones of transparency, since obtaining accreditation did not guarantee access to critical discussions. For example, <a href="https://unfccc.int/process-and-meetings/parties-non-party-stakeholders/non-party-stakeholders/overview/how-to-obtain-observer-status">Canadian observers</a> were not allowed to attend Prime Minister Justin Trudeau’s press conference. Discussions about Article 6 of the Paris Agreement also provoked <a href="https://www.ciel.org/news/exclusion-of-human-rights-from-article-6-a-dereliction-of-duty/">debates about the inclusion of observers in the negotiations</a>.</p>
<figure class="align-center ">
<img alt="Justin Trudeau and Steven Guilbault" src="https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432686/original/file-20211118-21-14082m3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Prime Minister Justin Trudeau and Environment Minister Steven Guilbeault at a press conference in Glasgow on Nov. 2.</span>
<span class="attribution"><span class="source">The Canadian Press/Sean Kilpatrick</span></span>
</figcaption>
</figure>
<h2>Were the negotiations a success or a failure?</h2>
<p><strong>1. The 1.5 C target is alive, but in a critical condition.</strong></p>
<p>Under the Glasgow Climate Pact, states did not adopt new commitments to reduce greenhouse gas emissions. They do now recognize — following recommendations by the IPCC — the importance of reducing global emissions 45 per cent by 2030 compared to 2010 levels, and of <a href="https://unfccc.int/documents/310497">achieving carbon neutrality around 2050</a>.</p>
<p>However, there is still a huge gap between these targets and the commitments states have made to date. That could lead to an overall increase in emissions of 13.7 per cent compared to 2010 levels. The fact that only 112 states have updated their <a href="https://www4.unfccc.int/sites/ndcstaging/Pages/LatestSubmissions.aspx">nationally determined contributions (NDCs)</a> is also worrying. </p>
<hr>
<p>
<em>
<strong>
À lire aussi :
<a href="https://theconversation.com/cop26-how-the-world-will-measure-progress-on-the-paris-climate-agreement-and-keep-countries-accountable-160325">COP26: How the world will measure progress on the Paris climate agreement and keep countries accountable</a>
</strong>
</em>
</p>
<hr>
<p>States that have not provided the required update this year are invited to do so as soon as possible before the next COP. While the fact that the 1.5 C degree temperature increase target remains “alive” is a positive sign, concrete measures to achieve it are still lacking.</p>
<p><strong>2. Unprecedented progress towards ending fossil fuel use</strong></p>
<p>One of the most important advances made at COP26 was the mention of fossil fuels and coal in the pact. Indeed, for the first time, <a href="https://www.thestar.com/news/canada/2021/11/23/the-elephant-of-fossil-fuels-is-not-even-in-the-room-at-un-climate-summit.html">the elephant in the room</a> was included in the outcome of a COP. Parties are called upon to accelerate efforts to “phase down” unabated coal power and to phase out “inefficient” fossil fuel subsidies.</p>
<figure class="align-center ">
<img alt="Open-pit coal mine" src="https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432695/original/file-20211118-24-lg7dhy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Fuxin open-pit coal mine in China. For the first time, the elephant in the room — fossil fuels and coal — has been included in the outcome of a COP.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>It was about time, even if the wording of the text was <a href="https://www.bbc.com/news/uk-59280241">weakened at the last minute</a>. The strong presence of <a href="https://www.bbc.com/news/science-environment-59199484">fossil fuel lobbies</a> during the negotiations must be noted.</p>
<hr>
<p>
<em>
<strong>
À lire aussi :
<a href="https://theconversation.com/climate-change-denial-2-0-was-on-full-display-at-cop26-but-there-was-also-pushback-171639">Climate change denial 2.0 was on full display at COP26, but there was also pushback</a>
</strong>
</em>
</p>
<hr>
<p>COP26 was also an opportunity to launch or strengthen certain alliances between states. This was the case, for example, of the <a href="https://www.poweringpastcoal.org/">Powering Past Coal Alliance</a>, co-founded by Canada, which aims to eliminate <a href="https://www.canada.ca/en/services/environment/weather/climatechange/canada-international-action/coal-phase-out/alliance-declaration.html">unabated coal power</a>. It now has 165 members (<a href="https://www.poweringpastcoal.org/members">national governments, regional governments and various organizations</a>), including 28 that joined during COP26.</p>
<p>Another example is the <a href="https://beyondoilandgasalliance.com/">Beyond Oil and Gas Alliance</a>, which aims to phase out the use of fossil fuels. <a href="https://montreal.ctvnews.ca/quebec-says-no-to-oil-exploration-and-development-1.5652053">Québec</a> joined, but not Canada. Finally, some 20 states, including Canada, have committed to <a href="https://www.ctvnews.ca/politics/canada-u-s-say-end-fossil-fuel-subsidies-as-cop26-draft-called-weasel-words-1.5663944">ending new international fossil fuels subsidies</a>.</p>
<p>These agreements, which are concluded in parallel to the main negotiations, may allow states to take action on issues where there is still no international consensus. </p>
<figure class="align-center ">
<img alt="A man and a woman, from behind, contemplate the space set up for COP26" src="https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432692/original/file-20211118-28-1xho08e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Thomas Burelli and Lauren Touchant in the Action Zone (media and conferences) at the COP26 site.</span>
<span class="attribution"><span class="source">(Thomas Burelli)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p><strong>3. Missed targets to support the South</strong></p>
<p>At COP15 in Copenhagen in 2009, developed countries pledged to financially assist developing countries in mitigating climate change by mobilizing a variety of financial sources amounting to <a href="https://unfccc.int/resource/docs/2009/cop15/eng/11a01.pdf#page=4">US$100 billion per year</a> by 2020. Unfortunately, this target was missed.</p>
<p><a href="https://www.cbc.ca/news/politics/cop26-developed-world-falls-short-1.6223735">Canada and Germany did show some leadership</a> in mobilizing new funding to help vulnerable countries adapt. Indeed, Canada announced at the G7 Summit in June that it was doubling its climate finance to <a href="https://pm.gc.ca/en/news/news-releases/2021/06/13/prime-minister-concludes-productive-g7-leaders-summit-united-kingdom">$5.3 billion over five years</a>.</p>
<hr>
<p>
<em>
<strong>
À lire aussi :
<a href="https://theconversation.com/cop26-4-ways-rich-nations-can-keep-promises-to-curb-emissions-and-fund-climate-adaptation-170062">COP26: 4 ways rich nations can keep promises to curb emissions and fund climate adaptation</a>
</strong>
</em>
</p>
<hr>
<p>Recognizing the failure of developed countries to stick to their financial commitments, the <a href="https://unfccc.int/documents/310497">Glasgow Climate Pact</a> urges them to reach the US$100 billion yearly target as soon as possible, pending the adoption of a new and much more ambitious target in 2025. At the same time, developed countries are urged to <a href="https://unfccc.int/documents/310497">at least double their contributions</a> to climate change adaptation in developing countries.</p>
<p>During the climate finance negotiations, developing countries and island states called for the <a href="https://www.nature.com/articles/d41586-021-02846-3">establishment of a mechanism to finance the loss and damage</a> resulting from climate change. The Glasgow Climate Pact does not satisfy this demand. It only calls for “dialogue” on the issue and mentions the allocation of funding, as yet unknown, to the <a href="https://unfccc.int/santiago-network">Santiago Network</a>.</p>
<p>COP26 therefore marks broken promises on climate finance, and did not bring new and specific targets to help vulnerable countries, developing and island countries in particular, cope with the climate emergency although their needs are growing exponentially.</p>
<figure class="align-center ">
<img alt="Marshallese delegate at COP26" src="https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432688/original/file-20211118-19-11mr2lg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Kristina E. Stege, delegate from the Marshall Islands, attends a plenary session. COP26 did not provide new targets to support developing and island countries in dealing with the climate emergency.</span>
<span class="attribution"><span class="source">(AP Photo/Alberto Pezzali)</span></span>
</figcaption>
</figure>
<p><strong>4. Emissions-trading rules finally adopted, but weak</strong></p>
<p>One of the key objectives of COP26 was to develop the <a href="https://unfccc.int/sites/default/files/resource/cma3_auv_12b_PA_6.4.pdf">rules for emissions trading</a> based on Article 6 of the Paris Agreement, which allows countries and companies to buy credits generated by others and to subtract these from their own emissions inventories.</p>
<hr>
<p>
<em>
<strong>
À lire aussi :
<a href="https://theconversation.com/cop26-strong-carbon-trading-rules-could-help-the-world-avoid-dangerous-levels-of-global-warming-151172">COP26: Strong carbon-trading rules could help the world avoid dangerous levels of global warming</a>
</strong>
</em>
</p>
<hr>
<p>Parties were unable to adopt the necessary rules at COP24 in Katowice or <a href="https://www.carbonbrief.org/in-depth-q-and-a-how-article-6-carbon-markets-could-make-or-break-the-paris-agreement">at COP25 in Madrid</a>. Their adoption in Glasgow can therefore be considered a success.</p>
<p>One can be more critical of the Glasgow outcome in terms of the impacts that some emissions-trading projects may have on local communities. Since COP21, <a href="https://cclr.lexxion.eu/article/CCLR/2019/3/5">several proposals</a> have been made on this issue, including the possibility of creating a human rights-based appeal against the certification of projects aimed at removing emissions.</p>
<p>Indeed, as shown by <a href="https://www.ciel.org/news/exclusion-of-human-rights-from-article-6-a-dereliction-of-duty/">cases in Chile and Panama</a>, many credits allowed under the Kyoto Protocol are associated with rights violations. An appeal mechanism was adopted in Glasgow, but it is fragile. With non-governmental organizations such as <a href="https://www.amnesty.org/en/wp-content/uploads/2021/11/IOR4049812021ENGLISH-1.pdf">Amnesty International</a> sounding the alarm, the purchase of carbon credits by governments, companies and individuals in Canada is far from a straightforward option for achieving net-zero emissions.</p>
<h2>Already looking ahead to the next COP</h2>
<p>According to the COP26 presidency, while “Paris promised, Glasgow must deliver.” It is clear that Glasgow did not deliver on everything. COP26 did see some progress and new announcements, but the national commitments — in addition to having to pass the implementation test — fall far short of what science requires.</p>
<hr>
<p>
<em>
<strong>
À lire aussi :
<a href="https://theconversation.com/climate-clock-reset-shows-the-world-is-one-year-closer-to-1-5-c-warming-threshold-169122">Climate clock reset shows the world is one year closer to 1.5 C warming threshold</a>
</strong>
</em>
</p>
<hr>
<p>The 1.5 C degree target is <a href="https://ukcop26.org/cop26-keeps-1-5c-alive-and-finalises-paris-agreement/">still alive</a>, but one wonders how long it will survive. <a href="https://climateactiontracker.org/global/temperatures/">Various estimates</a> produced before and during the negotiations to take new commitments into account predict a temperature rise of <a href="https://www.iea.org/commentaries/cop26-climate-pledges-could-help-limit-global-warming-to-1-8-c-but-implementing-them-will-be-the-key">1.8 C</a> to <a href="https://unfccc.int/sites/default/files/resource/cma2021_08r01_E.pdf">2.7 C</a>. Yet measures to meet these commitments are often missing.</p>
<figure class="align-center ">
<img alt="Yasmine Fouad at COP26" src="https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/432687/original/file-20211118-27-1yyjtay.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Egypt’s Environment Minister Yasmine Fouad in Glasgow, Scotland. Her country will host the next climate summit, COP27, in 2022.</span>
<span class="attribution"><span class="source">(AP Photo/Alberto Pezzali)</span></span>
</figcaption>
</figure>
<p>We are a long way from achieving the 1.5 C degree target, which would still have very serious consequences for our societies and an even greater impact on the most vulnerable countries, groups and individuals.</p>
<p>In addition to the health challenges that are once again on the horizon, <a href="https://www.independent.co.uk/voices/campaigns/giantsclub/cop-27-africa-climate-conversations-b1957738.html">COP27</a>, which takes place in Egypt next year, promises to be a major meeting as the UN Convention on Climate Change marks its 30th anniversary. Given the lack of progress since the <a href="https://www.un.org/french/events/rio92/rio-fp.htm">1992 Earth Summit</a>, the primary focus of COP27 should be the achievement of the numerous goals and targets that have been announced over the years.</p><img src="https://counter.theconversation.com/content/172558/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Burelli is a member of the University of Ottawa. He co-directs the Centre for Environmental Law and Global Sustainability at the University of Ottawa. He received funding from the Centre for Environmental Law and Global Sustainability to follow COP26 in Glasgow. He participated in COP26 as an observer on behalf of the Quebec Environmental Law Centre. He is a member of the Alex Trebek Dialogue Forum. </span></em></p><p class="fine-print"><em><span>Alexandre Lillo is a member of the Public Law Centre and the Forum on Water Law and Governance at the University of Ottawa. He received funding from the Public Law Centre to attend COP26 in Glasgow. He participated in COP26 as an observer on behalf of the Centre québécois du droit de l'environnement. His postdoctoral research is funded by the Alex Trebek Forum Dialogue.</span></em></p><p class="fine-print"><em><span>Christopher Campbell-Duruflé is a Fellow at the Cambridge Center for Environment, Energy and Natural Resource Governance (C-EENRG) and a member of the Legal Committee of the Quebec Environmental Law Centre. His post-doctoral research is funded by the Social Sciences and Humanities Research Council of Canada (SSHRC).</span></em></p><p class="fine-print"><em><span>Lauren Touchant is a post-doctoral fellow at the Centre for Governance Studies and the Centre for Environmental Law and Global Sustainability at the University of Ottawa as part of the University of Ottawa Forum on Water Law and Governance, funded by the Alex-Trebek Dialogue Forum. Lauren received funding from the Centre for Governance Studies to participate as an observer at COP26 in Glasgow. She was accredited by the Quebec Environmental Law Centre.</span></em></p>COP26 saw progress and announcements, but the commitments made by states — in addition to having to pass the test of implementation —fall far short of what the science requires.Thomas Burelli, Professeur en droit, Section de droit civil, Université d’Ottawa (Canada), membre du Conseil scientifique de la Fondation France Libertés, L’Université d’Ottawa/University of OttawaAlexandre Lillo, Postdoctoral Fellow, Centre de droit public, L’Université d’Ottawa/University of OttawaChristopher Campbell-Duruflé, Banting Postdoctoral Fellow, Department of Land Economy, University of CambridgeLauren Touchant, Postdoctoral fellow, Centre d’études en gouvernance et du Centre de droit de l’environnement et de la durabilité mondiale, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1711942021-11-11T22:05:48Z2021-11-11T22:05:48ZCOP26: New Zealand depends on robust new rules for global carbon trading to meets its climate pledge<figure><img src="https://images.theconversation.com/files/431467/original/file-20211111-17-1p3uta1.jpg?ixlib=rb-1.1.0&rect=80%2C74%2C4412%2C2916&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock/rafapress</span></span></figcaption></figure><p>As the <a href="https://ukcop26.org/">COP26</a> climate summit draws to a close, debate continues on one key issue in particular: a new rule book for global carbon trading to allow countries to purchase emissions reductions from overseas to count towards their own climate action.</p>
<p>The world has generally welcomed headline-grabbing <a href="https://www.theguardian.com/environment/2021/nov/07/so-what-has-cop26-achieved-so-far">agreements</a> on halting deforestation and tackling methane and <a href="https://ukcop26.org/end-of-coal-in-sight-at-cop26/">coal</a>. Likewise ambitious commitments from some large polluters, most notably <a href="https://www.theguardian.com/environment/2021/nov/07/so-what-has-cop26-achieved-so-far">India’s pledge</a> to reach net zero carbon by 2070. </p>
<p>But the devil is in the detail and there is serious concern that some of these commitments are only voluntary, while others look unachievable. </p>
<p>Defining the rules for international carbon trading is a contentious agenda item — but one that will partly determine whether countries can meet their pledges and collectively limit global warming to <a href="https://www.theguardian.com/environment/2021/nov/05/president-of-paris-summit-says-18c-commitment-is-only-hypothetical">as close to 1.5°C as possible</a>.</p>
<p>The new rules, known as <a href="https://www.carbonbrief.org/in-depth-q-and-a-how-article-6-carbon-markets-could-make-or-break-the-paris-agreement">Article 6</a> under the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris Agreement</a>, will be important for New Zealand. </p>
<p>During COP26, New Zealand announced its new Nationally Determined Contribution (<a href="https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs/nationally-determined-contributions-ndcs">NDC</a>) to reduce emissions by <a href="https://www.nzherald.co.nz/nz/politics/climate-change-conference-emissions-to-be-cut-by-50-per-cent-below-2005-levels-by-2030/WRDDTBYBIRDSOTQSDP7UH6KWLI/">50% on 2005 levels by 2030</a>. </p>
<p>Prime Minister Jacinda Ardern described this as “our fair share” and it is indeed a significant step up on New Zealand’s previous pledge to cut emissions by 30%. It leaves the country with 571 Megatons of CO₂-equivalent emissions to “spend” between 2022 and 2030.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/cop26-new-zealands-new-climate-pledge-is-a-step-up-but-not-a-fair-share-170932">COP26: New Zealand's new climate pledge is a step up, but not a 'fair share'</a>
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<h2>New rules for global carbon trading</h2>
<p>The New Zealand government stated its “<a href="https://www.nzherald.co.nz/nz/politics/climate-change-conference-emissions-to-be-cut-by-50-per-cent-below-2005-levels-by-2030/WRDDTBYBIRDSOTQSDP7UH6KWLI/">first priority</a>” was to reduce domestic emissions, but it acknowledged that alone could not meet the country’s new pledge. In fact, two thirds of the promised emissions reductions will have to come through overseas arrangements, especially with nations in the Asia-Pacific region.</p>
<p>The <a href="https://www.climatecommission.govt.nz/our-work/advice-to-government-topic/inaia-tonu-nei-a-low-emissions-future-for-aotearoa/test-summary/">Climate Change Commission</a> has been critical of this approach, describing it as “purchasing offshore mitigation, rather than [doing] what was necessary to achieve actual emissions reductions at source”. </p>
<p>But the approach is allowed under the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">Paris Agreement</a>, which all states at COP26 have signed up to. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1458083472464023572"}"></div></p>
<p>This would allow one country to buy credits from another country that has exceeded its NDC, or to carry out activities that reduce emissions in another (host) country and count those towards its own NDC. It also supports non-market approaches to climate cooperation between countries around technology transfer, finance and capacity building. </p>
<p>But these provisions have proved contentious, not least because they could result in double counting of emissions reductions, unless clear and robust operational rules are agreed. The COP26 summit has made some progress on this, but many finer details are yet to be resolved.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/big-business-greenwash-or-a-climate-saviour-carbon-offsets-raise-tricky-moral-questions-171295">Big-business greenwash or a climate saviour? Carbon offsets raise tricky moral questions</a>
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<h2>Cutting emissions at home versus elsewhere</h2>
<p>Uncertainty about carbon market rules will be particularly problematic for New Zealand, given its reliance on overseas activities to meet its new NDC. There are also practical questions around how much of these activities will count towards New Zealand’s NDC, and how ready potential partners in the Pacific are for such carbon market trading mechanisms. </p>
<p>Pacific Island nations are not currently trading or part of established carbon markets. They may not be able to develop the necessary technical expertise to ensure fairness, compliance and transparency well in advance of 2030.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cop26-time-for-new-zealand-to-show-regional-leadership-on-climate-change-170785">COP26: time for New Zealand to show regional leadership on climate change</a>
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<p>While there is scope to pursue opportunities to reduce emissions beyond our shores, we should be looking harder at what can be done domestically to help fulfil our NDC in the short time available.</p>
<p>Public <a href="https://consult.environment.govt.nz/climate/emissions-reduction-plan/">consultation</a> on the government’s first <a href="https://environment.govt.nz/publications/emissions-reduction-plan-discussion-document/">emissions reduction plan</a> is currently underway until November 24. A final version is due in May 2022 and is expected to set out strategies for specific sectors (transport, energy and industry, agriculture, waste and forestry) to meet emissions budgets. </p>
<p>It will also include a multi-sector plan to adapt to climate change, and to mitigate the impacts emissions cuts may have on people.</p>
<p>It’s not ideal that a concrete plan for domestic emissions reductions is still six months away. But this does provide opportunity for people and interest groups to help shape priorities and pathways, and to encourage the government to set bolder domestic targets than would otherwise have been likely. </p>
<p>The Climate Change Commission has already produced <a href="https://www.climatecommission.govt.nz/our-work/reducing-emissions/">recommendations for a low-emissions Aotearoa</a>, including the rapid adoption of electric vehicles, reduction in animal stocking rates and changing land use towards forestry and horticulture. </p>
<p>Now is also the time to start building capacity to support Pacific Island nations in designing their carbon market policies. New Zealand has already <a href="https://www.beehive.govt.nz/release/new-zealand-increases-climate-aid-contribution">pledged NZ$1.3 billion</a> in funding for climate change aid, about half of which will go to Pacific Island countries. </p>
<p>Allocating some of this to enhancing technical know-how will help create a level playing field in carbon trading. It would ensure that whichever overseas arrangements materialise, these will be fair and deliver an “<a href="https://unfccc.int/sites/default/files/english_paris_agreement.pdf">overall mitigation in global emissions</a>”, as the Paris Agreement requires.</p>
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<img alt="COP26: the world's biggest climate talks" src="https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/424739/original/file-20211005-17-cgrf2z.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><strong>This story is part of The Conversation’s coverage on COP26, the Glasgow climate conference, by experts from around the world.</strong>
<br><em>Amid a rising tide of climate news and stories, The Conversation is here to clear the air and make sure you get information you can trust. <a href="https://page.theconversation.com/cop26-glasgow-2021-climate-change-summit/"><strong>More.</strong></a></em> </p>
<hr><img src="https://counter.theconversation.com/content/171194/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Uncertainty about carbon market rules will be problematic for New Zealand, given its reliance on overseas carbon trading to meet its new climate pledge.Nathan Cooper, Associate Professor of Law, University of WaikatoKemi Hughes, Doctoral Researcher in Climate Change Governance, University of WaikatoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1626572021-06-17T02:14:26Z2021-06-17T02:14:26ZWhy a carbon price alone won’t be enough to drive down New Zealand’s emissions<figure><img src="https://images.theconversation.com/files/406891/original/file-20210616-21-hzbrul.jpg?ixlib=rb-1.1.0&rect=0%2C160%2C8243%2C5302&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Kai Schwoerer/Getty Images</span></span></figcaption></figure><p>With its emissions budgets, the <a href="https://www.climatecommission.govt.nz/">Climate Change Commission</a>’s <a href="https://www.climatecommission.govt.nz/our-work/advice-to-government-topic/inaia-tonu-nei-a-low-emissions-future-for-aotearoa/">final advice to the government</a> charts a course towards a low-emissions economy. But its comprehensive policy package is arguably the more decisive element — targets can only be achieved if the right policies are in place.</p>
<p>For many years, the Emissions Trading Scheme (<a href="https://environment.govt.nz/what-government-is-doing/key-initiatives/ets/">ETS</a>) has been the government’s primary policy response to climate change. It puts a price on greenhouse gas emissions, but given New Zealand’s failure to cut emissions, its efficacy has been called into question.</p>
<p>In part, this failure is circumstantial. The ETS was <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9781003014249-7/rhetoric-reality-new-zealand-climate-leadership-david-hall">deliberately hobbled</a> by the fifth National government to “moderate” its impact on the economy in the wake of the 2008 global financial crisis. </p>
<p>But recent changes to the ETS settings, especially the introduction of a <a href="https://www.beehive.govt.nz/release/emission-trading-reforms-another-step-meeting-climate-targets">flexible cap on the total emissions allowed in the scheme</a>, make it more rigorous than ever. The price of New Zealand units (NZUs) has risen correspondingly and, <a href="https://link.springer.com/article/10.1007%2Fs10640-020-00436-x">presumably</a>, behaviour change will follow. Or will it?</p>
<p>The commission has taken a clear position that emissions pricing, while necessary for driving the low-emissions transition, is not sufficient. To drive down emissions, the ETS needs complementary policies and tools. Hence the commission’s endorsement of a comprehensive policy package.</p>
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<em>
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Read more:
<a href="https://theconversation.com/climate-explained-how-emissions-trading-schemes-work-and-they-can-help-us-shift-to-a-zero-carbon-future-122325">Climate explained: how emissions trading schemes work and they can help us shift to a zero carbon future</a>
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<p>This has proven controversial <a href="https://www.nzherald.co.nz/business/richard-prebble-new-climate-report-is-just-socialist-quackery/WLMWYWJY7VIJNFSVRY7N4TLNDY/">domestically</a>, but it is the standard view in international climate policy circles, including among many economists. A <a href="https://wagner.nyu.edu/files/events/docs/Jenkins%20Stokes%20Wagner%202020%20Carbon%20Pricing%20Workshop.pdf">recent expert workshop</a> in the US concluded that:</p>
<blockquote>
<p>Carbon pricing cannot stand alone. Politically feasible carbon pricing policies are not sufficient to drive emissions reductions or innovation at the scale and pace necessary.</p>
</blockquote>
<p>Why is this the case? Because the real world is <a href="https://www.nature.com/articles/d41586-021-01500-2">more complicated</a> than economic models typically allow.</p>
<h2>Not just market fixing</h2>
<p>There are many finicky obstacles to behaviour change, even when an adequate carbon price is in place. </p>
<p>Consumers may lack adequate information, or lack access to capital to purchase cleaner technology (such as electric cars), or lack the authority to respond to the price signal (such as a building tenant who carries the cost of electricity but cannot undertake energy efficiency improvements to a building she does not own). Not every such barrier will require a regulatory solution, but sometimes this will be just the ticket.</p>
<p>Beyond market fixing, there are deeper challenges to market-based approaches such as emissions pricing.</p>
<p>In theory, an emissions price enables markets to identify the least-cost emissions reductions. This is valuable because the more cost-effective the climate policy, the more resources are left over to do further good.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">Carbon pricing works: the largest-ever study puts it beyond doubt</a>
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<p>But there are instances where more expensive options make sense, especially from the perspective of long-term strategy. It is <a href="https://www.sciencedirect.com/science/article/pii/S0921800907003552">well known</a> that investing in expensive technologies lowers their cost over time, such that steeper upfront costs are justified in the long run. </p>
<p>For example, Germany drove down the price of solar panels through feed-in tariffs, which meant Germans overpaid for electricity but also <a href="https://www.bloombergquint.com/business/carbon-taxes-alone-aren-t-good-climate-policy-gernot-wagner">accelerated the global shift</a> to renewable energy. </p>
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<img alt="Aerial view of houses with solar panels" src="https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=295&fit=crop&dpr=1 600w, https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=295&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=295&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=370&fit=crop&dpr=1 754w, https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=370&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/406894/original/file-20210616-3759-u71y7o.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=370&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">When Germany introduced feed-in tariffs, the price of solar panels dropped.</span>
<span class="attribution"><span class="source">Shutterstock/Hennadii Filchakov</span></span>
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</figure>
<p>Similarly, in Aotearoa New Zealand, there are opportunities, especially in agriculture and land use, to make future solutions more cost competitive by investing now. </p>
<p>Take investing in native forests — it’s exactly what will reduce the relatively higher costs of establishment (compared to commercial pine plantations that have enjoyed decades of investment already). The higher cost is currently seen as a reason not to plant native forests.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/greening-the-planet-we-cant-just-plant-trees-we-have-to-restore-forests-156910">Greening the planet: we can't just plant trees, we have to restore forests</a>
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</em>
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<h2>Not so sensitive</h2>
<p>Another complication is that some sectors are more sensitive to a carbon price than others. For example, the planting of exotic forest has proved <a href="https://www.stuff.co.nz/environment/climate-news/300046434/new-zealand-could-meet-its-zero-carbon-target-at-virtually-no-economic-cost-but-is-the-social-cost-too-high">very sensitive</a> to carbon price. So too has electricity because costs are direct and alternatives are available.</p>
<p>But sectors such as agriculture and transport tend to be <a href="https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/fora97&section=88">less sensitive</a>, because costs are diffuse, cultural norms are entrenched, and alternatives are lacking.</p>
<p>An <a href="https://researcharchive.vuw.ac.nz/xmlui/bitstream/handle/10063/9120/thesis_access.pdf?sequence=1">analysis of transport</a> found an emissions price of NZ$235/tonne — about six times higher than today’s price — would be needed to align transport emissions with New Zealand’s international commitments. This is because, in order to change transport behaviour, we ultimately need to change the transport system. </p>
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<img alt="Cars on motorway" src="https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=321&fit=crop&dpr=1 600w, https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=321&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=321&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=403&fit=crop&dpr=1 754w, https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=403&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/406896/original/file-20210616-3582-9immhh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=403&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">To cut emissions from transport, the system needs to change to reduce people’s dependence on cars.</span>
<span class="attribution"><span class="source">Jason Oxenham/Getty Images</span></span>
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</figure>
<p>Existing infrastructure creates a <a href="https://www.sciencedirect.com/science/article/pii/S2214629620300633">lock-in effect</a> which keeps people in their cars even as the emissions price rises, because alternative means of mobility are inadequate. This is known as “price inelasticity” and has likely been <a href="https://www.ineteconomics.org/research/research-papers/carbon-pricing-and-the-elasticity-of-co2-emissions">significantly underestimated</a> in economic modelling. It is also the source of <a href="https://theconversation.com/why-our-response-to-climate-change-needs-to-be-a-just-and-careful-revolution-that-limits-pushback-123588">political pushback</a> because people have no choice except to bear higher costs.</p>
<p>Consequently there is a <a href="https://www.sciencedirect.com/science/article/pii/S0095069617308392">case for starting early</a>, rather than attempting an expensive transformation of the transport system only once the carbon price reaches a certain threshold. As others have <a href="https://www.sciencedirect.com/science/article/pii/S2542435118305671">said</a>:</p>
<blockquote>
<p>Carbon taxes stimulate a search for low-hanging fruit. That ceases to matter when we know we must eventually pick all of the apples on the tree.</p>
</blockquote>
<h2>A paradigm shift ahead</h2>
<p>It is time to take seriously the notion that climate policy cannot only be about correcting the status quo, but undertaking a <a href="https://www.pnas.org/content/117/16/8664">major technological transition</a>. What is required isn’t only market-fixing, but a <a href="https://www.ucl.ac.uk/bartlett/public-purpose/publications/2018/jul/economics-change-policy-and-appraisal-missions-market-shaping-and-public">mission-oriented approach</a> which embraces people’s capacity to find solutions and put them into action. </p>
<p>It also involves more than just allocating costs efficiently by emissions pricing, but searching for policy levers that trigger systems change over time, especially through <a href="https://www.tandfonline.com/doi/full/10.1080/14693062.2020.1870097">technological tipping points</a> that cascade upwards into a global-scale impact.</p>
<p>It bears emphasising that, even though there is a case for complementary policies, this does not mean every complementary policy is justified. A new way of evaluating policy options, which accounts for the risks and opportunities of the low-emissions transition, is seriously overdue. </p>
<p>Cost effectiveness ought to retain its place as an instrumental value, alongside other <a href="https://www.bwb.co.nz/books/careful-revolution/">principles of justice</a>. But the purpose of the exercise is risk mitigation — that is what climate action should be judged against. Getting that wrong will be more costly and more unjust than the burdens of the transition.</p><img src="https://counter.theconversation.com/content/162657/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Hall received funding from Biological Heritage National Science Challenge.</span></em></p>An emissions trading scheme is New Zealand’s main policy to tackle climate change. But to bring down emissions quickly enough, other policies will need to transform transport and agriculture.David Hall, Senior Lecturer in Social Sciences and Public Policy, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1582182021-04-06T20:08:57Z2021-04-06T20:08:57ZOn the road again: here’s how the states can accelerate Australia’s sputtering electric vehicle transition<figure><img src="https://images.theconversation.com/files/393501/original/file-20210406-19-1twfcl5.jpg?ixlib=rb-1.1.0&rect=49%2C33%2C5483%2C3517&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Last month, Volkswagen Australia chief Michael Bartsch <a href="https://www.smh.com.au/business/consumer-affairs/vw-boss-says-embarrassing-rules-stop-cheap-electric-car-imports-20210322-p57d85.html">revealed</a> Australia’s clean technology laws were so weak, his German head office would not supply Australians with the company’s top selling mid-range electric vehicles.</p>
<p>Without a clear policy to signal the market for electric vehicles would grow, Bartsch said, Volkswagen would instead supply popular models, such as the ID.3 hatchback and the ID.4 SUV, to more welcoming markets such as North America and Europe.</p>
<p>Undoubtedly, the Morrison government remains in the slow lane on electric vehicle policy. Its Future Fuels Strategy <a href="https://www.industry.gov.au/news/future-fuels-strategy-discussion-paper-have-your-say">discussion paper</a> rules out subsidies for electric vehicles, and the government has failed to implement fuel efficiency standards to encourage the transition away from traditional cars.</p>
<p>But as history shows, in the absence of federal leadership, states and territories can work together and step into a policy breach. Now’s the time for them to band together on electric vehicles. Here’s how they can do it.</p>
<figure class="align-center ">
<img alt="cars driving across Sydney Harbour Bridge" src="https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/393504/original/file-20210406-17-68pcvr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The states can step into the federal policy breach to promote the uptake of electric vehicles.</span>
<span class="attribution"><span class="source">PLUG ME IN</span></span>
</figcaption>
</figure>
<h2>A history of collaboration</h2>
<p>Businesses largely want to act on climate change. But without strong, consistent, legally binding policy in place many businesses worry about damage to their investments, competitiveness and profits. </p>
<p>The situation right now is reminiscent of that in the early 2000s. Then, industry called on the Howard government to provide a clear signal on emissions reduction. The pressure culminated in 2006, when businesses – including BP, IAG and Origin Energy – <a href="https://www.aph.gov.au/%7E/media/wopapub/senate/committee/climate_ctte/submissions/sub764c_pdf.ashx">declared</a> climate change was a major business risk and “the longer we delay acting, the more expensive it becomes for business and for the wider Australian economy”.</p>
<p>In the years prior, Australian states and territories had already recognised the need to act. In a remarkable collaboration in 2004, they released a discussion paper on a possible National Emissions Trading Scheme (<a href="https://www.caf.gov.au/Documents/nett-discussion-paper.pdf">NETS</a>). It aimed to “provide a framework for emissions reduction that gives business and the community certainty and predictability”.</p>
<p>This collaboration, together with industry pressure, forced the federal government to respond. In December 2006, then prime minister John Howard <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:%22media/pressrel/68QL6%22">established</a> a joint government-business group to advise on an emissions trading system.</p>
<p>As history shows, this policy didn’t eventuate. Howard <a href="https://www.theguardian.com/world/2007/nov/24/australia">lost</a> the 2007 election and, following disappointing global climate talks in Copenhagen, the Rudd government <a href="https://www.smh.com.au/national/i-was-wrong-to-ditch-emissions-trading-rudd-20110404-1cysk.html">abandoned</a> emission trading.</p>
<p>But it demonstrates the opportunity for states to lead by acting collectively – and electric vehicle policy presents another such chance. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/on-an-electric-car-road-trip-around-nsw-we-found-range-anxiety-and-the-need-for-more-chargers-is-real-154071">On an electric car road trip around NSW, we found range anxiety (and the need for more chargers) is real</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="John Howard in front of a Bentley" src="https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/393505/original/file-20210406-17-2d7in4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Industry concern prompted then prime minister John Howard to investigate an emissions trading scheme in 2006.</span>
<span class="attribution"><span class="source">Alan Porritt/AAP</span></span>
</figcaption>
</figure>
<h2>Power to the states</h2>
<p>Australian states and territories are already leading on climate policy. <a href="https://www.afr.com/chanticleer/australia-is-a-net-zero-embarrassment-20201124-p56hg6">All have</a> targets or aspirations to reach net-zero emissions by 2050, and <a href="https://www.energy.vic.gov.au/renewable-energy/victorias-renewable-energy-targets">some</a> <a href="https://www.epw.qld.gov.au/about/initiatives/renewable-energy-targets">have</a> ambitious renewable energy targets.</p>
<p>Some jurisdictions are also starting to decarbonise their transport sector. For example, the <a href="https://www.environment.act.gov.au/cc/zero-emissions-vehicles">ACT government</a> offers financial incentives, stamp duty exemptions and a bold fleet purchasing commitment.</p>
<p>Norway provides a stunning example of policies that can support electric vehicle uptake. In under a decade, electric vehicle purchases have increased from virtually nothing to more than <a href="https://www.reuters.com/article/us-autos-electric-norway-idUKKBN29A0ZT">half of all new car sales in 2020</a>. It has a national goal that all new cars sold by 2025 should be zero emissions.</p>
<p>In contrast, in Australia in 2020, electric vehicles <a href="https://www.caradvice.com.au/914746/exclusive-tesla-sales-in-australia-revealed-up-16-per-cent-in-2020/">comprised</a> just 0.6% of new vehicle sales.</p>
<p>Electric vehicle incentives <a href="https://elbil.no/english/norwegian-ev-policy/">deployed in Norway</a> include:</p>
<ul>
<li>exemption on 25% consumption tax normally applied to new vehicles</li>
<li>road tax exemptions</li>
<li>lower registration fees</li>
<li>parking fee and tolls discounts</li>
<li>no import tax</li>
<li>permission to drive in bus lanes</li>
<li>reduced company car tax.</li>
</ul>
<figure class="align-center ">
<img alt="EVs in snow in Norway" src="https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/393513/original/file-20210406-21-1kexo54.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Norway’s electric vehicle policies offer a model for Australian states to follow.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>Many of these policies are within the remit of Australia’s states. But the efforts must be coordinated, or unintended consequences may result. For example, a large rebate offered in one state might mean consumers flock to purchase their electric vehicles outside their home state. That outcome would not be fair to taxpayers in the state offering the rebate.</p>
<p>Coordinated fleet purchasing is another way states could encourage electric vehicle uptake in Australia. At the moment, electric vehicle prices are out of reach for many consumers. Few low-cost options exist and the range of mid-range models – those priced about A$50,000 or $60,000 – is limited.</p>
<p>But <a href="https://www.climateworksaustralia.org/resource/electric-vehicle-ready-local-government-fleets-increasing-uptake-and-ambition/">our analysis shows</a> some electric vehicles are already cost-competitive for government fleets. So if states banded together to buy a large number of a particular model of electric vehicles, this could be the incentive needed for manufacturers to offer the model for general purchase in Australia. Some manufacturers may even consider local assembly or manufacture if sales volumes were high enough.</p>
<p>And due to the relatively high turnover in government fleet cars, the second-hand market would soon see an influx of electric vehicles. This would quicken the transition across the economy.</p>
<p>It should be noted, the Morrison government <a href="https://consult.industry.gov.au/climate-change/future-fuels-strategy/">plans</a> to encourage business fleets to transition to electric vehicles. It is also <a href="https://thedriven.io/2021/02/17/federal-mps-to-ride-in-tesla-model-3-and-hyundai-electric-cars-in-comcar-trial/">trialling</a> the Tesla Model 3 and Hyundai Ioniq EVas in its Comcar fleet.</p>
<p>States could also use their collective clout to have more electric vehicle charging infrastructure built. If all states act together to expand the charging network, it could be done more cheaply and efficiently.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-us-jumps-on-board-the-electric-vehicle-revolution-leaving-australia-in-the-dust-154566">The US jumps on board the electric vehicle revolution, leaving Australia in the dust</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="row of new cars" src="https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/393506/original/file-20210406-19-4vtkg0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Government fleet cars offer an opportunity to increase electric vehicle uptake.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>On the road again</h2>
<p>Working together, the states could send the signal manufacturers require before they commit to selling a wider range of electric vehicles in Australia.</p>
<p>Our research <a href="https://www.climateworksaustralia.org/resource/decarbonisation-futures-solutions-actions-and-benchmarks-for-a-net-zero-emissions-australia/">has shown</a> 50-76% of new car sales in Australia must be electric by 2030 to ensure we reach net-zero emissions by 2050. </p>
<p>We don’t have much time. The states can jumpstart this transition – and with any luck, the Commonwealth might get on board.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/morrison-has-embraced-net-zero-emissions-its-time-to-walk-the-talk-154478">Morrison has embraced net-zero emissions – it's time to walk the talk</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/158218/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rupert Posner is part of ClimateWorks Australia, which works within the Monash Sustainable Development Institute. ClimateWorks Australia receives its core funding from philanthropic foundations and also undertakes projects which attract funding from industry and government departments and agencies. Rupert owns shares in Uniti, a Swedish automotive startup. </span></em></p>History shows how the states and territories can step into a policy breach when the federal government fails. It’s time they band together on electric vehicles.Rupert Posner, Systems Lead - Sustainable Economies, Climateworks CentreLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1517822020-12-09T11:51:29Z2020-12-09T11:51:29ZEmissions projections indicate Australia won’t need carryover credits to meet Paris targets<p>Australia is on track to meet its 2030 Paris climate targets without resorting to carryover credits and could exceed them with the aid of the recently-announced technology roadmap, according to projections to be released on Thursday.</p>
<p>Australia has pledged to reduce emissions by 26-28% on 2005 levels by 2030.</p>
<p>The annual update of emissions projections shows that to meet the 26% cut, without using carryover credits, a further reduction of 56 million tonnes would be needed over the decade to 2030.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=520&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=520&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=520&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=654&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=654&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373891/original/file-20201209-13-q2bih0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=654&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">image.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>To reach the higher target of a 28% cut without the credits, a reduction of 123 million tonnes would be required over the decade.</p>
<p>Neither of these scenarios includes the technology investment roadmap – which is the government’s policy to support new and emerging energy technologies to a price that is comparable with higher emitting alternatives.</p>
<p>The Minister for Emissions Reduction, Angus Taylor, said if the roadmap was taken into account, “Australia is projected to beat its 2030 target by 145 million tonnes”.</p>
<p>This would be without relying on the credits which have been gained from exceeding earlier targets.</p>
<p>“Under this scenario, Australia’s emissions are projected to be 29% below 2005 levels by 2030,” Taylor said.</p>
<p>Scott Morrison has flagged the government won’t use the carryovers if they are not necessary to meet Australia’s commitments.</p>
<p>He is set to confirm this when he addresses a Pacific Islands Forum virtual climate summit on Friday. This precedes the Climate Ambition Summit hosted by Britain, France and the United Nations at the weekend to mark the fifth anniversary of the Paris accord.</p>
<p>The Pacific summit is aimed at putting pressure on the weekend meeting, which is being called “the sprint to Glasgow”, the delayed climate conference to be held in a year’s time.</p>
<p>There has been argy bargy over whether Morrison could get a speaking role at the weekend meeting, where leaders are being asked to make new commitments. As of Wednesday, he was not expected to be a speaker.</p>
<p>The update in the Australia’s emissions projections 2020 report shows Australia’s position against the 2030 target has improved by more than 300 million tonnes since the 2019 projections, and by 639 million tonnes since 2018.</p>
<p>The improvement since 2018 is equivalent to taking all of the country’s passenger vehicles off the road for 15 years.</p>
<p>Emissions are projected to decline to 478 million tonnes in 2030 which is 22% below 2005 levels. Incorporating the technology investment roadmap, emissions are forecast to be 436 million tonnes in 2030 – 29% below 2005 levels.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=478&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=478&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373892/original/file-20201209-13-z1tkv3.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=478&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">image.</span>
</figcaption>
</figure>
<p>The update says the downward revision in the 2020 projections reflects:</p>
<ul>
<li><p>the inclusion of new measures to speed up the development and deployment of low emissions technologies in the recent budget</p></li>
<li><p>a further reduction in projected emissions from the electricity sector due to continued strong uptake of renewables – especially small and mid-scale solar – by households and businesses; and</p></li>
<li><p>the temporary effect of COVID-related restrictions on the economy.</p></li>
</ul><img src="https://counter.theconversation.com/content/151782/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia is on track to meet its 2030 Paris climate targets without resorting to carryover credits, with the aid of the recently-announced technology roadmap, according to projections to be released on Thursday.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1510432020-12-04T14:11:42Z2020-12-04T14:11:42ZUK plans to slash carbon emissions 68% by 2030 – how banking, building and borrowing can help<p>For those conscious of the growing climate crisis and the perilous economic situation, the path out of the coronavirus recession looks like a tightrope. On one side, the urgent need to revive the economy and head off unemployment. On the other, the demand that post-COVID growth is green and sustainable. The UK’s recently announced <a href="https://www.gov.uk/government/publications/national-infrastructure-strategy">national infrastructure strategy</a> is part of the government’s vision for managing that balancing act.</p>
<p>The government has set out plans to renew the UK’s “creaking national anatomy” with “hundreds of billions of pounds” of private and public investment in transport, the energy sector and telecommunications. But with the newly announced target to cut carbon emissions by at least <a href="https://www.bbc.co.uk/news/science-environment-55179008">68%</a> of what they were in 1990 by the end of 2030, decarbonisation measures must be much more aggressive.</p>
<p>If planned carefully, there are opportunities for targeting this promised infrastructure spending in a way that could slash emissions and make the British economy more sustainable.</p>
<h2>1. National infrastructure bank</h2>
<p>The UK government is to set up a <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/938051/NIS_final_print.pdf">national infrastructure bank</a> in the North of England which will fund projects across the UK, while attempting to garner additional private investment. The bank’s institutional weight will lend confidence and guarantees to private investors, and could assist local and mayoral authorities with regional infrastructure projects.</p>
<p>The European Investment Bank (EIB) provided <a href="https://www.instituteforgovernment.org.uk/explainers/european-investment-bank-brexit">€165 billion to UK projects</a> between 1973 and 2017. Since it lent around a third of the total project cost on average, it meant around €20 billion in <a href="https://blogs.lse.ac.uk/brexit/2020/09/28/european-investment-bank-the-uk-will-miss-it-when-it-is-gone/">project support annually</a> in the years before the 2016 Brexit referendum. A national infrastructure bank would need to match and surpass the level of support the EIB provided post-Brexit, particularly given the dire need for a post-pandemic economic revival.</p>
<p>From its outset, the bank should mandate that projects which are carbon-neutral or contribute to lowering emissions elsewhere – such as energy efficient upgrades of existing infrastructure or new low-carbon public transport – get priority in funding. Continued support should require proof that promised benefits to the environment and communities are being delivered. </p>
<h2>2. Levelling-up fund</h2>
<p>The government is also committing £4 billion to a “levelling-up fund”. This is supposed to reduce regional inequality across the UK by offering local authorities the chance to bid for up to £20 million in project funding. </p>
<p>A <a href="https://www.rtpi.org.uk/consultations/2020/october/pwpconsultationresponse/">green growth board</a>, or similar proposal, could recommend local projects for funding. But this should be an opportunity to find the best ideas – not an additional process for applicants to negotiate.</p>
<p>The government recently revised its <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/937700/Green_Book_Review_final_report_241120v2.pdf">investment rules</a> to ensure that project appraisals go beyond benefit-cost ratios and consider how each project might serve strategic priorities, such as regional renewal or reaching net-zero carbon emissions. Allowing communities to define local priorities, lead projects and have a say in where funding goes could generate local support for new green infrastructure.</p>
<h2>3. Housing and energy efficiency</h2>
<p>The government aims to build <a href="https://www.gov.uk/government/news/government-announces-new-housing-measures">300,000 new homes</a> each year. These should all meet the highest energy efficiency standards, with the highest quality insulation and heat pumps where possible. There should be a similarly ambitious programme of refurbishment for existing homes that includes replacing gas heating systems and retrofitting walls and windows.</p>
<p>The UK’s private rental sector tends to have <a href="https://commonslibrary.parliament.uk/research-briefings/cbp-7328/">lower housing standards</a>, so properties that fail to meet energy efficiency targets must be retrofitted before being placed on the market. Meanwhile, incentives like tax benefits or subsidies could encourage the wider adoption of energy-efficient measures.</p>
<figure class="align-center ">
<img alt="A builder installs insulating boards into the roof of a house." src="https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373059/original/file-20201204-21-tfouk2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A fifth of the UK’s carbon emissions come from the energy generated to heat and light homes.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/builder-installing-insulating-board-into-roof-203363170">SpeedKingz/Shutterstock</a></span>
</figcaption>
</figure>
<h2>4. Road building</h2>
<p>The announcement of <a href="https://www.gov.uk/government/news/27billion-roads-investment-to-support-64000-jobs">£27 billion for road building</a> doesn’t inspire a lot of confidence in the government’s ability to meet its net-zero target. But there is an opportunity here to make Britain’s road network greener if the money is spent carefully.</p>
<p>New road building projects could focus on reducing journey times and congestion by identifying where routes are likely to be most useful, analysing hourly traffic data and <a href="https://www.sciencedaily.com/releases/2017/03/170329102523.htm">adopting smart interventions</a> to reduce queuing at roundabouts. Remote rural areas should get new road connections including new bus routes and public transport provision to reduce how dependent people in these communities are on cars.</p>
<p>Rapid charging hubs for electric vehicles should feature in all new motorway and A-road service stations. New roads and extensions of existing ones should include bus and bike lanes, with money for <a href="https://www.theguardian.com/environment/bike-blog/2020/feb/11/the-government-must-invest-in-cycling-heres-how-to-do-it">bike-sharing schemes too</a>.</p>
<p>Highways England’s promise to create <a href="https://www.theguardian.com/environment/2020/dec/01/wildflower-meadows-to-line-all-major-new-uk-roads-in-boost-for-biodiversity-aoe">native wildflower meadows</a> along the verges of all new major roads – and eventually extend them to existing roads – highlights the opportunities to make the network more wildlife-friendly as well.</p>
<h2>5. Carbon pricing system</h2>
<p>Most energy-intensive industries such as electricity generation, steel manufacturing and aviation currently receive some free and tradeable allowances, each of which permits the emission of one tonne of CO₂ under the <a href="https://ec.europa.eu/clima/policies/ets_en#:%7E:text=The%2021%25%20reduction%20in%202020,to%20the%20phase%202%20cap.">EU Emissions Trading System</a> (ETS). A “cap”, or limit, is set on the total greenhouse gas emissions by all participants, which is lowered over time to ensure total emissions fall.</p>
<p>Participating companies either take measures to reduce their emissions or buy additional tradeable allowances from other companies or through state auctions. Post-Brexit, the UK will adopt a <a href="https://www.gov.uk/government/news/new-emissions-trading-system-proposal-would-see-uk-go-further-in-tackling-climate-change">replacement carbon pricing system</a>.</p>
<p>Here lies an opportunity to go deeper and further than current EU plans, by reducing the cap aggressively and bringing more polluting activities under the cap. This will ensure the cap remains below what the UK’s share would have been in the EU’s ETS, but also help the UK become a global leader in the race to reach net-zero emissions.</p><img src="https://counter.theconversation.com/content/151043/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anupam Nanda's research has received funding UKRI/Innovate UK, the US Real Estate Research Institute, the UK Foreign and Commonwealth Office, the UK Department of Energy and Climate Change, the Investment Property Forum and the Royal Institution of Chartered Surveyors. He is a board member of the European Real Estate Society.</span></em></p>Slashing carbon emissions by 68% by 2030 will depend on using the UK’s infrastructure strategy effectively.Anupam Nanda, Professor of Urban Economics & Real Estate, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1334902020-06-24T14:29:05Z2020-06-24T14:29:05ZWhy we need the opposite of a carbon tax to reduce emissions<p>For the last few decades, the consensus among leading economists has been that putting a price on carbon is the most efficient way to reduce emissions. The idea behind it is simple. If we make activities that emit carbon – such as driving a car, consuming electricity or flying – more expensive, people will do these things less often. </p>
<p>Despite its apparent simplicity, the accomplishments of carbon taxes over the last decade have been <a href="https://www.forbes.com/sites/howardgleckman/2019/08/15/why-carbon-taxes-are-so-hard-to-pass/#6f7551ef4f05">underwhelming</a>. According to the World Bank, 61 carbon pricing initiatives target <a href="https://guidehouse.com/insights/energy/2020/state-and-trends-of-carbon-pricing-2020">22% of the world’s carbon emissions</a>. These have <a href="https://www.nytimes.com/interactive/2019/04/02/climate/pricing-carbon-emissions.html?mtrref=www.google.com&assetType=PAYWALL">worked fairly well in some countries</a>, such as the UK, where higher prices have prompted electricity utilities to dump coal since 2013, and Canada, where there is a nationwide tax on oil, coal and gas starting at US$15 (£12) per US ton of carbon dioxide emitted.</p>
<p>China, the world’s largest polluter, has struggled to set up an emissions trading system since 2017 that would put a price on a third of the country’s emissions, and allow the most polluting enterprises to buy carbon credits from greener companies. But experts fear the 2020 pandemic will <a href="https://www.ft.com/content/35a0a860-8eab-11ea-af59-5283fc4c0cb0">delay these efforts</a> even further.</p>
<p>In other countries, carbon taxes have sparked a significant backlash.</p>
<h2>Why carbon taxes are unpopular</h2>
<p>France’s <a href="https://theconversation.com/emmanuel-macrons-carbon-tax-sparked-gilets-jaunes-protests-but-popular-climate-policy-is-possible-108437">gilets jaunes protests</a> in 2018 and 2019 erupted after a domestic excise tax on energy products caused an increase in fuel prices. The unrest transformed into a broader movement against economic inequality in France. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/343723/original/file-20200624-132972-duoptk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">If unwisely implemented, carbon taxes can undermine popular support for action on climate change.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/villefranche-en-beaujolais-france-november-19-1235117362">Ricochet64/Shutterstock</a></span>
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<p>There have been similar protests against fuel price rises in <a href="https://www.theguardian.com/world/2017/jan/04/gasolinazo-mexico-gasoline-price-hike-protests-petrol">Mexico</a>, <a href="https://www.theguardian.com/world/2019/nov/16/protests-erupt-in-iran-after-government-raises-price-of-gas-by-50">Iraq</a>, <a href="https://theconversation.com/ecuadors-fuel-protests-show-the-risks-of-removing-fossil-fuel-subsidies-too-fast-125690">Ecuador</a>, <a href="https://www.washingtonpost.com/business/energy/chiles-violence-has-a-worrisome-message-for-the-world/2019/10/22/aa3430b6-f4c8-11e9-b2d2-1f37c9d82dbb_story.html">Brazil</a> and <a href="https://www.washingtonpost.com/business/energy/chiles-violence-has-a-worrisome-message-for-the-world/2019/10/22/aa3430b6-f4c8-11e9-b2d2-1f37c9d82dbb_story.html">Chile</a>. Beyond public protests, carbon taxes have raised organised political opposition in <a href="https://www.cbc.ca/news/canada/edmonton/federal-carbon-tax-unconstitutional-alberta-court-1.5473482">Canada</a>, the <a href="https://www.eenews.net/stories/1062457547">US</a> and <a href="https://www.nytimes.com/interactive/2019/04/02/climate/pricing-carbon-emissions.html">Australia</a>, even when existing taxes are still too low and the sectors covered too small. </p>
<p>In its 2019 report, the IMF calculated that the average carbon price stands at US$2 per ton of carbon dioxide. But the requisite price for reducing emissions in line with the Paris Agreement would mean <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/33809/9781464815867.pdf?sequence=4&isAllowed=y">a commitment of US$40–80</a>.</p>
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Read more:
<a href="https://theconversation.com/emmanuel-macrons-carbon-tax-sparked-gilets-jaunes-protests-but-popular-climate-policy-is-possible-108437">Emmanuel Macron's carbon tax sparked gilets jaunes protests, but popular climate policy is possible</a>
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<p>One of the reasons ordinary people tend to resist carbon pricing is because it’s seen as unfair. This is particularly true when it’s applied as a direct tax on a commonly used commodity, such as fuel or electricity. This leads to an economy-wide price increase that burdens all of society indiscriminately. Since many people can’t afford to shoulder even a slight increase in their cost of living, the economic burden falls disproportionately on the poor and most vulnerable. These communities tend to have the <a href="https://www.bbc.com/future/article/20200618-climate-change-who-is-to-blame-and-why-does-it-matter">lowest carbon footprints</a> anyway, hence the impression that the poorest are punished unfairly through carbon pricing. </p>
<p>Policymakers have tried to address these problems by using the revenue raised from carbon taxes to <a href="https://www.cleanenergywire.org/factsheets/germanys-climate-action-programme-2030">subsidise green infrastructure</a>, such as wind farms. Another plan is to offer tax rebates or direct benefits to poorer people, <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/33809/9781464815867.pdf?sequence=4&isAllowed=y">as lawmakers did in Canada</a>. But these ideas have often been criticised for overestimating how fairly local institutions can redistribute wealth while underestimating the costs of implementing carbon taxes.</p>
<h2>The case for a different approach</h2>
<p>What if, instead of making fuel and other commodities and services more expensive, we used a financial incentive to make technologies that help reduce emissions – such as solar, wind and geothermal energy – more affordable?</p>
<p>Once each unit of carbon emissions has an appropriate economic value, this could be subtracted from the costs of carbon-reducing technologies. Prices linked to fossil fuels would remain constant while alternatives would get cheaper. The cost of driving a conventional car wouldn’t change, but buying and driving an electric vehicle would become cheaper. Household electricity tariffs would stay the same, but electricity from solar rooftop panels would drop in price. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=274&fit=crop&dpr=1 600w, https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=274&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=274&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=344&fit=crop&dpr=1 754w, https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=344&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/343720/original/file-20200624-132951-yircjr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=344&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A CRI could encourage an organic transition towards cleaner and more affordable technologies.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/ZNS6rizp9RU">Science in HD/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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</figure>
<p>The main advantage of this carbon reduction incentive, as I call it, is that instead of an economy-wide price increase, which would inevitably result in hardship for some, cleaner technologies would be supported according to their respective capacities to reduce and replace carbon emissions. The high upfront costs of cleaner technologies, such as electric vehicles, currently make them inaccessible to large sections of the population.</p>
<p>One way of funding this could be an income tax applied to the more affluent sections of the population. This taxed base could be slowly widened over time to increase revenue in the future. This would hold the biggest beneficiaries of carbon emissions accountable and help subsidise a just transition from fossil fuels among the people who can least afford to make the switch.</p>
<p>The approach may make more sense in countries where inequality is more pronounced, and the use of subsidised fossil fuels is more prevalent. Like any other climate policy, it must be part of a broader mix that reduces demand for carbon-intensive consumption while phasing in green alternatives.</p>
<p>Before any kind of carbon pricing can be effective, governments must change the way it is perceived among the public. A carbon reduction incentive could neutralise the current opposition while reducing carbon-intensive activities in a much more targeted and fair way.</p>
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<img alt="" src="https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=140&fit=crop&dpr=1 600w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=140&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=140&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=176&fit=crop&dpr=1 754w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=176&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=176&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><a href="https://theconversation.com/imagine-newsletter-researchers-think-of-a-world-with-climate-action-113443?utm_source=TCUK&utm_medium=linkback&utm_campaign=TCUKengagement&utm_content=Imagineheader1133490">Click here to subscribe to our climate action newsletter. Climate change is inevitable. Our response to it isn’t.</a></em></p><img src="https://counter.theconversation.com/content/133490/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sumedha Basu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Making the solutions cheaper – rather than the problems more expensive – could reduce emissions more fairly.Sumedha Basu, PhD Candidate in Sustainability, University of WarwickLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1374722020-05-27T13:48:29Z2020-05-27T13:48:29ZGreen bailouts: relying on carbon offsetting will let polluting airlines off the hook<figure><img src="https://images.theconversation.com/files/337949/original/file-20200527-20215-8iv9h9.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C3992%2C2992&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/D59013q1Um4">Dan Meyers/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The coronavirus pandemic has grounded thousands of aircraft, contributing to the <a href="https://www.theguardian.com/environment/2020/may/19/lockdowns-trigger-dramatic-fall-global-carbon-emissions">largest-ever annual fall in CO₂ emissions</a>. At some point though, the planes will soar again and with them, global emissions.</p>
<p>Most airlines in the UK have committed to achieving <a href="https://www.sustainableaviation.co.uk/wp-content/uploads/2020/02/SustainableAviation_CarbonLeaflet_20200129.pdf">net zero carbon emissions by 2050</a>. From 2026, it will become mandatory for airlines worldwide to ensure that <a href="https://www.icao.int/environmental-protection/Pages/A39_CORSIA_FAQ2.aspx">their annual emissions</a> stay flat. But the UK aviation industry also plans to <a href="https://www.theguardian.com/business/2020/feb/04/uk-air-industry-sets-zero-carbon-target-despite-70-more-flights">increase the number of passengers it serves by 70%</a> in the next three decades.</p>
<p>To pull this off, airlines will be planning to fly planes at or near full passenger capacity and use cleaner burning fuels. But the rest of the emissions airlines hope to cut – between one-third and half of the total – are expected to come from <a href="https://www.sustainableaviation.co.uk/wp-content/uploads/2020/02/SustainableAviation_CarbonLeaflet_20200129.pdf">market-based measures</a>, such as carbon offsetting and emissions trading. </p>
<p>You’ve probably encountered an option to offset your carbon footprint when buying a flight. The payment page of Ryanair’s website suggested a “carbon offset contribution” of £2 for a return flight from Gatwick to Alicante. <a href="https://theconversation.com/why-airline-bailouts-are-so-unpopular-with-economists-137372">Airlines seeking government bailouts</a> are likely to use carbon offsetting and emissions trading to show they’re serious about putting their emissions on a downward trajectory. But what do they involve and are they really a solution to climate change? </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=306&fit=crop&dpr=1 754w, https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=306&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/336997/original/file-20200522-124840-1qas24c.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=306&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tick this box and all your carbon sins will be forgiven.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/stoweboyd/1469456837/in/photolist-3eRmjH-eMPDB9-ceV8do-ceV8H9-3vkiDp-8YkrtQ-LKh7H-59BuXW-tJMJzL-5fwiRo-5jx4F6-5QDWAz-575MBS-5iutK6-53qkut-77Wqba-bpXWK4-8c6Mna-9XiR4p-9XmEJ9-7X6BBh-858mMs-7fCXr7-2hthWEi-uUfxN5-5JRFqN-5L57Pf-ud1r3q-2gxxtJc-2eoQVoH-4iWPJ5-8iNFe9-2eAH8Tf-fyB5JC-6d3YK2-7e3pSP-2h1TfAv-8PnmQ9-cegdfG-22pqecU-ceV58w-59njvL-wbdDxQ-9GbQPC-6d3YPF-48B6X3-apX3zY-9LS1XC-7YbYsa-2kq32V">Stowe Boyd/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Avoiding upsets with offsets</h2>
<p>The idea of offsets is to cancel out your own emissions by reducing equivalent emissions elsewhere. This could be by purchasing carbon credits from an <a href="https://www.theguardian.com/environment/2011/jul/05/what-is-emissions-trading">emissions trading scheme</a>, where one credit typically equals one metric tonne of CO₂. When a carbon credit is “retired” – essentially ripped up – it saves one tonne of CO₂ from being emitted by the countries or companies that sell them. </p>
<p>Alternatively, you can invest in offsetting schemes – called clean development mechanisms – which aim to reduce future emissions in developing countries by providing greener cooking stoves, for example. There are also carbon removal schemes which aim to actively absorb carbon by planting trees, or developing technologies that can absorb carbon from the air.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-airline-bailouts-are-so-unpopular-with-economists-137372">Why airline bailouts are so unpopular with economists</a>
</strong>
</em>
</p>
<hr>
<p>Only a decade ago, carbon offsetting was largely voluntary and schemes were unverified and unregulated. Broken promises and schemes causing <a href="https://www.telegraph.co.uk/science/2019/08/20/carbon-offsetting-may-increase-pollution-experts-warn-rich-cant/">more harm than good</a> abounded. Today, there are several trustworthy schemes that can verify the work of offsetting projects, such as the <a href="https://verra.org/project/vcs-program/">Verified Carbon Standard</a>. As the popularity of offsetting schemes increases, regulation continues to improve. Even the Intergovernmental Panel on Climate Change trusts carbon offsetting to ensure its meetings – which involve delegates flying from around the world – are <a href="https://www.ipcc.ch/2018/06/15/ipcc-meetings-go-carbon-neutral/">carbon neutral</a>.</p>
<p>But whether these schemes actually make sufficiently deep carbon cuts over an effective timescale to actually slow climate change is another matter. With tree planting, it can take a long time for newly planted trees to start storing carbon, and it’s difficult to accurately predict how much carbon each tree will put away during its lifetime. That carbon is easily re-released during forest fires or as a result of deforestation.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/337957/original/file-20200527-20229-u4lup3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Tree planting isn’t the panacea for climate change many would like it to be.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/tree-planting-uganda-close-many-small-756780151">Dennis Wegewijs/Shutterstock</a></span>
</figcaption>
</figure>
<p>Carbon credit trading and carbon offsetting schemes can support projects which reduce emissions and remove carbon from the atmosphere if they’re sufficiently ambitious – and they should be going ahead anyway, without their benefits being cancelled out by businesses using these schemes to continue polluting. For example, a tax on airlines and customers could fund offsetting projects that aim to cut at least double the units of carbon emitted per flight, with frequent flyers being taxed more heavily.</p>
<p>But sustainability targets for airlines need to be based on real emissions cuts at their source. That would mean drastically reducing the number of flights each year, especially those with reasonable travel alternatives such as rail. As a condition for any post-COVID-19 bailout, airlines should invest heavily in the research and development of technologies that can make flights carbon-neutral, such as <a href="https://www.theguardian.com/world/2020/may/27/worlds-largest-all-electric-aircraft-set-for-first-flight?CMP=share_btn_tw">electric engines and batteries</a>. The marketing of rescued airlines should also be honest with customers about the climate impact of their flight.</p>
<p>Aviation will need to change drastically to shrink its contribution to climate change. As governments consider state aid for flagging airlines, they have a rare opportunity to enforce lasting changes. But if offsetting is earmarked as the principal way for them to reach net zero emissions – with no reduction in the number of flights or control over how airlines invest their revenue, these efforts could become little more than greenwashing. When it comes to meaningful action on aviation emissions, now is the time to get our heads out of the clouds.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=140&fit=crop&dpr=1 600w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=140&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=140&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=176&fit=crop&dpr=1 754w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=176&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/263883/original/file-20190314-28475-1mzxjur.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=176&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p><em><a href="https://theconversation.com/imagine-newsletter-researchers-think-of-a-world-with-climate-action-113443?utm_source=TCUK&utm_medium=linkback&utm_campaign=TCUKengagement&utm_content=Imagineheader1137472">Click here to subscribe to our climate action newsletter. Climate change is inevitable. Our response to it isn’t.</a></em></p><img src="https://counter.theconversation.com/content/137472/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Christopher Howard does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Carbon offsetting is better regulated than it once was, but it’s no solution to the climate crisis.Ben Christopher Howard, Doctoral Researcher in Nature-based Solutions, University of BirminghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1286272020-02-13T19:10:16Z2020-02-13T19:10:16ZNew tools help communities measure and reduce their emissions locally<figure><img src="https://images.theconversation.com/files/314141/original/file-20200207-177248-1slj7cf.jpg?ixlib=rb-1.1.0&rect=62%2C184%2C2748%2C1809&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/takver/8665162810/in/photolist-ecHe1N-51okB4-7nfSwN-dAaCoU-2hYvigQ-5k8nVB-ecBzkR-YDDyVj-ecBzBa-ecBzKe-8Zd7Mi-ZFCVmj-8Zd7Tp-YCKtHZ-8Zd7Rg-GEnYHn-ecHdUJ-ZFCXJW-8Zd7GK-8Zd7K2-fFxLcm-YDDNym-YDDHYj-YDDFSW-fFxLnw-Aq1vXK-zsYKRu-AoP5kY-fFgc62-AnHeoj-A8p5N7-YDDKK5-zsYM99-2hX8ffa-fFgbGn-5kcEbW-2hXaNqG-2hXaP38-5kcEe9-2hXbNnE-2hX8eDa-5k8nWk-2hXaPty-2hX8fc9-2hX8eJ5-2hXaPjk-2hXbMFu-2hX8f6n-2hXaPdo-2hXbNiG">John Englart/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The slogan “What you can measure, you can manage” has become a guiding principle for local climate action. There’s an accounting standard made for this purpose: the <a href="https://ghgprotocol.org/greenhouse-gas-protocol-accounting-reporting-standard-cities">Global Protocol for Community-scale Greenhouse Gas Emission Inventories</a>. Free online <a href="https://snapshotclimate.com.au">CO₂ emissions snapshots</a> for municipalities in Australia, recently launched by <a href="https://snapshotclimate.com.au/about/">Ironbark Sustainability and Beyond Zero Emissions</a>, make the protocol more accessible than ever for local governments and communities that want to know what their emissions are, and what to do about them.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/in-the-absence-of-national-leadership-cities-are-driving-climate-policy-81108">In the absence of national leadership, cities are driving climate policy</a>
</strong>
</em>
</p>
<hr>
<p>The Greenhouse Gas Protocol provides a way to measure local greenhouse gas emissions and removals. It is designed to record two elements of local emissions:</p>
<ul>
<li>emissions within a municipal area, such as from cooking with natural gas or driving a car</li>
<li>emissions from activities within that area that produce emissions somewhere else, such as using electricity from a coal-fired power station or sending rubbish to landfill. </li>
</ul>
<p>The method creates a consistent approach to measure emissions in different localities. It lets local governments and communities aggregate their individual commitments to reduce emissions. </p>
<p>The protocol is aligned with the Intergovernmental Panel on Climate Change (IPCC) standards that guide countries’ greenhouse gas inventories. Local accounts can then be nested within national inventories without double counting.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/double-counting-of-emissions-cuts-may-undermine-paris-climate-deal-125019">Double counting of emissions cuts may undermine Paris climate deal</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=801&fit=crop&dpr=1 600w, https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=801&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=801&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1007&fit=crop&dpr=1 754w, https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1007&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/314130/original/file-20200207-43108-19n7mnx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1007&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Australian local governments can do many things to help reduce their community emissions.</span>
<span class="attribution"><a class="source" href="https://www.ironbarksustainability.com.au/fileadmin/public/downloads/IRO_GEN_001_Local_Government_Reivew_Report_FINAL.pdf">Australian Local Government Climate Review 2018</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>By measuring greenhouse gas emissions at the local scale, the protocol supports local governments and communities as important actors in climate governance. Adding local efforts together gives them a stronger voice in national and international arenas. This political pressure is especially important given the inadequacy of countries’ commitments to meet the Paris Agreement targets.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-good-the-bad-and-the-ugly-the-nations-leading-and-failing-on-climate-action-123581">The good, the bad and the ugly: the nations leading and failing on climate action</a>
</strong>
</em>
</p>
<hr>
<h2>Translating local actions to global impacts</h2>
<p>Even though the protocol adds weight to local climate commitments, translating these commitments into action can be challenging. Consistent with IPCC standards, the protocol frames greenhouse gases in two important ways. </p>
<p>First, greenhouse gases are measured according to defined “sectors”. These include stationary energy, transportation, waste, industrial processes and product use, and agriculture, forestry and other land uses. These categories are shorthand for the complex and extended systems of infrastructure, resource flows and human activities that produce greenhouse gases. </p>
<p>Municipal boundaries often align poorly with these systems. The data on activity needed to calculate emissions are often patchy or misaligned at the local scale. Local governments and communities rarely have the authority to intervene directly and change these larger systems. </p>
<p>So although the protocol helps to direct attention to local activities and systems that produce emissions, changing those systems and activities is usually more complex.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/this-is-why-we-cannot-rely-on-cities-alone-to-tackle-climate-change-82375">This is why we cannot rely on cities alone to tackle climate change</a>
</strong>
</em>
</p>
<hr>
<p>Second, greenhouse gas emissions are translated, through a set of simple equations established by the IPCC, into a “carbon dioxide equivalent”. These equations are the basis for comparing, aggregating and exchanging greenhouse gas emissions and removals of different types, at different times and in different places. </p>
<p>These calculations are entangled with the claim that “a ton of carbon is everywhere the same”. It forms the basis for regulated and voluntary markets in carbon trading. </p>
<p>However, there are problems with this assumed interchangeability. As Larry Lohmann <a href="http://www.thecornerhouse.org.uk/resource/neoliberalism-and-calculable-world">argues</a>:</p>
<blockquote>
<p>While carbon trading encourages ingenuity in inventing measurable ‘equivalences’ between emissions of different types in different places, it does not select for innovations that can initiate or sustain a historical trajectory away from fossil fuels […] </p>
</blockquote>
<h2>Local carbon accounts aren’t the whole answer</h2>
<p>In sum, the Greenhouse Gas Protocol supports the legitimacy and strengthens the voice of local governments and communities in global climate governance. </p>
<p>At the same time, defining emissions by territory and sector does not fully reflect the complexity of the infrastructure systems and human activities that cause emissions. In particular, the protocol can reinforce a framing of carbon as an exchangeable commodity. This poses the risk that choices about whether to reduce or offset emissions could be skewed.</p>
<p>Without suggesting there is no place for territorial carbon accounts, it is important to recognise that how we measure emissions shapes possibilities for how we might manage them. </p>
<p>Alternative approaches such as consumption-based accounts measure greenhouse gas emissions from what is consumed by an individual or within a territory. This draws attention to choices about what we eat and what we buy, and to the social norms and systems of wealth, which are harder to see in territorial accounts. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-is-ecological-economics-and-why-do-we-need-to-talk-about-it-123915">What is ‘ecological economics’ and why do we need to talk about it?</a>
</strong>
</em>
</p>
<hr>
<p>The key point is that no single measure of greenhouse gases can offer a definitive view. As a complement to the protocol, an additional question for local governments and communities to ask when trying to manage greenhouse gases is: “Where do we have the power to effect change, and why does that change matter to us?”</p><img src="https://counter.theconversation.com/content/128627/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Pollard receives funding from an Australian Government Research Training Scholarship and has been a volunteer for Beyond Zero Emissions. He also works for the Victorian Government on climate change policy. The views expressed in this article are those of the author and do not necessarily reflect the views of any organisation.</span></em></p>Carbon accounting isn’t always simple, so it’s important to make it easier to measure and reduce emissions at the local level. And that’s ultimately the starting point for global climate action.Stephen Pollard, PhD Candidate in climate change and sustainability, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1293542020-01-12T20:16:12Z2020-01-12T20:16:12ZBushfires won’t change climate policy overnight. But Morrison can shift the Coalition without losing face<figure><img src="https://images.theconversation.com/files/309362/original/file-20200109-80126-12kapze.jpg?ixlib=rb-1.1.0&rect=47%2C1042%2C5181%2C2437&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">When polling resumes after the summer, Scott Morrison may be surprised by the public's assessment of his government's handling of the bushfires.</span> <span class="attribution"><span class="source">Mick Tsikas/AAP</span></span></figcaption></figure><p>The hope of many people enduring this summer’s firestorms is that better climate policy will arise phoenix-like from the ashes. </p>
<p>It is expressed loudly, fervently, sometimes abusively by people directly affected and those feeling solidarity with them. </p>
<p>It is also expressed secretly, whispered to like-minded confidants, by others who are part of or allied with the Liberal-National (LNP) coalition government of Prime Minister Scott Morrison.</p>
<p>On Sunday, Morrison <a href="https://www.abc.net.au/news/2020-01-12/bushfire-royal-commission-proposal-to-go-to-cabinet-morrison/11860954">indicated that he would take a proposal to establish a royal commission</a> into the bushfires to his Cabinet. </p>
<p>But when it comes to climate policy, there are three possible scenarios in the aftermath of the crisis: everything magically changes for the better, everything stays the same or something different happens.</p>
<h2>What these three scenarios look like</h2>
<p>Everything magically changes for the better would look like this: Morrison announces the crisis has transformed his previous token admission of a link between bushfires and climate change into a revelation of the reality of global warming, with consequential policy change. </p>
<p>As logical and desirable as this seems, it is unlikely, not least because of Morrison’s character and personal beliefs.</p>
<p>Everything stays the same has a powerful impetus behind it. Morrison does not want policy change any more than his likely successor in the event of leadership change, Peter Dutton. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/key-challenges-for-the-re-elected-coalition-government-our-experts-respond-117325">Key challenges for the re-elected Coalition government: our experts respond</a>
</strong>
</em>
</p>
<hr>
<p>Government-friendly journalists and commentators at <a href="https://www.nytimes.com/2020/01/08/world/australia/fires-murdoch-disinformation.html">News Corp</a> and <a href="https://omny.fm/shows/the-alan-jones-breakfast-show/we-are-at-war-alan-jones-says-new-leadership-neede">2GB</a> show no sign of changing tack either, so even if the government wanted to shift its policy, the media environment makes it difficult to do so. The forces of inertia are powerful. </p>
<p>Then there is the slim hope that something different happens. This scenario relies on all three of Australia’s main political groupings – the LNP, Labor and the Greens – realising they each face their own distinct climate policy challenge and rising to it.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/309371/original/file-20200109-80144-1uyi18w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">As Australian burns, its politicians squabble over who’s to blame and how to prevent future disasters.</span>
<span class="attribution"><span class="source">David Mariuz/AAP</span></span>
</figcaption>
</figure>
<h2>Avoiding the appearance of a backflip</h2>
<p>Opinion polls are not done over the summer holiday period, meaning the LNP has yet to see the impact of the bushfires on their public standing. </p>
<p>When polling resumes, Liberal and National MPs will understand the impact, and they won’t like it. Morrison and others will likely urge party members to hold their course since the next election is years away and a dozen other issues could distract attention from climate policy between now and then. </p>
<p>This tactic can prevail for some time but is not strategically sustainable: firestorms like those in the summer of 2020 will not be the last. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/grattan-on-friday-when-the-firies-call-him-out-on-climate-change-scott-morrison-should-listen-127049">Grattan on Friday: When the firies call him out on climate change, Scott Morrison should listen</a>
</strong>
</em>
</p>
<hr>
<p>The <a href="https://www.theage.com.au/politics/federal/states-to-feel-federal-heat-over-hazard-reduction-burns-20200105-p53ozo.html">emerging LNP argument</a> that inadequate hazard reduction burns are to blame for the current crisis is risible. The Australian who has emerged with the most credibility from the bushfires – NSW Rural Fire Service Commissioner Shane Fitzsimmons – <a href="https://www.smh.com.au/national/hazard-reduction-burns-are-not-the-panacea-rfs-boss-20200108-p53poq.html">rejects it out of hand</a>. </p>
<p>The LNP’s challenge, then, is to realise its current position won’t hold strategically and to transition to better policy ahead of that becoming obvious, managing the optics to avoid the appearance of a backflip.</p>
<h2>The challenge for Labor and the Greens</h2>
<p>Labor is benefiting from leader Anthony Albanese’s <a href="https://www.2gb.com/anthony-albanese-we-cant-bury-our-heads-in-the-sand-over-climate-change/">call</a> for “an adult conversation” in Australia about climate policy. He is <a href="https://10daily.com.au/news/australia/a200107jxpnc/anthony-albanese-lashes-bushfire-conspiracy-theories-spread-by-armchair-critics-20200107">astutely citing</a> British Tories like the late Margaret Thatcher and current Prime Minister Boris Johnson, who long ago accepted and acted upon the climate science the Morrison government viscerally rejects. </p>
<p>Labor’s homework now is to reconcile the views and interests of members and supporters prioritising climate policy over mining jobs, and vice versa. </p>
<p>This can and must be done if Labor is to build a coalition of support big enough to win office and then enact the climate and other policies the current firestorms make so urgent.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/its-the-10-year-anniversary-of-our-climate-policy-abyss-but-dont-blame-the-greens-128239">It's the 10-year anniversary of our climate policy abyss. But don't blame the Greens</a>
</strong>
</em>
</p>
<hr>
<p>The Greens, meanwhile, need to have an internal conversation about whether they want to continue making perfect policy the enemy of the good – leaving Australia with no emissions trading system (ETS) at all, for example, because they would not vote for one that did not meet their every demand – or join in efforts to begin on the path to better policy. </p>
<p>Central to that conversation must be a realisation their current strategy isn’t working – the LNP keeps returning to power.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=388&fit=crop&dpr=1 600w, https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=388&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=388&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=488&fit=crop&dpr=1 754w, https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=488&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/309368/original/file-20200109-80148-1i83sgf.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=488&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Greens leader Richard Di Natale has said the bushfires should be a</span>
<span class="attribution"><span class="source">David Crosling/AAP</span></span>
</figcaption>
</figure>
<h2>A possible way forward</h2>
<p>There is an obvious point the LNP, Labor and Greens might momentarily agree upon to move policy forward. It is the ETS <a href="https://www.abc.net.au/news/2007-07-17/howard-announces-emissions-trading-system/2505080">proposed</a> by Liberal Prime Minister John Howard in 2007.</p>
<p>Howard saw climate change coming. In late 2006, he established a prime ministerial task group on emissions trading chaired by the secretary of his Department of Prime Minister and Cabinet, Peter Shergold. </p>
<p><a href="https://webarchive.nla.gov.au/awa/20070604000621/http://pandora.nla.gov.au/pan/72614/20070601-0000/www.pmc.gov.au/publications/emissions/docs/emissions_trading_report.pdf">The Shergold Report</a>, released in May 2007, said “emissions trading should be preferred to a carbon tax” and among the various kinds possible, a national “cap and trade” ETS was best. </p>
<p>In an <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:%22media/pressrel/IU9N6%22">address to the Liberal Party Federal Council in October 2007</a>, Howard promised to establish a national ETS starting no later than 2012. </p>
<blockquote>
<p>This will be a world-class emissions trading system more comprehensive, more rigorously grounded in economics and with better governance than anything in Europe. </p>
<p>Implementing an emissions trading scheme and setting a long-term goal for reducing emissions will be the most momentous economic decisions Australia will take in the next decade. </p>
<p>This emissions trading system must be built to last. It needs to last not five or 10 years, it needs to last the whole of the 21st century if Australia is to meet our global responsibilities and further build our economic prosperity.</p>
</blockquote>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1209057036538789893"}"></div></p>
<p>Howard positioned the LNP as the party Australians could trust to implement an ETS in a way that gives “firms and families” the ability to “plan for the future with confidence”. </p>
<p>His authorship – and his framing of his ETS as an act of economic responsibility –provides a fig leaf Morrison can now use to move the LNP to a credible, sustainable and politically viable climate policy position. </p>
<p>“Something different” has to start somewhere. If Morrison can deploy the cunning he showed winning the 2019 election by drawing on Howard’s deep well of credibility within the LNP to implement the plan himself and then inviting – daring – Labor and the Greens to back him, it would be a signal political achievement. </p>
<p>And if Morrison doesn’t want to, Labor, the Greens, independent MPs and conscientious LNP MPs should vote together to turn Howard’s ETS into law right away. With political will, “something different” can start now.</p>
<hr>
<p><em>Updates to add that the latest Newspoll, released late Sunday, shows Morrison’s standing has taken a massive hit over the bushfires, dropping nine percentage points as preferred prime minister from 48% to 39% since the last poll in early December. Opposition leader Anthony Albanese stood at 43% - a massive reversal of Morrison’s 14 percentage point lead over the Labor leader in early December.</em></p><img src="https://counter.theconversation.com/content/129354/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Wallace receives funding from the Australian Research Council. </span></em></p>There is an obvious point upon which the LNP, Labor and Greens might agree to move policy forward: the national ‘cap and trade’ emissions trading system proposed by John Howard in 2007.Chris Wallace, ARC DECRA Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1290012019-12-18T13:49:20Z2019-12-18T13:49:20ZThe Madrid climate conference’s real failure was not getting a broad deal on global carbon markets<figure><img src="https://images.theconversation.com/files/307491/original/file-20191217-58326-uekoow.jpg?ixlib=rb-1.1.0&rect=49%2C0%2C5472%2C3637&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Activists protest outside of COP25 climate talks in Madrid, Dec. 14, 2019.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Spain-Climate-Talks/07f310659b5241239a7a61899c0f6e26/15/0">AP Photo/Manu Fernandez</a></span></figcaption></figure><p>Press accounts of the <a href="https://unfccc.int/cop25">Madrid climate conference</a> that adjourned on Dec. 15 are calling it a failure in the face of inspirational calls from <a href="https://www.theguardian.com/global/video/2019/dec/16/stop-taking-up-space-with-your-false-solutions-say-furious-activists-at-un-cop25">youth activists</a> and others for greater ambition. But based on my 25 years <a href="https://www.belfercenter.org/project/harvard-project-climate-agreements">following and analyzing this process</a> together with scholars and government officials from around the world, I believe the reality is more complicated.</p>
<p>True, this round of climate talks did not produce an aspirational statement calling for greater ambition in the next round of national pledges. In my view, that’s not actually very significant in terms of its real effects, even though organizations such as <a href="https://www.greenpeace.org/international/campaign/cop25/">Greenpeace</a> and <a href="https://rebellion.earth/event/rebels-beyond-borders-at-cop25/">Extinction Rebellion</a> framed this as the key task for this meeting. </p>
<p>On the other hand, the talks failed to reach one of their key stated goals: writing meaningful rules to help facilitate global carbon markets. <a href="https://scholar.google.com/citations?user=TcoarRAAAAAJ&hl=en">As an economist</a>, I see this as a real disappointment – although not the <a href="https://intpolicydigest.org/2019/12/16/climate-change-accounting-the-failure-of-cop25/">fatal failure</a> some portray it to be.</p>
<h2>Tackling the free-rider problem</h2>
<p>Here’s some context to explain why international cooperation is essential to tackle climate change. Regardless of where they’re emitted, greenhouse gases mix in the atmosphere. That’s different from other air pollutants, which can affect localities or large areas, but not the entire world. </p>
<p>This means that any jurisdiction that reduces its emissions incurs all of the costs of doing so, but receives only a share of the global benefits. Everyone has an incentive to free-ride, relying on others to cut emissions while taking minimal steps themselves.</p>
<p>Recognizing this problem, nations adopted the United Nations Framework Convention on Climate Change at the Rio Earth Summit in 1992. As with many other international treaties, member countries agreed to hold regular meetings to devise rules for achieving the goals set out in the agreement. That’s how the Conference of Parties, or COP, process was launched. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/OEqZ7bS0oQM?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">U.N. Secretary-General António Guterres urges delegates in Madrid to accelerate action against climate change.</span></figcaption>
</figure>
<h2>Why climate change is a wicked problem</h2>
<p>If the pace of progress at these meetings seems slow, keep in mind three factors that make their task enormously challenging.</p>
<p>First, every nation has an incentive to exploit the atmosphere and rely on other countries to cut emissions.</p>
<p>Second, making reductions costs money up front – but since carbon dioxide emissions remain in the atmosphere and warm the Earth for up to a century, many of the benefits of cutting emissions accrue much later. </p>
<p>Third, the costs of cutting emissions fall on particular sectors – notably, fossil fuel interests – that have a strong monetary incentive to fight back. But the benefits are broadly distributed across the general public. Some people <a href="https://www.nbcnews.com/video/climate-change-activist-greta-thunberg-speaks-out-at-cop-25-u-n-climate-conference-74896965984">care passionately about this issue</a>, while others <a href="https://www.pewresearch.org/science/2019/11/25/u-s-public-views-on-climate-and-energy/">give it little thought</a>.</p>
<p>At the COP-1 meeting in 1995 in Berlin, members decided that some of the wealthiest countries would commit to targets and timetables for emission reductions, but there would be no commitments for other countries. Two years later, nations adopted the Kyoto Protocol, which set quantitative targets only for Annex I (largely wealthy) countries.</p>
<p>That wasn’t a broad enough foundation to solve the climate challenge. Annex I countries alone could not reduce global emissions, since the most significant growth was coming from large emerging economies – China, India, Brazil, Korea, South Africa, Mexico and Indonesia – that were not part of the Annex I group.</p>
<h2>Everybody in</h2>
<p>At negotiations in 2009 in Copenhagen and 2010 in Cancun, distinctions between wealthy and developing countries began to blur. This culminated in an agreement at Durban, South Africa, in 2011 that all countries would come under the same legal framework in a post-Kyoto agreement, to be completed in 2015 in Paris.</p>
<p>The <a href="https://theconversation.com/paris-agreement-on-climate-change-the-good-the-bad-and-the-ugly-52242">Paris Agreement</a> provided a promising, fresh approach. It proposed a bottom-up strategy in which all 195 participating countries would specify their own targets, consistent with their national circumstances and domestic political realities. </p>
<p>This convinced many more nations to sign up. Countries that joined the Paris Agreement represented 97% of global greenhouse gas emissions, compared to 14% currently under the Kyoto Protocol. But it also gave every country an incentive to minimize its own actions while benefiting from other nations’ reductions. It is worth noting that China overtook the United States in 2006 as the <a href="http://dx.doi.org/10.1038/news070618-9">world’s largest annual emitter of greenhouse gases</a>, but the U.S. remains the <a href="https://www.youtube.com/watch?v=jx85qK1ztAc">largest historical contributor</a> to the accumulated stock of GHGs in the atmosphere.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=500&fit=crop&dpr=1 600w, https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=500&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=500&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=629&fit=crop&dpr=1 754w, https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=629&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/307488/original/file-20191217-58326-bqty7p.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=629&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Large developing countries like China and India are major carbon sources now, but most cumulative emissions over the past two centuries have come from wealthy nations.</span>
<span class="attribution"><a class="source" href="https://ourworldindata.org/uploads/2019/10/Cumulative-CO2-treemap.png">Hannah Ritchie/Our World in Data</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Growing carbon markets</h2>
<p>Are there ways to persuade nations to increase their commitments over time? One key strategy is linking national policies, so that emitters can buy and sell carbon emissions allowances or credits across borders. </p>
<p>For example, <a href="https://www.reuters.com/article/us-canada-climatechange-carbonmarket/u-s-canadian-provinces-launch-first-cap-and-trade-auction-to-battle-climate-change-idUSKCN1G52T7">California and Quebec</a> have linked their emissions trading systems. On Jan. 1, 2020, the <a href="https://ec.europa.eu/clima/news/agreement-linking-emissions-trading-systems-eu-and-switzerland_en">European Union and Switzerland</a> will do likewise. </p>
<p>Note, however, that such linking need not be restricted to pairs of cap-and-trade systems. Rather, heterogeneous linkage among cap-and-trade, carbon taxes and performance standards is <a href="https://scholar.harvard.edu/files/stavins/files/linking_heterogeneous_climate_policies_consistent_with_the_paris_agreement_in_journal_january_2019_002.pdf">perfectly feasible</a>.</p>
<p>Expanding carbon markets in this way lowers costs, enabling countries to be more ambitious. One recent study estimates that linkage could, in theory, <a href="https://www.ieta.org/page-18192/7895908">reduce compliance costs by 75%</a>.</p>
<p>But for such systems to be meaningful, each country’s steps must be correctly counted toward its national target under the Paris Agreement. This is where Article 6 of the Paris Agreement comes in. Writing the rules for this article was the primary task for negotiators in Madrid (28 other articles were completed at the 2018 COP in Katowice, Poland). </p>
<p>Unfortunately, Brazil, Australia and a few other countries insisted on adopting accounting loopholes that made it impossible to reach agreement in Madrid on Article 6. Negotiators had an opportunity to define clear and consistent guidance for accounting for emissions transfers but failed to close a deal. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1206314234071658497"}"></div></p>
<p>But if they had adopted guidance that extended much beyond basic accounting rules, as some countries wanted, the result could have been restrictive requirements that would actually impede effective linkage. This would have made it more expensive, not less, for nations to achieve their Paris targets. As Teresa Ribera, minister for the Ecological Transition of Spain, observed at COP-25, “<a href="https://www.bloomberg.com/news/articles/2019-12-04/spain-says-no-deal-better-than-bad-agreement-on-carbon-at-cop2">No deal is better than a bad deal</a>” on carbon markets and Article 6. </p>
<p>The baton for completing Article 6 has been passed to COP-26 in Glasgow in November 2020. In the meantime, without agreement on an overall set of rules, countries may develop their own rules for international linkages that can foster high-integrity carbon markets, as California, Quebec, the European Union and Switzerland already have. If negotiators can keep their eyes on the prize and resist being diverted by demands from activists and interest groups, I believe real success is still possible.</p><img src="https://counter.theconversation.com/content/129001/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Stavins has served as a consultant on the design of cap-and-trade systems for the Western States Petroleum Association. The work of the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements have received funding from a variety of foundations, which are listed on the respective websites. Stavins is a member of the Board of Directors of Resources for the Future.</span></em></p>Activists wanted nations to make bigger climate commitments at the Madrid COP-25 meeting, but the meeting’s real goal was agreeing on rules for pricing carbon pollution.Robert Stavins, A.J. Meyer Professor of Energy and Economic Development, Harvard Kennedy SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1148972019-09-12T11:05:53Z2019-09-12T11:05:53ZChina is positioned to lead on climate change as the US rolls back its policies<figure><img src="https://images.theconversation.com/files/291837/original/file-20190910-190044-11yudxd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Smoke from a coal-fired Beijing power plant that closed in 2017 as part of China's transition to cleaner energy.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/China-Pollution-Deaths/25c1adc8b8524f89815665bbe66dfb62/49/0">AP Photo/Andy Wong</a></span></figcaption></figure><p>As the <a href="https://www.ipcc.ch/sr15/">effects of climate change</a> become more widespread and alarming, U.N. Secretary-General António Guterres has <a href="https://www.un.org/en/climatechange/">called on nations</a> to step up their plans for cutting greenhouse gas emissions. Every country has a part to play, but if the world’s largest emitters fail to meet their commitments, the goal of holding global warming to a manageable level will remain out of reach. </p>
<p>U.S. carbon dioxide emissions are <a href="https://www.npr.org/2019/01/08/683258294/u-s-carbon-dioxide-emissions-are-once-again-on-the-rise">on the rise</a> after several years of decline, due in part to the Trump administration’s repeal or delay of <a href="https://www.cnn.com/2019/09/04/politics/trump-climate-change-policy-rollbacks/index.html">Obama administration policies</a>. In contrast, China – the world largest emitter – appears to be honoring its climate targets under the <a href="https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement">2015 Paris Agreement</a>, as we documented in a <a href="http://doi.org/10.1038/s41467-019-09159-0">recent article with colleagues</a>.</p>
<p>We study many aspects of China’s <a href="https://scholar.google.com/citations?user=UCgFHW8AAAAJ&hl=en">energy and climate policy</a>, including <a href="https://scholar.google.com/citations?user=Wx_drAEAAAAJ&hl=en">industrial energy efficiency and reforestration</a>. Our analysis indicates that if China fully executes existing policies and finishes reforming its electric power sector into a market-based system, its carbon dioxide emissions are likely to peak well before its 2030 target. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1161967694004047873"}"></div></p>
<h2>China’s climate portfolio</h2>
<p>Over the last decade China has <a href="https://theconversation.com/for-china-climate-change-is-no-hoax-its-a-business-and-political-opportunity-69191">positioned itself as a global leader</a> on climate action through aggressive investments and a bold mix of climate, renewable energy, energy efficiency and economic policies. As one of us (Kelly Sims Gallagher) documents in the recent book <a href="https://mitpress.mit.edu/books/titans-climate">“Titans of the Climate</a>,” China has implemented more than 100 policies related to lowering its energy use and greenhouse gas emissions. </p>
<p>Notable examples include a <a href="https://www.eia.gov/todayinenergy/detail.php?id=11471">feed-in-tariff policy</a> for renewable energy generators, which offers them a guaranteed price for their power; energy efficiency standards for power plants, motor vehicles, buildings and equipment; targets for energy production from non-fossil sources; and mandated caps on coal consumption.</p>
<p>China has added vast wind and solar installations to its grid and developed large domestic industries to manufacture solar panels, batteries and electric vehicles. In late 2017 it launched a <a href="https://unfccc.int/news/china-to-launch-world-s-largest-emissions-trading-system">national emissions trading system</a>, which creates a market for buying and selling carbon dioxide emissions allowances. This was a profoundly symbolic step, given that the United States still has not adopted a national market-based climate policy. </p>
<p>Most of these policies will produce additional benefits, such as improving China’s energy security, promoting economic reform and reducing ground-level air pollution. The only major program explicitly aimed at reducing carbon dioxide is the emissions trading system.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=443&fit=crop&dpr=1 600w, https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=443&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=443&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=557&fit=crop&dpr=1 754w, https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=557&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/291631/original/file-20190909-109919-15b1ns4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=557&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">China will need to carry out multiple policies to start reducing its carbon dioxide emissions by 2030 – most importantly, reforming its electric power sector.</span>
<span class="attribution"><a class="source" href="https://www.nature.com/articles/s41467-019-09159-0/figures/7">Gallagher et al., 2019.</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>Major challenges and policy gaps</h2>
<p>Under the Paris Agreement, China committed to start reducing its carbon dioxide emissions and derive 20% of its energy from non-fossil fuels by around 2030. But when Chinese emissions <a href="https://www.theguardian.com/environment/2018/dec/05/brutal-news-global-carbon-emissions-jump-to-all-time-high-in-2018">rose in 2018</a>, international observers feared that Beijing might fail to meet its targets. We analyzed China’s actions to assess that risk.</p>
<p>In our review, we found that the policies with the greatest influence over China’s projected emissions in 2030 were power sector reform, industrial transformation, industrial efficiency, emissions trading and light-duty vehicle efficiency.</p>
<p>Reforming the electric power sector is an essential step. Traditionally, electricity pricing schemes in China were determined by the <a href="https://www.uschina.org/policy/national-development-and-reform-commission">National Development and Reform Commission</a>, which leads the country’s macroeconomic planning. They favored existing power producers, particularly coal plants, not the cleanest or most efficient sources. </p>
<p>China committed to electric power reform, <a href="https://www.raponline.org/blog/a-new-framework-for-chinas-power-sector/">including emission reductions and greater use of renewables</a>, in 2015. Converting to a process under which grid managers buy electricity from generators starting with the lowest-cost sources should facilitate installation and use of renewables, since renewable electricity has almost zero marginal costs. Meanwhile, renewable energy projects across China, especially solar, have become <a href="https://www.carbonbrief.org/solar-now-cheaper-than-grid-electricity-in-every-chinese-city-study-finds">cheaper than grid electricity</a>.</p>
<p>Even as China made big investments in wind and solar power in recent years, it also <a href="https://www.reuters.com/article/us-china-power-capacity/china-suspends-new-coal-fired-power-plants-in-29-provinces-report-idUSKBN1880P4">kept building coal plants</a>. Power sector reform will help reduce the resulting overcapacity by stopping planned additions and encouraging market competition. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/PY29hugrfNY?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Reducing China’s reliance on coal energy is an enormous long-term shift.</span></figcaption>
</figure>
<p>But success is not guaranteed. The affected companies are giant state-owned enterprises. There is political resistance from owners of existing coal-fired power plants and from provinces that produce and use a lot of coal. The current U.S.-China trade war is slowing China’s economic growth and spurring <a href="https://www.cnbc.com/2019/02/28/china-is-facing-employment-challenges-as-its-economy-slows-official.html">rising concerns about employment</a>, which could further complicate the reform process.</p>
<p>China’s emissions trading system has had a very modest impact so far because it set a low initial price on carbon dioxide emissions: US$7 per ton, increasing by 3% annually through 2030. But our analysis found that emissions trading, which allows low-carbon generators to make money by selling emissions allowances that they don’t need, could become influential over the longer term if it can sustain a much higher price. If China reduces its cap on total carbon dioxide emissions after 2025, which will increase the price of emissions allowances, this policy could become a major driver for emission reductions in the power sector. </p>
<p>Energy efficiency standards, particularly for coal-fired power plants, factories and motor vehicles, will also be very important over the coming decade. To continue driving progress, China will need to update these standards continuously. </p>
<p>Finally, there are some important gaps in China’s climate policies. Currently they only target carbon dioxide emissions, although China also generates significant quantities of other greenhouse gases, including <a href="https://doi.org/10.1016/j.ecoinf.2014.01.009">methane and black carbon</a>. </p>
<p>And China is contributing to emissions outside of its borders by <a href="https://www.ft.com/content/f965fa22-9be4-11e8-9702-5946bae86e6d">exporting coal equipment</a> and <a href="https://www.theguardian.com/world/2019/apr/25/belt-and-road-summit-puts-spotlight-on-chinese-coal-funding">directly financing overseas coal plants</a> through its Belt and Road Initiative. No nation, including China, currently reports emissions generated abroad in its national emissions inventory.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=386&fit=crop&dpr=1 600w, https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=386&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=386&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=485&fit=crop&dpr=1 754w, https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=485&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/291842/original/file-20190910-190035-suytqa.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=485&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Coal projects currently financed by China.</span>
<span class="attribution"><a class="source" href="https://endcoal.org/finance-tracker/">Global Coal Finance Tracker</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span>
</figcaption>
</figure>
<h2>Following through</h2>
<p>The biggest challenge China faces in achieving its Paris targets is making sure that business and local governments comply with policies and regulations that the government has already put in place. In the past, China has sometimes struggled with environmental enforcement at the local level when provincial and city governments <a href="https://doi.org/10.1016/j.envdev.2012.05.005">prioritized economic development over the environment</a>.</p>
<p>Assuming that China does carry out its existing and announced climate and energy policies, we think its carbon dioxide emissions could likely peak well before 2030. In our view, Chinese leaders should focus on completing power sector reform as soon as possible, implementing and strengthening emissions trading, making energy efficiency standards more stringent in the future and developing new carbon pricing policies for sectors such as iron, steel and transportation. </p>
<p>If they succeed, U.S. politicians will no longer have “But what about China?” as an excuse for opposing climate policies at home.</p>
<p><em><a href="https://energyinnovation.org/team-member/robbie-orvis/">Robbie Orvis</a> and <a href="https://energyinnovation.org/team-member/jeffrey-rissman/">Jeffrey Rissman</a> from <a href="https://energyinnovation.org/">Energy Innovation</a> and <a href="https://www.linkedin.com/in/qiang-liu-b66a262a/?originalSubdomain=cn">Qiang Lu</a> from the <a href="https://www.ctc-n.org/about-ctcn/national-designated-entities/national-center-climate-change-strategy-and-international">National Center for Climate Change Strategy and International Cooperation</a> in China co-authored the study described in this article.</em></p>
<p>[ <em><a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=expertise">Expertise in your inbox. Sign up for The Conversation’s newsletter and get a digest of academic takes on today’s news, every day.</a></em> ]</p><img src="https://counter.theconversation.com/content/114897/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kelly Sims Gallagher currently receives sponsored research grants from BP, Breakthrough Energy, Casey & Family Foundation, ClimateWorks, The William and Flora Hewlett Foundation, Rockefeller Brothers Fund, and U.S. Department of Defense. The Energy Foundation provided support for this research project.</span></em></p><p class="fine-print"><em><span>Fang Zhang receives funding from BP, Breakthrough Energy, Casey & Family Foundation, ClimateWorks, The William and Flora Hewlett Foundation, Rockefeller Brothers Fund, and the Department of Defense. The Energy Foundation provided support for this research project.</span></em></p>The United Nations is calling on world governments to step up action against climate change. Can China, the world’s biggest carbon emitter, fulfill its pledges?Kelly Sims Gallagher, Professor of Energy and Environmental Policy and Director, Center for International Environment and Resource Policy at The Fletcher School, Tufts UniversityFang Zhang, China Research Coordinator and Postdoctoral Research Fellow, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1080112018-12-03T11:33:57Z2018-12-03T11:33:57ZGeorge H.W. Bush understood that markets and the environment weren’t enemies<figure><img src="https://images.theconversation.com/files/248306/original/file-20181202-194925-b20gxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">President George H.W. Bush (right) fishing on the Kennebunk River in Maine, Aug. 27, 1990. </span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-AP-A-MAINE-USA-APHS161255-George-H-W-Bu-/6299fa3b7de24d779e4cac246fd358a6/74/0">AP Photo/Doug Mills</a></span></figcaption></figure><p>Former President George H.W. Bush, who died on Nov. 30, was admirable for many reasons, from his skillful <a href="https://theconversation.com/why-well-miss-george-h-w-bush-americas-last-foreign-policy-president-95560">leadership through the end of the Cold War</a> to his personal warmth and courtesy. As an <a href="https://scholar.google.com/citations?user=lfkXE9kAAAAJ&hl=en">environmental economist</a>, I believe his approach to conservation also deserves attention.</p>
<p>Bush <a href="https://news.yale.edu/2018/12/01/lifetime-public-service-remembrance-george-hw-bush-48-ba">majored in economics at Yale</a> and was a skilled politician. He believed that market-based solutions could protect the environment at lower cost than the command-and-control strategy that was more typical in the 1970s and 1980s. </p>
<p>Under that approach, regulators ordered each polluter to install the same equipment to reduce emissions. This could be cost-effective <a href="http://faculty.haas.berkeley.edu/wolfram/papers/fkw_100326.pdf">if all polluters used the same technology</a>, but in modern economies, firms rarely have similar management or the same operating equipment. Bush was willing to test the idea that setting pollution reduction targets and letting regulated firms decide how best to achieve them could lead to better outcomes.</p>
<h2>Markets for clean air</h2>
<p>In June 1989, Bush proposed what would become his most important environmental achievement: the <a href="https://www.epa.gov/clean-air-act-overview/1990-clean-air-act-amendment-summary">Clean Air Act Amendments of 1990</a>. This sweeping legislation used a market-based approach to halve sulfur dioxide emissions from coal-fired power plants, which reacted in the air to produce harmful <a href="https://www.epa.gov/acidrain/what-acid-rain">acid rain</a>. </p>
<p>This pollution was generated mainly by coal-fired electric utilities in the Midwest, but winds carried it into New England and mid-Atlantic states, where it <a href="https://www.smithsonianmag.com/science-nature/acid-rain-and-our-ecosystem-20824120/">damaged forests, rivers and lakes</a>. States where the pollution was produced had little incentive to regulate it because the costs were borne by others far away. In a 2011 study, Nobel Laureate William Nordhaus and others estimated that coal-fired power plants generated social costs – including acid rain – that could <a href="http://dx.doi.org/10.1257/aer.101.5.1649">equal or exceed the value of the electricity they produced</a>. </p>
<p>President Bush followed the advice of economists who recommended introducing a national market where utilities could <a href="http://www.robertstavinsblog.org/2010/07/27/beware-of-scorched-earth-strategies-in-climate-debates/">buy and sell the right to pollute</a>. This approach made sense for mitigating acid rain because utilities differed with respect to their cost of reducing emissions. Utilities in states such as Ohio had much higher emissions, and a greater scope of emissions reductions possibilities if they were required to cut them.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=912&fit=crop&dpr=1 600w, https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=912&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=912&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1146&fit=crop&dpr=1 754w, https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1146&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/248303/original/file-20181202-194938-100udjy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1146&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">President George Bush presents a pen he used to sign the Clean Air Act Amendments to EPA Administrator William Reilly, left, Nov. 16, 1990 as Energy Secretary James Watkins looks on.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-Associated-Press-Domestic-News-Dist-of-/4bbbba2cebdb4a41b43526cd427ecb2d/22/0">AP Photo/Charles Tasnadi</a></span>
</figcaption>
</figure>
<p>Under the legislation, each utility would receive an allotment of permits, proportional to its past emissions, that allowed it to release a fixed amount of pollution. The total number of permits was set at a level that would <a href="http://dx.doi.org/10.1086/467384">reduce national emissions by 10 million tons relative to the 1980 level</a>, phasing down over time. Each company could use its permits to cover its emissions, or sell any permits it did not use <a href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.1.103">at the market price</a>. If a utility could reduce its emissions for less than the going market price for a permit, it could make those reductions by whatever means it chose, then sell the permit and keep the difference.</p>
<p>This approach encouraged utilities to hire environmental engineers to update their production processes and find cleaner strategies, such as <a href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.1.103">switching to lower-sulfur coal</a>. It <a href="http://dx.doi.org/10.1257/jep.12.3.69">created dynamic innovation investment</a> to discover new strategies for producing power while creating fewer emissions. </p>
<p>The legislation <a href="https://www.eenews.net/stories/1059994544">passed the Senate 89 to 10 and the House 401 to 25.</a> Such bipartisan support for environmental regulation is rarely seen today. “Every city in America should have clean air,” President Bush <a href="https://www.nytimes.com/1990/11/16/us/bush-signs-major-revision-of-anti-pollution-law.html">said as he signed it</a>. “With this legislation I firmly believe we will.” And studies show that he was right: The program successfully <a href="http://dx.doi.org/10.1257/jep.12.3.69">reduced sulfur dioxide emissions at a lower cost</a> than the command-and-control method.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=229&fit=crop&dpr=1 600w, https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=229&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=229&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=288&fit=crop&dpr=1 754w, https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=288&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/248304/original/file-20181202-194938-uxfrgw.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=288&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Wet sulfate deposition fell by 66 percent across the eastern U.S. from 1989–1991 to 2014–2016, thanks to reduced sulfate emissions.</span>
<span class="attribution"><a class="source" href="https://www3.epa.gov/airmarkets/progress/reports/acid_deposition_figures.html#figure1">EPA</a></span>
</figcaption>
</figure>
<h2>Can emissions trading save Earth’s climate?</h2>
<p>Today climate change is the world’s biggest environmental challenge. Bush took this problem seriously enough to issue an order in 1989 that led to creation of the <a href="https://www.globalchange.gov/">U.S. Global Change Research Program</a>, which produces expert reports on <a href="https://nca2018.globalchange.gov/">how climate change is affecting the United States</a>. In 1992 he signed the <a href="https://unfccc.int/">United Nations Framework Convention on Climate Change</a>, which created a process for countries to work together to understand and respond to climate change. </p>
<p>It’s hard to know whether Bush would have taken steps to curb climate change if he had been reelected in 1992. Some members of his administration <a href="https://archive.epa.gov/epa/aboutepa/william-k-reilly-oral-history-interview.html">supported such a course</a>, but others were <a href="https://www.nytimes.com/interactive/2018/08/01/magazine/climate-change-losing-earth.html">less convinced of the need to act</a>. And <a href="https://www.nytimes.com/1992/07/04/us/the-1992-campaign-bush-on-the-environment-a-record-of-contradictions.html">critics found fault</a> with positions Bush took on other environmental issues, especially in the second half of his term.</p>
<p>Nonetheless, Bush succeeded in building a political coalition to reduce pollution, and I believe there are <a href="https://ideas.repec.org/p/nbr/nberwo/14963.html">valuable political economy lessons</a> to be learned from his record as debate continues over future U.S. climate mitigation policy. </p>
<p>As our nation’s population and per-capita income continue to grow, making progress toward sustainability will require reducing the emissions our economy generates per dollar of income. The acid rain program showed that markets for pollution lower the cost to society of achieving this goal. By rewarding economic actors who can reduce pollution at the lowest cost, they give businesses an incentive to become even better at this task. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/c9QodGK-FJA?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">President Bush speaks on U.S. climate change policy at Georgetown University, Feb. 6, 1990.</span></figcaption>
</figure>
<p>As concerns grow over <a href="https://theconversation.com/being-born-in-the-wrong-zip-code-can-shorten-your-life-104037">inequality in America</a>, U.S. officials also must pay close attention to who bears the costs of new regulations. If carbon mitigation policies raise electricity and gasoline prices, then middle-class purchasing power could decline. </p>
<p>But this income effect can be offset by simultaneously imposing a carbon fee and then <a href="https://www.brookings.edu/wp-content/uploads/2016/06/05222014_exec_summary_carbon_tax_broader_us_fiscal_reform.pdf">giving households a lump-sum rebate</a>. This approach would adhere to President Bush’s core goals of harnessing market forces to accelerate environmental progress while protecting the pocketbook of the middle class. Prominent liberal and conservative economic experts who have served under every U.S. president since Nixon <a href="https://www.clcouncil.org/founding-members/">support this approach</a>.</p>
<p>President Trump plans to <a href="https://theconversation.com/why-trumps-decision-to-leave-paris-accord-hurts-the-us-and-the-world-78707">withdraw the United States from the Paris Climate Accord</a>, the latest stage of international efforts to curb climate change, and has repeatedly <a href="https://www.cnn.com/2018/11/26/politics/donald-trump-climate-change/index.html">questioned whether climate change is real</a>. In contrast, President Bush spoke of it as a challenge to be faced. Just after signing the Framework Convention on Climate Change, Bush stated in a <a href="https://www.nytimes.com/1992/06/13/world/the-earth-summit-excerpts-from-speech-by-bush-on-action-plan.html">speech to the 1992 Earth Summit in Rio de Janeiro</a>:</p>
<blockquote>
<p>“We must leave this earth in better condition than we found it, and today this old truth must be applied to new threats facing the resources which sustain us all, the atmosphere and the ocean, the stratosphere and the biosphere. Our village is truly global.”</p>
</blockquote><img src="https://counter.theconversation.com/content/108011/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew E. Kahn does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>George H.W. Bush, who pledged to be ‘the environmental president,’ took a market-based approach to pollution control that helped clear the air. Now some experts think it could work on climate change.Matthew E. Kahn, Professor of Economics, USC Dornsife College of Letters, Arts and SciencesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1029842018-09-18T04:57:15Z2018-09-18T04:57:15ZWhy NZ’s emissions trading scheme should have an auction reserve price<figure><img src="https://images.theconversation.com/files/236636/original/file-20180917-158234-iupz1b.jpg?ixlib=rb-1.1.0&rect=764%2C109%2C4440%2C2754&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New Zealand's emission reduction target for 2030 is to bring emissions to 30% below 2005 levels, and to be carbon neutral by 2050.</span> <span class="attribution"><span class="source">from www.shutterstock.com</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span></figcaption></figure><p>While people’s eyes often glaze over when they hear the words “emissions trading”, we all respond to the price of carbon. </p>
<p>Back in 2010, when the carbon price was around NZ$20 per tonne, <a href="https://motu.nz/our-work/environment-and-resources/emission-mitigation/emissions-trading/including-forestry-in-an-emissions-trading-scheme-lessons-from-new-zealand/">forest nurseries in New Zealand boosted production</a>. But when <a href="https://www.odt.co.nz/business/farming/pine-seedlings-destroyed-ets-price-plummets">prices plunged</a> thereafter, hundreds of thousands of tree seedlings <a href="https://www.stuff.co.nz/business/farming/agribusiness/71818147/foresters-bailing-out-of-failed-ets-scheme">were destroyed rather than planted</a>, wiping out both upfront investment and new forest growth.</p>
<p>Emission prices have since recovered but no one knows if this will last. With consultation underway on improving the <a href="http://www.mfe.govt.nz/publications/climate-change/improvements-new-zealand-emissions-trading-scheme">New Zealand Emissions Trading Scheme</a> (NZ ETS), the government should seriously consider a “price floor” to rebuild confidence in low-emission investment. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/a-new-approach-to-emissions-trading-in-a-post-paris-climate-78746">A new approach to emissions trading in a post-Paris climate</a>
</strong>
</em>
</p>
<hr>
<h2>How a price floor works</h2>
<p>If we want to make a smart transition to <a href="https://www.productivity.govt.nz/inquiry-content/3254?stage=4">a low-emission economy</a>, we need to change how we value emissions so people make the investments that deliver on our targets. Implementing a reserve price at auction – or a “price floor” – is a powerful tool for managing the risk that emission prices could fall for the wrong reasons and undermine much needed low-emission investments. </p>
<p>In <a href="https://www.mfe.govt.nz/ets">New Zealand’s ETS</a>, participants are required to give tradable emission units (i.e. permits) to the government to cover the emissions for which they are liable. A limit on unit supply relative to demand reduces total emissions and enables the market to set the unit price. </p>
<p>In the future, the government will be auctioning emission units into the market. A reserve price at auction, which is simple to implement, can help avoid very low prices. If private actors are not willing to pay at least the reserve price, the government would stop selling units and the supply to the market would automatically contract. </p>
<p>The government’s current <a href="http://www.mfe.govt.nz/publications/climate-change/improvements-new-zealand-emissions-trading-scheme">ETS consultation document</a> suggests that no price floor will be needed in the future because a limit on international purchasing will be sufficient to prevent the kind of price collapse we experienced in the past. However, that assessment neglects other drivers of this risk. </p>
<h2>When low ETS prices are a pitfall</h2>
<p>Ideally, ETS prices would respond to signals of the long-term cost of meeting New Zealand’s decarbonisation goals and achieving global climate stabilisation. With today’s information, we generally expect ETS prices to rise over time. For example, modelling prepared for the <a href="https://www.productivity.govt.nz/">New Zealand Productivity Commission</a> suggests <a href="https://www.productivity.govt.nz/sites/default/files/At%20a%20glance_Low-emissions%20economy_0.pdf">emission prices could rise</a> to at least NZ$75 per tonne, possibly over NZ$200 per tonne, over the next three decades. </p>
<p>However, ETS prices could also fall because of sudden technology breakthroughs or economic downturn. Even though some low-emission investors would lose the returns they had hoped for, this could be an efficient outcome because low ETS prices would reflect true decarbonisation costs. Technological and economic uncertainty imposes a genuine risk on low-emission investments that society cannot avoid. </p>
<p>But there is another scenario in which ETS prices fall while decarbonisation costs remained high. This could arise because of political risk. For example, if a major emissions-intensive industrial producer was to exit the market unexpectedly and it was unclear how the government would respond, or if a political crisis was perceived to threaten the future of the ETS, then emission prices could collapse and efficient low-emission investments could be derailed. </p>
<p>Even when remedies are on the way, it can take time to correct perceptions of weak climate policy intentions. The New Zealand government’s <a href="https://motu.nz/our-work/environment-and-resources/emission-mitigation/emissions-trading/evolution-of-the-new-zealand-emissions-trading-scheme-linking/">slow response to the impact of low-quality international units</a> in the ETS from 2011 to mid-2015 is a vivid example of this. </p>
<h2>A simple and effective solution</h2>
<p>With a price floor, an ETS auction will respond quickly and predictably to unpredictable events that lower prices. A price floor signals the direction of travel for minimum emission prices and builds confidence for low-emission investors and innovators. It also provides greater assurance to government about the minimum level of auction revenue to expect. </p>
<p>It is important to note that ETS participants can still trade units amongst each other at prices below the price floor. The price floor simply stops the flow of further auctioned units from the government into the market until demand recovers again and prices rise. </p>
<p>We have three good case studies overseas for the value of a price floor. </p>
<ol>
<li><p>The European Union ETS did not have a price floor for correcting unexpected oversupply and prices dropped because of the global financial crisis, other energy policies and overly generous free allocation. It now has a complex <a href="https://ec.europa.eu/clima/policies/ets/reform_en">market stability reserve</a> for this purpose, although that operates with less ease and transparency than a reserve price at auction.</p></li>
<li><p>To counteract low EU ETS prices, the UK created its own <a href="https://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN05927">price floor</a> as a “top up” to the EU ETS. Although this did not add to global mitigation beyond the EU ETS cap, it did <a href="http://energypost.eu/emissions-reductions-from-carbon-pricing-can-be-big-quick-and-cheap/">drive down coal-fired generation</a> in the UK. </p></li>
<li><p><a href="https://www.c2es.org/content/california-cap-and-trade/">California’s ETS</a> was designed in conjunction with a large suite of emission reduction measures with complex interactions. Its reserve price at auction has ensured that a <a href="https://cleantechnica.com/2018/03/08/californias-success-reserve-prices-auctions-emission-allowances-encourage-adoption-eu/">minimum and rising emission price</a> has been maintained, despite uncertainties about the impact of other measures. </p></li>
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<h2>Keeping NZ on track for decarbonisation</h2>
<p>In New Zealand, the Productivity Commission supports the concept of an auction reserve price in its <a href="https://www.productivity.govt.nz/inquiry-content/3254?stage=4">final report on a transition to a low-emissions economy</a>. </p>
<p>The only potential downside of a price floor is the political courage needed to set its level. It could be set at the minimum level that any credible <a href="https://static1.squarespace.com/static/54ff9c5ce4b0a53decccfb4c/t/59244eed17bffc0ac256cf16/1495551740633/CarbonPricing_Final_May29.pdf">global</a> or <a href="https://www.productivity.govt.nz/sites/default/files/Modelling%20the%20transition%20to%20a%20lower%20net%20emissions%20New%20Zealand_Interim%20Results_Concept%2C%20Motu%2C%20Vivid.pdf">local</a> modelling suggests is consistent with New Zealand and global goals. The Climate Change Commission could provide independent advice on preferred modelling and an appropriate level. The merits of a price floor warrant cross-party support. </p>
<p>If the market operates in line with expectations, then the price floor has no impact on emission prices. But the price floor usefully guards against price collapse when the market does not go to plan. </p>
<p>The government, ETS participants and investors need to understand that international purchasing is not the only driver of downside price risk in the NZ ETS. A price floor would strengthen the incentives for major long-term investments in low-emission technologies, infrastructure and land uses in the face of uncertainty. </p>
<p>To reach New Zealand’s <a href="https://www.mfe.govt.nz/climate-change/what-government-doing/emissions-reduction-targets/about-our-emissions-reduction">ambitious emission reduction targets</a> for 2030 (a 30% reduction below 2005 levels) and beyond, bargain-basement emission prices need to stay a thing of the past. </p>
<p><em>This article was co-authored with Catherine Leining, a policy fellow at <a href="https://motu.nz/">Motu Economic and Public Policy Research</a>.</em></p><img src="https://counter.theconversation.com/content/102984/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Suzi Kerr is a fellow at Motu. This research was supported by the Aotearoa Foundation.</span></em></p>With consultation underway to improve the New Zealand emissions trading scheme, experts argue that a reserve price on emissions units could help rebuild confidence in low-emission investment.Suzi Kerr, Adjunct Professor, School of Government, Te Herenga Waka — Victoria University of WellingtonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1018122018-08-20T06:26:29Z2018-08-20T06:26:29ZThe too hard basket: a short history of Australia’s aborted climate policies<p>Less than three years ago, after Malcolm Turnbull had wrested the prime ministership from Tony Abbott, I wrote an article entitled “<a href="https://theconversation.com/carbon-coups-from-hawke-to-abbott-climate-policy-is-never-far-away-when-leaders-come-a-cropper-47542">Carbon coups: from Hawke to Abbott, climate policy is never far away when leaders come a cropper</a>”.</p>
<p>Less than two weeks ago I <a href="https://theconversation.com/emissions-policy-is-under-attack-from-all-sides-weve-been-here-before-and-it-rarely-ends-well-101103">wrote again</a> about climate policy’s unique knack of causing leaders to falter, with terminal results for the policies and, often, the leaders themselves.</p>
<p>Now Turnbull has added a new chapter to this saga. He has <a href="https://theconversation.com/malcolm-turnbull-shelves-emissions-reduction-target-as-leadership-speculation-mounts-101811">abandoned the emissions component</a> of his beleaguered <a href="https://theconversation.com/infographic-the-national-energy-guarantee-at-a-glance-85832">National Energy Guarantee</a>, in what has been characterised as a capitulation to a vocal group of backbench colleagues. The climbdown may still not be enough to save his leadership.</p>
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<a href="https://theconversation.com/emissions-policy-is-under-attack-from-all-sides-weve-been-here-before-and-it-rarely-ends-well-101103">Emissions policy is under attack from all sides. We've been here before, and it rarely ends well</a>
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<p>A workable, credible climate policy has been the impossible object that has brought down every prime minister we’ve had for a more than a decade – all the way back to (and including) John Howard.</p>
<h2>Howard’s way</h2>
<p>Howard had spent the first ten years of his prime ministership denying either the existence of climate change or the need to do anything about it. In 2003, virtually all of his cabinet supported an emissions trading scheme. But, after meeting with industry leaders, he <a href="https://www.theage.com.au/national/howard-blows-hot-and-cold-on-emissions-20061115-ge3kkq.html">dumped the idea</a>.</p>
<p>The following year Howard <a href="http://www.abc.net.au/pm/content/2004/s1194166.htm">called a meeting of large fossil fuel companies, seeking their help in destroying the renewable energy target</a> that he had been forced to accept in the runup to the 1997 Kyoto climate summit.</p>
<p>However, in 2006, the political pressure to act on climate became too great. The <a href="https://theconversation.com/au/topics/millennium-drought-22237">Millennium Drought</a> seemed endless, the European Union had launched its own emissions trading scheme, and Al Gore’s documentary <a href="https://theconversation.com/ten-years-on-how-al-gores-an-inconvenient-truth-made-its-mark-59387">An Inconvenient Truth</a> cut through with the Australian public. Late in the year, Treasury came back for another bite at an emissions trading cherry. </p>
<p>In his book <a href="https://www.mup.com.au/books/triumph-and-demise-paperback-softback">Triumph and Demise</a>, journalist Paul Kelly describes how Treasury secretary Ken Henry convinced Howard to adopt an emissions trading policy, telling him: </p>
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<p>Prime Minister, I’m taking as my starting point that during your prime ministership you will want to commit us to a cap on national emissions. If my view on that is wrong, there is really nothing more I can say… If you want a cap on emissions then it stands to reason that you want the most cost-effective way of doing that. That brings us to emissions trading, unless you want a tax on carbon.</p>
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<h2>The moral challenge</h2>
<p>Howard’s problem was that voters were not convinced by his backflip. In November 2007, Kevin Rudd – who had proclaimed climate change “the great moral challenge of our generation” – became prime minister. A tortuous policy-making process ensued, with ever greater concessions to big polluters. </p>
<p>In late 2009, according to <a href="https://books.google.com.au/books?id=Ij9bBAAAQBAJ&pg=PT169&lpg=PT169&dq=turnbull+chris+kenny+kevin+rudd+cprs&source=bl&ots=YYMvDihfrR&sig=w7cmgULKBCRLE26MWrB3mlz0Gqw&hl=en&sa=X&ved=2ahUKEwjl7rzg7frcAhUKjLwKHci9DDUQ6AEwB3oECAIQAQ#v=onepage&q=turnbull%20chris%20kenny%20kevin%20rudd%20cprs&f=false">Kelly’s account</a>, Rudd refused to meet with the then opposition leader Malcolm Turnbull to resolve the outstanding issues around Rudd’s Carbon Pollution Reduction Scheme. Then, in December of that year, Turnbull was toppled by Abbott and the legislation was doomed. </p>
<p>Meanwhile, the Copenhagen climate conference ended in disaster, and although advised to go for a double-dissolution election, Rudd baulked. In April 2010, he <a href="https://www.smh.com.au/environment/climate-change/rudds-ets-flipflop-sparks-climate-chaos-20100428-tsgu.html">kicked emissions trading into the long grass</a> for at least three years, and his approval ratings plummeted.</p>
<p>In July 2010 Julia Gillard toppled Rudd, and the prime ministership has never been safe from internal dissent since. Not since 2004 has a federal leader won a general election from which they would survive to contest the next. </p>
<p>In the final days of the 2010 election campaign, Gillard made the fateful statement that “there will be no carbon tax under a government I lead”.</p>
<p>That election resulted in a hung parliament, and after meeting climate policy advocates Ross Garnaut and Nick Stern, two crucial independents – Tony Windsor and Rob Oakeshott – made a carbon price their price for supporting Gillard.</p>
<h2>The carbon tax war</h2>
<p>Gillard steered the legislation through parliament in the face of ferocious opposition from Abbott, who declared a “<a href="https://theconversation.com/abbott-has-pledged-to-repeal-the-carbon-tax-but-could-it-be-done-7986">blood oath</a>” that he would repeal her legislation. After winning the 2013 election, he <a href="https://theconversation.com/obituary-australias-carbon-price-29217">delivered on his pledge</a> in July 2014. Gillard, for her part, said she <a href="https://www.theguardian.com/world/2013/sep/13/julia-gillard-labor-purpose-future">regretted</a> not taking issue with Abbott’s characterisation of her carbon pricing scheme as a tax.</p>
<p>Abbott also <a href="https://theconversation.com/planned-cut-to-renewable-energy-target-a-free-kick-for-fossil-fuels-33317">reduced the Renewable Energy Target</a>, and tried but failed to rid himself of the Australian Renewable Energy Authority and the Clean Energy Finance Corporation. </p>
<p>Abbott’s demise as prime minister was not as directly tied to climate policy as Howard’s, Rudd’s or Gillard’s. Far more instrumental were gaffes such as giving the Duke of Edinburgh a knighthood.</p>
<p>But as Abbott’s government was descending into chaos, Turnbull seemed to many middle-of-the-road voters like the perfect solution: Liberal economic policy but with added climate concern. On today’s evidence, he seems to have been willing to trade that concern away to stay in the top job.</p>
<h2>The future?</h2>
<p>As of the time of writing – Monday 20 August (it pays to be specific when the situation is in such flux) – it is clear that the NEG is dead, at least in its original incarnation as a means of tackling the climate issue. No legislation or regulation will aim to reduce greenhouse emissions, with the policy now addressing itself solely at power prices. </p>
<p>It is not clear how long Turnbull will remain in office, and one could make a case that he is no longer truly in power. Thoughts now inevitably also turn to what a Shorten Labor government would do in this area if the opposition claims victory at the next election.</p>
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Read more:
<a href="https://theconversation.com/its-ten-years-since-rudds-great-moral-challenge-and-we-have-failed-it-75534">It's ten years since Rudd's 'great moral challenge', and we have failed it</a>
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<p>The first question in that regard is whether Mark Butler – an able opposition spokesman on climate change – would become the minister for a single portfolio covering energy and environment. The next is the degree of opposition that Labor would face – both from members of the union movement looking out for the interests of coal workers, and from business and industry. If Australia’s environment groups win the battle over Adani’s planned Carmichael coalmine, will they have the heart to win the wider climate policy struggle?</p>
<p>As ever, it will come down to stamina and stomach. Would Shorten and Butler have the wherewithal to face down the various competing interests and push through a credible, lasting policy, in an area where all their predecessors have ultimately failed? </p>
<p>Will the Coalition government formulate a new emissions policy – one that can withstand the feet-to-the-fire approach that has killed off every other similar effort so far?</p><img src="https://counter.theconversation.com/content/101812/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc Hudson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Prime Minister Malcolm Turnbull has abandoned the emissions-reduction component of his signature energy policy, in the latest chapter of a brutal decade-long saga for Australian climate policy.Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/923482018-02-27T19:13:23Z2018-02-27T19:13:23ZThe Nationals have changed their leader but kept the same climate story<p>After Barnaby Joyce’s <a href="https://www.theguardian.com/australia-news/2018/feb/23/what-joyce-said-when-he-resigned-as-deputy-pm-full-transcript">demise as Deputy Prime Minister and Nationals leader</a>, and his <a href="https://theconversation.com/mccormack-wins-nationals-leadership-after-token-challenge-by-christensen-92415">replacement by Michael McCormack</a>, we might wonder what the junior Coalition partner’s leadership change means for Australia’s climate policy. </p>
<p>Perhaps the answer is “not a great deal”, given the apparent similarity between the two men’s outlooks. But then again, confident predictions about the future of Australian climate policy are a mug’s game.</p>
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<a href="https://theconversation.com/shattered-nationals-meet-to-chart-their-post-barnaby-course-92409">Shattered Nationals meet to chart their post-Barnaby course</a>
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<p>Joyce joined the Senate back in July 2005, as part of the tranche that gave the Liberal and National Coalition absolute control. At the time, another new senator, the Greens’ Christine Milne, was ready to talk with the likes of Joyce, arguing that both of their parties should share common concerns about climate change, drought, salinity, loss of native vegetation, and more.</p>
<p>Joyce evidently didn’t see it that way. When federal Liberals Brendan Nelson and Alexander Downer tried to get a debate going about the purported climate benefits of nuclear power, Joyce joined with Queensland’s Labor Premier Peter Beattie in arguing that nuclear power should not be on the agenda while Australia’s coal resources remained plentiful (although he opted against echoing Beattie’s “clean coal” push).</p>
<p>A year later, however, Joyce was more attuned to Milne’s concerns. In the context of the seemingly never-ending <a href="https://theconversation.com/au/topics/millennium-drought-22237">Millennium drought</a>, and with Nationals leader Mark Vaile urging his cabinet colleagues to spend at least another A$750 million on drought relief, Joyce fearfully noted that:</p>
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<p>The drought really has to be seen to be believed. It’s a case of creeks that haven’t run for months, sometimes years, (and) bores that are going dry. There is a real concern amongst a lot that maybe there is a final change in the climate. That’s really starting to worry people.</p>
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<p>Six months later, with the “<a href="http://www.tandfonline.com/doi/abs/10.1080/09644010802065815">first climate change election</a>” looming, Joyce used some leaping logic to describe proposed rail spending as a climate measure: </p>
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<p>We can go up to every mother and father and ask them if they can drive their tree to work and see how they go… I think that rail is greenhouse friendly. It is going to be taking all prime-movers off the road.</p>
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<h2>Roast boast</h2>
<p>Of course, this support for rural industry didn’t mean that Joyce supported any form of emissions trading put forward by either Liberal or Labor. He instead <a href="https://www.propertyrightsaustralia.org.au/joyce-wants-property-rights-inquiry/">voiced fears</a> that Australia “could soon resemble communism” unless farmers are paid properly for the carbon stored in their land. </p>
<p>In <a href="https://theyvoteforyou.org.au/people/representatives/new_england/barnaby_joyce/policies/33">2011 Joyce voted against </a> Julia Gillard’s voluntary <a href="http://www.environment.gov.au/climate-change/government/emissions-reduction-fund/cfi/about">Carbon Farming Initiative</a>, which in 2014 was <a href="http://www.cleanenergyregulator.gov.au/Infohub/CFI/Carbon-Farming-Initiative">absorbed into Tony Abbott’s Direct Action program</a>. A <a href="http://www.abc.net.au/news/rural/2017-04-09/carbon-farming-no-solution-to-reducing-australias-emissions/8409900">2017 report</a> argues that it is now helping farmers, but not reducing emissions.</p>
<p>Perhaps his most (in)famous claim came in 2009, as Kevin Rudd’s Carbon Pollution Reduction Scheme staggered towards its demise, bleeding credibility and support at every lobbyist-inspired softening. Joyce predicted that with the advent of carbon trading, the <a href="http://www.news.com.au/news/barnaby-joyce-warns-of-the-150-beef-roast/news-story/d18c1f82c39bc61dbfb3856a69989aee">Sunday roast would cost A$150</a> (a figure that was later downgraded to a far more measured and believable 100 bucks). </p>
<p>The same year, Joyce told political journalist Laurie Oakes:</p>
<blockquote>
<p>Everywhere there is a power point in your house, there is access to a new tax for the Labor Government – a new tax on ironing, a new tax on watching television, a new tax on vacuuming.</p>
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<p>In November 2009, the Nationals told the Liberals that support for carbon pricing could lead to a split in the Coalition. The then Liberal leader Malcolm Turnbull was challenged by Joe Hockey and Tony Abbott, the latter winning by a single vote. The rest is history.</p>
<p>Joyce joined in the ultimately fatal attack on Gillard’s carbon pricing scheme by upping the ante on his Sunday roast claims. Using some impressively creative reasoning, he argued that the A$23-a-tonne carbon price could lead abattoirs to end up <a href="http://www.smh.com.au/federal-politics/political-news/joyces-100-roast-prediction-rubbished-20121118-29kln.html">being slugged A$575,000 for slaughtering a single cow</a>.</p>
<h2>A party of one mind</h2>
<p>Of course, Joyce is far from alone among Nationals for baiting the greenies. Fellow backbencher George Christensen’s <a href="https://www.theguardian.com/australia-news/2018/feb/18/george-christensen-reported-to-police-over-gun-photo-aimed-at-greenie-rivals">dangerous and lamentable Facebook post</a> is just the latest in a long line of provocations.</p>
<p>Back in 1997 <a href="https://en.wikipedia.org/wiki/Tim_Fischer">Tim Fischer</a>, then Deputy Prime Minister, <a href="http://trademinister.gov.au/speeches/1997/climate_19aug.html">spoke</a> at a conference in Canberra organised by climate denialists called Countdown to Kyoto. Years later, at about the same time that Joyce first entered the Senate, his party colleague Julian McGauran reportedly flipped the bird at Greens leader Bob Brown after the Coalition voted down a Senate motion criticising the government on climate change.</p>
<p>More recently still, the Nationals have joined in <a href="https://theconversation.com/who-tilts-at-windmills-explaining-hostility-to-renewables-77762">many Liberals’ hatred of renewable energy</a>, despite the fact that it would make a lot of money for farmers.</p>
<h2>Will anything change except the climate?</h2>
<p>Joyce is gone, but the Nationals don’t exactly have hordes of tree-huggers waiting in the wings. The efforts of <a href="http://www.farmersforclimateaction.org.au/">Farmers for Climate Action</a> to influence the Nationals’ leadership succession seems to have amounted to nothing. </p>
<p>Michael McCormack (who was <a href="https://theconversation.com/politics-podcast-michael-mccormack-the-nationals-member-for-riverina-46406">interviewed by Michelle Grattan for the Conversation</a>) is already under <a href="https://twitter.com/Tim_Beshara/status/967838899287375872">Twitter scrutiny</a> over his maiden speech in 2010, when he said:</p>
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<p>When it does not rain for years on end, it does not mean it will not rain again. It does not mean we all need to listen to a government grant-seeking academic sprouting doom and gloom about climate changing irreversibly.</p>
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<p>The journalist Paddy Manning has <a href="https://www.themonthly.com.au/today/paddy-manning/2018/26/2018/1519620354/meet-our-new-deputy-pm">given an overview of his positions since then</a>. It seems that the more things change, the more they stay the same (unlike the climate).</p>
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Read more:
<a href="https://theconversation.com/under-mccormack-the-nationals-need-to-accept-they-are-a-minority-and-preserve-their-independence-92355">Under McCormack, the Nationals need to accept they are a minority and preserve their independence</a>
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<p>It is impossible to predict how and when the Nationals’ policies might change, especially in places where One Nation is waiting with open arms for any wavering voters.</p>
<p>But as ever, it is the voters who hold the key. If enough of Barnaby’s “weatherboard and iron” rural base decide that climate change is a serious, vote-deciding issue, that will be the day when the Nationals finally give up their cast-iron opposition to climate action.</p><img src="https://counter.theconversation.com/content/92348/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc Hudson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Barnaby Joyce had a long history of opposing climate action. His successor Michael McCormack seems to think the same way, despite climate being a growing threat to the Nationals’ rural voters.Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/859782017-10-20T04:59:06Z2017-10-20T04:59:06ZWill the National Energy Guarantee hit pause on renewables?<p>The federal government’s new National Energy Guarantee (NEG) proposal looks likely to put the brakes on renewable energy investment in Australia. And based on the sparse detail so far available, there are serious questions about whether the plan really can deliver on its aims of reliability, emissions reductions and lower prices. </p>
<p>The broad mechanism design could be made to work, but to be effective in driving the transition of the energy sector it would need adequate ambition on carbon emissions and very careful thought about the reliability requirements of the future electricity grid.</p>
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<a href="https://theconversation.com/infographic-the-national-energy-guarantee-at-a-glance-85832">Infographic: the National Energy Guarantee at a glance</a>
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<p>The policy may well be used to force investment into the fossil fuel power fleet through regulatory intervention, and perhaps for the power sector to buy emissions offsets. This would risk locking in a carbon-intensive power system.</p>
<h2>The NEG: top or flop?</h2>
<p>Having rejected several options – including an <a href="https://theconversation.com/emissions-trading-for-electricity-is-the-sensible-way-forward-70137">emissions intensity scheme</a>, the <a href="https://theconversation.com/as-the-clean-energy-target-fizzles-what-might-replace-it-85598">Clean Energy Target</a> put forward by the <a href="https://theconversation.com/the-finkel-review-at-a-glance-79177">Finkel Review</a>, and any continuation of the <a href="https://theconversation.com/au/topics/renewable-energy-target-8912">Renewable Energy Target</a> – the government has finally managed to get a <a href="https://theconversation.com/infographic-the-national-energy-guarantee-at-a-glance-85832">policy proposal</a> through the party room, formulated in advice by its newly established <a href="http://www.coagenergycouncil.gov.au/publications/energy-security-board-update">Energy Security Board</a>.</p>
<p>Analysts’ initial reactions have ranged from <a href="http://www.afr.com/opinion/columnists/energy-security-board-offers-the-government-a-circuitbreaker-for-energy-crisis-20171017-gz2k7t">unbridled enthusiasm</a> to <a href="http://www.afr.com/opinion/columnists/shambolic-energy-guarantee-policy-snatches-defeat-from-the-jaws-of-victory-20171018-gz3c18?utm_source=News+Wrap&utm_campaign=bf34a5b73b-EMAIL_CAMPAIGN_2017_03_30&utm_medium=email&utm_term=0_4d9b03d80b-bf34a5b73b-296301185&mc_cid=bf34a5b73b&mc_eid=9412a2e2f6">derisive rejection</a>. It depends on political judgments, expectations about how the scheme might operate in practice, and how high one’s expectations are for efficiency and environmental effectiveness. </p>
<p>The politics of this are <a href="https://www.theguardian.com/australia-news/2017/oct/20/turnbull-predicts-states-will-sign-up-to-national-energy-guarantee">complicated</a>, but there are hopes that the Labor opposition will agree to the scheme in principle. But the decision is ultimately with the Australian states, which would need to pass legislation to implement it.</p>
<h2>Reliability guarantee: supporting fossil fuels?</h2>
<p>The first element of the NEG is the “reliability guarantee”. This would require electricity retailers to buy some share of their electricity from “<a href="https://theconversation.com/baffled-by-baseload-dumbfounded-by-dispatchables-heres-a-glossary-of-the-energy-debate-84212">dispatchable</a>” sources that can be readily switched on. The NEG list includes coal and gas, as well as hydro and energy storage – essentially, anything except wind and solar.</p>
<p>The NEG proposal might be informed by a political imperative to support coal. As <a href="https://theconversation.com/the-governments-energy-policy-hinges-on-some-tricky-wordplay-about-coals-role-85843">John Quiggin</a> has pointed out, defining coal-fired plants as dispatchable is questionable at best: they have long ramp-up times and are sometimes unavailable. </p>
<p>The <a href="https://www.aemo.com.au/">Australian Energy Market Operator (AEMO)</a> would prescribe the share of the “dispatchable” power sources and perhaps also the mix of technologies in retailers’ portfolios, separately in each state. This would be a remarkably interventionist approach.</p>
<p>Demand from retailers for the power sources they are told to use could trigger investment in new gas generators, refurbishment of existing coal plants, and some investment in energy storage. It is difficult to see how it would force the building of new coal plants, given their very large upfront cost and long-term emissions liabilities.</p>
<p>Would electricity prices be lower, as the Energy Security Board’s advice <a href="http://www.coagenergycouncil.gov.au/sites/prod.energycouncil/files/publications/documents/Energy%20Security%20Board%20ADVICE....pdf">claims</a>? Investment in new power generation will tend to reduce prices, cutting into profit margins. But the resulting investments will come at higher economic cost than market solutions, because they are determined by regulators’ orders made with a view to the short-term energy mix, not long-term cost-effectiveness. And there would be risk premiums on project finance, reflecting uncertainty about future policy settings.</p>
<h2>Emissions guarantee: flexible but weak?</h2>
<p>The NEG’s second pillar is the “emissions guarantee”. This would require retailers to keep their portfolio below some level of emissions intensity (carbon dioxide per unit of electricity).</p>
<p>This increases the demand for electricity from lower-emissions technologies, allowing them to command higher market prices and therefore encouraging investment in them. This price signal would benefit renewables and also favour gas over coal, as well as discriminating against the most polluting coal plants. </p>
<p>The <a href="http://www.coagenergycouncil.gov.au/sites/prod.energycouncil/files/publications/documents/Energy%20Security%20Board%20ADVICE....pdf">Energy Security Board’s advice</a> suggests that retailers would have flexibility in complying with that obligation, by buying and selling emissions components of their contracts, and potentially also using emissions offsets from outside the scheme to make up for any exceeding of emissions limits.</p>
<p>The reliability and emissions elements of the NEG interact with each other, and the net effect depends on the detailed implementation as well as the relative importance of the two components. </p>
<p>Given the politics within government, the weight could be on support for coal and gas generation. The reliability guarantee could therefore end up putting a tight lid on the amount of new wind and solar that can enter the system. </p>
<h2>Renewables, gas or credits?</h2>
<p>The Energy Security Board makes <a href="http://www.coagenergycouncil.gov.au/sites/prod.energycouncil/files/publications/documents/Energy%20Security%20Board%20ADVICE....pdf">explicit reference</a> to Australia’s <a href="https://theconversation.com/australias-2030-climate-target-puts-us-in-the-race-but-at-the-back-45931">Paris target</a> of a 26-28% reduction in emissions, relative to 2005 levels, by 2030. Prime Minister Malcolm Turnbull has <a href="http://www.smh.com.au/environment/climate-change/paris-target-fades-from-view-as-turnbull-government-stumbles-for-an-energy-fix-20171016-gz2a8q.html">said</a> the NEG will be expected to cut electricity emissions by a <a href="http://www.abc.net.au/news/2017-10-19/national-energy-guarantee-trifecta-missing-detail/9063500">similar percentage</a>, as a “pro rata” contribution to this goal.</p>
<p>But to meet the economy-wide target, the electricity sector would need to make deeper cuts, because emissions reductions are cheaper and easier here than elsewhere. </p>
<p>The Energy Security Board says it expects renewables to reach 28-36% by 2030. This is rather low, considering that the Finkel Review projected 42% under its proposed clean energy target, and 35% under business as usual. Other <a href="https://www.climateworksaustralia.org/project/national-projects/pathways-deep-decarbonisation-2050-how-australia-can-prosper-low-carbon">analyses</a> have shown that much higher levels of renewables are achievable. </p>
<p>So if the NEG is not geared to support renewables, how could significant emissions reductions be achieved?</p>
<p>One way would be to replace coal with gas-fired power, and brown coal with black coal. But the government has flagged that it is opposed to closing old coal plants. And a large-scale shift to gas would raise electricity prices further, unless gas prices were to tumble. </p>
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Read more:
<a href="https://theconversation.com/the-governments-energy-policy-hinges-on-some-tricky-wordplay-about-coals-role-85843">The government's energy policy hinges on some tricky wordplay about coal's role</a>
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<p>That leaves another option, mentioned in the Energy Security Board’s report: power retailers could buy emissions offset credits from elsewhere to make up for not meeting the emissions standard, specifically from projects under the government’s <a href="http://www.environment.gov.au/climate-change/government/emissions-reduction-fund">Emissions Reduction Fund (ERF)</a>. </p>
<p>This might be attractive for the government, as electricity retailers would then pay for ERF credits, rather than government as has been the case until now. It may also be attractive to the power industry, as it would reduce the cost of complying with the new obligations. Retailers would pass on the costs to their customers, so electricity consumers would end up paying for ERF projects. </p>
<p>Even assuming that all of the ERF’s emissions reductions are real (and some of them <a href="https://theconversation.com/direct-action-not-giving-us-bang-for-our-buck-on-climate-change-59308">may not be</a>), all this does is shift the adjustment burden from electricity to other sectors such as agriculture.</p>
<p>The NEG has the potential to reduce emissions effectively if the parameters are adjusted accordingly. But what seems more likely is that it will put the brakes on investment in renewables, solidify the status quo and delay the energy transition.</p><img src="https://counter.theconversation.com/content/85978/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Jotzo manages research grants including from the Commonwealth government. He is a member of the ACT Climate Change Council. </span></em></p><p class="fine-print"><em><span>Salim Mazouz is director of the economic consulting firm EcoPerspectives. There are no current projects that would be affected by the material discussed in this article.</span></em></p>The National Energy Guarantee proposal seems geared towards locking in the status quo rather than driving the much-needed energy transition.Frank Jotzo, Director, Centre for Climate Economics and Policy, Australian National UniversitySalim Mazouz, Research Associate, Centre for Climate Economics and Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/852532017-10-19T01:21:50Z2017-10-19T01:21:50ZRising dragon: China’s carbon market exposes Australia’s energy paralysis<p>When China’s national carbon market is launched <a href="https://www.reuters.com/article/us-china-energy-carbon/china-co2-market-launch-set-for-november-at-earliest-government-researcher-idUSKBN18X0N7">later this year</a> it will be the world’s second-largest carbon market, after the European emissions trading scheme (ETS), which it will eventually overtake. </p>
<p>In sharp contrast, the absence of an explicit carbon price in Australia and persistent turbulence and confusion around domestic energy policy are hindering investment in renewable energy, leaving Australia lagging behind global trends in cutting emissions. </p>
<p>China will add to the cluster of national and sub-national emissions trading schemes that now exist in the European Union, Canada, the United States, Japan, South Korea and New Zealand.</p>
<p>As the World Bank Group’s 2016 <a href="http://documents.worldbank.org/curated/en/598811476464765822/pdf/109157-REVISED-PUBLIC-wb-report-2016-complete-161214-cc2015-screen.pdf">report</a> on the state and trends in carbon pricing indicated, up to a quarter of global emissions will then be covered by carbon pricing initiatives across some 40 national jurisdictions and 20 cities, states and regions. The evolution of regional carbon markets fostered by the <a href="http://unfccc.int/paris_agreement/items/9485.php">Paris Agreement</a>, in North Asia and elsewhere, will economically advantage those able to participate. </p>
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<p>For a brief time Australia flirted with being a global leader in carbon pricing and emissions trading. The Keating Labor Government debated - and rejected - a national carbon price in 1995. In 2009 the Rudd Labor government proposed laws to establish a national emissions trading scheme, the <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Browse_by_Topic/ClimateChangeold/governance/domestic/national/cprs">Carbon Pollution Reduction Scheme</a>, which then failed in the Senate. </p>
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<p>Instead, Australia became the first country in the world to <a href="https://theconversation.com/obituary-australias-carbon-price-29217">dismantle</a> a national carbon price, when Tony Abbott axed Gillard Labor’s carbon tax. Now Australia is in danger of becoming an outlier globally - and this will have significant economic costs as well as environmental implications. </p>
<h2>China’s climate leadership</h2>
<p>When China became the world’s largest national greenhouse gas emitter in 2006, its involvement in any effective global emissions reduction agreement became an unavoidable responsibility. </p>
<p>China first acknowledged this internationally in 2009 when, at the climate negotiations in <a href="http://www.fmprc.gov.cn/ce/cedk/eng/zdgx/t646842.htm">Copenhagen</a>, it announced voluntary measures to improve national energy efficiency, pledging to cut its carbon dioxide emissions per unit of GDP by 40-45% below 2005 levels by 2020.</p>
<p>In 2014, China and the United States jointly announced their national targets and goals as a means of <a href="https://theconversation.com/us-china-climate-deal-at-last-a-real-game-changer-on-emissions-34148">providing momentum</a> for the following year’s Paris summit. China <a href="https://obamawhitehouse.archives.gov/the-press-office/2014/11/11/fact-sheet-us-china-joint-announcement-climate-change-and-clean-energy-c">committed</a> to an energy intensity target for 2030, lowering carbon dioxide emissions per unit of GDP by 60-65% below 2005 levels, and also to peak its emissions before 2030. </p>
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<p>Indeed it appears already to have achieved this goal as a result of industrial modernisation and slowing economic growth, along with a push to reduce its <a href="https://www.americanprogress.org/issues/green/reports/2017/05/15/432141/everything-think-know-coal-china-wrong/">reliance on coal</a> and its global leadership in building renewable energy capacity (specifically, solar and wind). </p>
<p>Then, a decade after the launch of the European ETS, during a second joint announcement with the United States in September 2015, President Xi Jinping <a href="https://obamawhitehouse.archives.gov/the-press-office/2015/09/25/us-china-joint-presidential-statement-climate-change">declared</a> that China would establish a national carbon market by 2017.</p>
<h2>China’s national ETS</h2>
<p><a href="https://icapcarbonaction.com/en/ets-map?etsid=53">Seven</a> pilot emissions trading schemes have operated in China since 2013. These subnational projects - in five cities and two provinces, including Beijing, Chonqing, Guandong, Hubei, Shanghai, Shenzen and Tianjin – together already cover some 26.7% of China’s GDP in 2014.</p>
<p>They have employed slightly different market designs, varying the range of greenhouse gases and industry sectors covered, slightly different approaches to permit allocation, verification and compliance, and produced seven different carbon prices, at times ranging from some A$2.50 to up to A$22 per tonne.</p>
<p>The new national market represents a further step in the process of policy learning and systematic development, based on these experimental steps as well as the experience of the European ETS, which has evolved in several phases since 2005. </p>
<p>During its trial phase, from 2017 to 2019, policy makers will work to help new participants become familiar with the new national market and to improve its design. The market initially will be restricted in scope and size. It first will only include carbon dioxide and, like its pilots, its initial carbon price likely will be modest. </p>
<p>Guidelines from the National Development and Reform Commission indicate it will cover eight major industry sectors, such as power generation, petrochemicals, construction materials, pulp and paper, aviation, and iron, steel and aluminium production. </p>
<p>Nevertheless it is expected to cover some 40-50% of total Chinese emissions and eventually become a significant contributor to the suite of measures now being used to tackle Chinese emissions. <a href="https://icapcarbonaction.com/en/?option=com_attach&task=download&id=447">Full implementation</a> is expected to occur from 2020 onwards - with greater industry coverage, an increased percentage of allowances allocated by auction, and improved benchmarking.</p>
<h2>A new measure among many</h2>
<p>The new national carbon market is an additional response to the pressures that have driven Chinese climate and energy policy reforms over the past decade. </p>
<p>Domestically, a complex basket of tools are already in use to increase energy efficiency and reduce emissions. Coal-fired power generation has faced increasingly stringent regulation and new investment to counter dangerously high levels of air pollution in major cities, growing health problems and associated social unrest. </p>
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Read more:
<a href="https://theconversation.com/want-to-see-the-business-case-for-green-energy-just-look-at-china-47927">Want to see the business case for green energy? Just look at China</a>
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<p>China’s heavy industries - economically sluggish, energy-inefficient and emissions-intensive - are under intensifying regulatory and now market pressure to modernise rapidly. While the carbon prices under the sub-national pilots have remained modest, they have added to this pressure for technological and economic reform.</p>
<p>National energy security is a strategic concern given China’s economic reliance on energy imports. The threats from global warming to China’s food and water security are recognised as concerns at the highest levels of government, including through the <a href="http://en.ndrc.gov.cn/newsrelease/201612/P020161207645765233498.pdf">13th Five-Year Plan</a>. </p>
<p>China’s climate and energy policies also offer China an opportunity to demonstrate global leadership in climate policy, with the election of US President Donald Trump creating <a href="https://theconversation.com/time-for-china-and-europe-to-lead-as-trump-dumps-the-paris-climate-deal-78709">new diplomatic possibilities</a>, a point emphasised in President Xi Jinping’s opening speech to the 19th Communist Party Congress, where he noted that China had taken a <a href="http://www.theguardian.com/world/2017/oct/18/xi-jinping-speech-new-era-chinese-power-party-congress">“driving seat in international cooperation to respond to climate change”</a>.</p>
<h2>Implications for Australia</h2>
<p>A successful Chinese national emissions scheme has a range of impacts for Australia.</p>
<p>About a quarter of Australia’s coal exports (by volume) currently go to China, which in 2016 was Australia’s second biggest market for thermal coal and third biggest market for metallurgical coal. </p>
<p>If a national carbon market accelerates improvements in energy efficiency in China’s metals and power generation sectors, its demand for Australian coal exports – already beginning to contract - is likely to fall faster. </p>
<p>Second, for a quarter of a century, a succession of conservative Australian Prime Ministers justified the absence of a meaningful Australian climate policy by claiming there was no point in reducing emissions here because China wasn’t doing enough to tackle the problem. </p>
<p>Based on misrepresentations of what was happening in China, the Howard government delayed and then the Abbott government destroyed an Australian carbon pricing mechanism. Both leaders consistently stalled Australian climate policy, and continued to spruik the mirage of a national energy future based on exporting coal to ever larger overseas markets, including in China. </p>
<p>In all, the turbulent unpredictability of Australia’s climate politics and policies stands in contrast to China’s steady institutional commitment to accelerating decarbonisation. Given its present weak climate policy settings and institutions, and without a clear target for renewables, Australia will struggle to meet its current emission reduction commitments and will face increased future costs for failing to act sooner.</p><img src="https://counter.theconversation.com/content/85253/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Christoff does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While China launches its new energy market, Australia is still lagging behind in implementing a mechanism to control carbon emissionsPeter Christoff, Associate Professor, School of Geography, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/699802016-12-16T01:37:40Z2016-12-16T01:37:40ZFactCheck: Are Australians paying twice as much for electricity as Americans?<blockquote>
<p>Business here and households here, already we’re paying twice the cost of the US for electricity. <strong>– Craig Kelly MP, chair of the backbench environment and energy committee, <a href="http://www.abc.net.au/radionational/programs/breakfast/kelly/8095266">ABC Radio National Breakfast interview</a>, December 6, 2016.</strong> (Listen from 7.38)</p>
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<p>Environment and energy minister Josh Frydenberg recently <a href="http://www.abc.net.au/news/2016-12-05/government-to-consider-carbon-price-for-power-generators/8091912">left open</a> <a href="https://www.theguardian.com/australia-news/2016/dec/05/direct-action-review-coalition-leaves-carbon-trading-option-open">the possibility</a> of some form of carbon trading in the <a href="http://www.environment.gov.au/climate-change/review-climate-change-policies">electricity sector</a>. He later <a href="https://theconversation.com/turnbull-government-rules-out-an-emissions-intensity-scheme-70039">ruled out that option</a>, saying he wanted to keep electricity prices down.</p>
<p>Following Frydenberg’s initial comments, Liberal MP Craig Kelly said businesses and households in Australia are already paying twice as much as Americans for their electricity.</p>
<p>Is that true?</p>
<h2>Checking the source</h2>
<p>When asked for sources to support his statement, Craig Kelly referred The Conversation to a <a href="http://theconversation.com/full-response-from-craig-kelly-70215">range of sources</a>, saying that:</p>
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<p>… a report titled <a href="http://www.aemc.gov.au/getattachment/02490709-1a3d-445d-89cd-4d405b246860/2015-Residential-Electricity-Price-Trends-report.aspx">2015 Residential Electricity Price Trends</a> lists [on page 212] the average Australian price at 28.72 cents per kilowatt hour for 2014/2015. </p>
<p>In comparison, the <a href="http://www.eia.gov/electricity/state/">US Energy Information Administration</a> lists the average price for residential electricity [in the US] at 10.44 cents for 2014.</p>
<p>Converting 10.44 US cents at A$1/US$0.74 – is the equivalent of 14.11 cents Australia.</p>
<p>So using these sources (in Australian cents) we have 14.11 cents in the USA and 28.72 cents in Australia. Therefore I think to say that “we’re paying twice the cost of the US for electricity” (on average) is pretty much right on the money.</p>
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<p>You can read Craig Kelly’s full response <a href="http://theconversation.com/full-response-from-craig-kelly-70215">here</a>. </p>
<h2>Do Australians pay more?</h2>
<p>It’s definitely true that Australians pay much more for their electricity than US citizens do (and Australian prices are <a href="http://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report">set to rise even further</a>, according to the Australian Energy Market Commission. </p>
<p>Using OECD data, there’s one measure that says it is twice as much – or at least it was twice as much as recently as 2014. Another measure – a better measure, in my view – shows Australians pay about 50% more than US citizens do for their electricity. </p>
<p>As Craig Kelly notes in his <a href="http://theconversation.com/full-response-from-craig-kelly-70215">full response</a>, there is significant variation in electricity prices across states and territories in Australia and in the United States, so comparing the two is not a simple matter. The Australian Energy Market Commission’s annual <a href="http://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report">Electricity Price Trends</a> report shows that retail prices in Australia vary from 18.44 c/kWh in the Australian Capital Territory to 29.75 c/KWh in South Australia.</p>
<p>But we can use Organisation for Economic Co-operation and Development (<a href="http://www.oecd.org/">OECD</a>) data on <a href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">wholesale and retail indices energy prices</a> to check Craig Kelly’s statement. </p>
<p>The wholesale price is the cost of generating the energy that is sent to the grid. Retail prices are what householders are more used to talking about. Retail prices factor in extra costs like transmission and distribution (“poles and wires”), retailer margins and other levies (such as Feed-in Tariff and Renewable Energy Target costs). In other words, it’s what we’re paying on our power bill. </p>
<p>Let’s examine the data. </p>
<h2>A tale of two measures</h2>
<p>The two measures I have used to compare prices in the US and Australia are called “market exchange rates” and “purchasing power parities”. Craig Kelly’s calculations rely on market exchange rates, so we will start with that one. </p>
<p>Market exchange rates simply means converting the price in one country’s currency to that of another country’s currency, as Kelly <a href="http://theconversation.com/full-response-from-craig-kelly-70215">did</a>. This measure of comparison is <a href="http://www.imf.org/external/pubs/ft/fandd/2007/03/basics.htm">more volatile</a> than purchasing power parity exchange rates.</p>
<p>Using market exchange rates, OECD <a href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/energy-prices-in-us-dollars_data-00442-en">data</a> show that Australian electricity prices have, in recent years, been approximately twice as high as electricity prices in the US. Recently, the gap has narrowed. In 2015, using market exchange rates, electricity prices in Australia were about 70.3% higher than in the US. </p>
<p>The Australian Energy Market Commission projects that Australian prices will <a href="http://www.aemc.gov.au/Mark%E2%80%8Bhttp://www.aemc.gov.au/Markets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Reportets-Reviews-Advice/2016-Residential-Electricity-Price-Trends/Final/AEMC-Documents/2016-Electricity-Price-Trends-Report">rise even further</a> in coming years.</p>
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<a href="https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149380/original/image-20161209-31391-1fhqr9n.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">By converting Australian electricity prices into US dollars (market exchange rates), we can see Australian electricity prices have been an average of twice as high as in the US over the past four years – though the gap narrowed in 2015, down to a 70% difference.</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Chart provided by author, using data from the OECD.</a></span>
</figcaption>
</figure>
<p>That broadly supports what Kelly said. But if we use purchasing power parity exchange rates, the data show that Australia’s prices are approximately 50% higher than the US. </p>
<p><a href="https://www.oecd.org/std/prices-ppp/purchasingpowerparitiespppsdata.htm">Purchasing power parity exchange rates</a>, or PPP, factor in inflation and the cost of living in a particular country, and eliminate differences in price levels between countries. This measure allows a cleaner, less volatile comparison between the US and Australia.</p>
<p>The chart below compares the retail prices of electricity in Australia and the United States when adjusted for cost of living differences using purchasing power parity.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149379/original/image-20161209-31352-16tb5w7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Using purchasing power parity exchange rates, OECD data shows household prices of electricity are approximately 50% higher in Australia than in the US.</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Chart by author, using data from the OECD.</a></span>
</figcaption>
</figure>
<p>As the above chart of the OECD <a href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/energy-prices-in-us-dollars_data-00442-en">data</a> shows, household prices of electricity are about 50% higher in Australia than in the US when you use purchasing power parity data. </p>
<h2>Why are the prices so different?</h2>
<p>As this chart shows, data from OECD indicate there has been a substantial divergence between Australian and American electricity prices since about 2008.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149381/original/image-20161209-31396-11kpet0.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Retail price index: average power prices for householders in the US and Australia. The year 2000 is indexed to 100 (that is, 2000 = 100)</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Author provided, using data from the OECD</a></span>
</figcaption>
</figure>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/149382/original/image-20161209-31352-1jhlhwt.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Wholesale price index: the average price the generators charge to the retailers (or distributors) for the power they put into the grid. The year 2000 is indexed to 100 (that is, 2000 = 100)</span>
<span class="attribution"><a class="source" href="http://www.oecd-ilibrary.org/energy/data/end-use-prices/wholesale-and-retail-indices-of-energy-prices_data-00445-en">Author provided, using data from the OECD.</a></span>
</figcaption>
</figure>
<p>As noted in the <a href="http://www.environment.gov.au/energy/publications/energy-market-preliminary-report">preliminary report</a> of the Australian chief scientist Alan Finkel’s <a href="http://www.environment.gov.au/energy/national-electricity-market-review">review</a> of the National Electricity Market, household energy bills in Australia increased 61% on average between 2008 and 2014. </p>
<p>The main reason for this is the cost of maintaining the electricity network – essentially, the poles and wires that deliver the power. Network costs represent between 45% and 55% of a typical electricity bill. This has been the largest contributor to Australia’s increasing prices over the past six years. </p>
<p>Some observers have said that the “<a href="https://theconversation.com/bringing-an-end-to-electricity-network-gold-plating-40830">gold-plating</a>” of the network came about because of a regulatory regime that encouraged <a href="http://www.brisbanetimes.com.au/federal-politics/editorial/power-to-the-people--at-the-lowest-price-20120808-23ugb.html">over-investment</a> in poles and wires. This was been partly driven by an effort to shore up electricity supply and an overestimation of demand.</p>
<p>The <a href="https://theconversation.com/low-oil-prices-are-here-to-stay-as-the-us-shale-oil-revolution-goes-global-48100">US shale gas revolution</a> has also helped keep energy more affordable there than in Australia. </p>
<p>The <a href="http://www.pc.gov.au/projects/inquiry/electricity/report">Productivity Commission</a> reported that, in New South Wales, network costs accounted for 80% of price rises in 2010-11 and 50% of price rises in 2011-12.</p>
<h2>Is it really that simple?</h2>
<p>Not really. Energy economics is far more complicated than can come across in Kelly’s quick quote or this short FactCheck.</p>
<p>While the Australian <em>price</em> is higher, this doesn’t necessarily mean the <em>cost</em> is higher: Australians use much less energy than Americans. This is because as prices increase, energy productivity and energy efficiency also tend to increase. In total, most countries actually spend a similar proportion of GDP on energy costs. </p>
<p>This holds surprisingly consistent across a range of countries. For example, Japan has high energy prices, but also has high energy efficiency and productivity. Consequently, it spends practically the same amount of GDP on energy cost as the US. </p>
<p>So <em>prices</em> may be higher for individuals, but that doesn’t mean the economy-wide costs are higher. All that said, Kelly was talking about the prices for individuals and business, so that’s what this FactCheck is focused on.</p>
<h2>Verdict</h2>
<p>If we compare Australian and American electricity prices using market exchange rates, Craig Kelly’s comment is correct: Australia’s electricity prices were essentially double those of the United States as recently as 2014. In 2015, using market exchange rates, Australian prices were about 70.3% higher. </p>
<p>If we compare the prices using purchasing parity power exchange rates – which I’d argue is the more accurate reflection of the costs of living in each of the countries – Australia’s prices are about 50% higher than the US. </p>
<p>Overall, Craig Kelly’s broader point is correct: Australians pay a much higher price for their electricity than Americans do. <strong>– Dylan McConnell.</strong></p>
<hr>
<h2>Review</h2>
<p>I agree with the author’s position that purchasing power parity comparisons are less volatile and more representative of the relativity based on actual living costs. It is true Australian households pay a much higher electricity price than Americans.</p>
<p>There’s one important point I’d add. There is a baseline cost of having a house or business connected to electrical supply, regardless of how much electricity is used. This is called the fixed supply cost. The more electricity a household or business uses, the more the fixed supply cost is diluted in the overall electricity bill. This brings down the cost per kilowatt-hours (kWh).</p>
<p>American households use about twice as much electricity as Australian households. <a href="http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3">According to the US EIA</a>, average US household electricity consumption in 2015 was 10,812 kWh. <a href="http://www.energyrating.gov.au/document/report-residential-baseline-study-technical-appendix">2014 data for Australia</a> shows average Australian household electricity consumption was 5,772 kWh (down from 6,819 kWh in 2008. At 25 cents/kWh that is a saving of $307 for Australians for using less electricity over time). </p>
<p>So we would expect Australian household electricity prices to be higher, because an average Australian household uses less electricity and the large fixed supply costs must be spread across a smaller amount of consumption. This raises the cost per kWh. But because Australians use less, their annual bill may be lower. </p>
<p>Further, in recent years, Australian energy retailers have been raising their fixed supply (or baseline) charges. So small users pay much more overall per unit of electricity they use.</p>
<p>Lastly, it’s worth noting that larger businesses often negotiate much better deals on their electricity prices than householders can. <strong>– Alan Pears.</strong></p>
<hr>
<blockquote>
<p>This article was corrected on February 9 to replace the line “In 2015, using market exchange rates, the US prices were about 70.3% higher” with “In 2015, using market exchange rates, Australian prices were about 70.3% higher”. The Conversation apologises for the error, which was introduced in the editing process.</p>
</blockquote>
<hr>
<p><div class="callout"> Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/69980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dylan McConnell has received funding from the AEMC's Consumer Advocacy Panel and Energy Consumers Australia.
</span></em></p><p class="fine-print"><em><span>Alan Pears has worked for government, business, industry associations public interest groups and at universities on energy efficiency, climate response and sustainability issues since the late 1970s. He is now an honorary Senior Industry Fellow at RMIT University and a consultant, as well as an adviser to a range of industry associations and public interest groups. His investments in managed funds include firms that benefit from growth in clean energy.</span></em></p>Liberal MP Craig Kelly said businesses and households in Australia are paying twice as much as Americans for their electricity. Is that true?Dylan McConnell, Researcher at the Australian German Climate and Energy College, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/701372016-12-09T00:52:21Z2016-12-09T00:52:21ZEmissions trading for electricity is the sensible way forward<figure><img src="https://images.theconversation.com/files/149351/original/image-20161209-31352-l9m6f7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An emissions intensity trading scheme increases the cost of coal power compared to other electricity sources. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/indigoskies/14717766993/in/photolist-oqypnk-e82sDT-4RVR82-4RNCtc-4S12iw-nf7Edq-64ExUQ-e5aAru-e5aA8E-mbeQhF-mbfS4T-pS1PUt-dajEyP-mbf6Jn-mbfPHk-mbfz9v-oXEHut-oXE6vC-6z6a2R-pfdPfp-KuLLBw-cngqxE-cngx6L-cngqUf-cngpJu-cngorw-cngxzh-cngvDm-cngxYu-cngpiq-cngsRJ-cngtZY-cngrhy-cngtCq-cngq8W-cngoPu-cngv7U-cngujs-cngs6h-7Z3oLQ-cngsrN-cngwpS-cnguGL-cngw1m-cngtcq-cngo3w-8HHKJ5-79WYYu-79WZ5S-7Z3oqj">Indigo Skies Photography/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>The preliminary report from the Finkel Review of electricity market security will be presented to COAG today. <a href="http://www.abc.net.au/news/2016-12-09/australias-energy-policy-cant-meet-current-targets/8105386">Leaked versions</a> indicate that the report notes the urgent need for long-term policy certainty on climate change and that some policies (such as carbon pricing) reduce emissions at lower cost than others (renewable energy targets or regulation).</p>
<p>These are hardly inflammatory observations. Yet they link directly with this week’s <a href="https://theconversation.com/turnbull-government-rules-out-an-emissions-intensity-scheme-70039">furious debate within the Coalition government</a> over the inclusion of a particular form of carbon pricing, an emissions intensity scheme, and whether it, and all of its relatives, should be excluded from next year’s climate policy review. </p>
<h2>How does it work?</h2>
<p>An emissions intensity scheme sets an intensity baseline – effectively a limit on how much carbon dioxide the generators can emit for each unit of electricity they produce.</p>
<p>Power stations can produce electricity above the baseline, but they would have to buy permits for the extra CO₂. Power stations that have lower emissions intensity create permits, which they can then sell.</p>
<p>For example, the intensity baseline might be set at one tonne of CO₂ for every megawatt hour (MWh) of electricity. A brown coal generator produces electricity at 1.3 tonnes CO₂ per MWh. </p>
<p>For every MWh the generator produces, it therefore has to purchase 0.3 permits. Alternatively, a wind farm that emits no CO₂ will create 1 permit for every MWh of electricity generated. </p>
<p>An emissions intensity scheme increases the cost of producing electricity from high-emitting generation, while reducing the relative cost of low-emitting generation. It thus drives emissions down in the electricity sector, because the cost difference favours a switch from high- to low-emitting generators.</p>
<h2>Why this type of scheme?</h2>
<p><a href="https://theconversation.com/no-climate-policy-is-perfect-heres-how-to-choose-the-best-one-52431">Other forms of carbon pricing</a>, such as a cap-and-trade emissions trading scheme, also increase the costs of high-emitting generation relative to low-emitting generation. But there are differences between the two schemes. </p>
<p>The main one is the short-term impact on prices. A cap-and-trade scheme places a price on each tonne of CO₂ emitted, which is paid to the government. Under an emissions intensity scheme, a price is imposed only on the carbon emitted above the intensity baseline. </p>
<p>Under a cap-and-trade scheme, our brown coal generator would have to purchase 1.3 permits for each MWh it produced, as opposed to the 0.3 it purchases under the intensity scheme. </p>
<p>As a result, electricity prices do not increase as much under an emissions intensity scheme as under a cap-and-trade scheme, at least in the short term. But there are drawbacks. </p>
<p>An emissions intensity scheme does not raise any revenue, as permits are purchased from other generators rather than the government. No revenue means no compensation to those impacted by decarbonisation. </p>
<p>Smaller price increases also mean that consumers are less likely to cut back on their own electricity use. This means that overall emissions will not be reduced as much as under a cap-and-trade scheme. </p>
<p>On the plus side, the lower price increase also means that there is less effect on overall economic activity. This can be mitigated under a cap-and-trade scheme, however, if the government uses the revenue wisely. </p>
<h2>Bipartisan support at last?</h2>
<p>Consulting firm Frontier Economics assisted the New South Wales government with the design of its <a href="https://www.ipart.nsw.gov.au/Home/Industries/Energy/Energy-Savings-Scheme/Greenhouse-Gas-Reduction-Scheme">greenhouse gas abatement scheme</a>, an emissions intensity scheme that ran in that state from 2003 until 2012, with some success. </p>
<p>In 2009, Senator Nick Xenophon championed the emissions intensity approach as a better alternative to then prime minister Kevin Rudd’s proposed Carbon Pollution Reduction Scheme (CPRS). Malcolm Turnbull joined with Xenophon to attempt to persuade Rudd to adopt the scheme as an alternative to the CPRS; that attempt failed. </p>
<p>In the past couple of years, an emissions intensity scheme has again been advocated as a potential circuit-breaker to the climate policy impasse that has been the norm in Australia for the past decade. The electricity market rule-maker, <a href="http://www.afr.com/news/climate-backflip-ignores-expert-advice-20161207-gt5o7g">the Australian Energy Market Commission</a>, the <a href="http://climatechangeauthority.gov.au/reviews/special-review/towards-climate-policy-toolkit-special-review-australias-climate-goals-and">Climate Change Authority</a> and <a href="https://grattan.edu.au/report/climate-phoenix-a-sustainable-australian-climate-policy/">we at the Grattan Institute</a> have all advocated for an emissions intensity scheme in the electricity sector. </p>
<p>This position was also reflected in the Labor Party manifesto at the last general election. While ambivalent about what form it takes, the <a href="https://www.energycouncil.com.au/news/australian-energy-council-and-energy-networks-australia-communique/">major generation companies and business groups</a> have all been arguing for a form of carbon pricing.</p>
<p>The Coalition government could get to an emissions intensity scheme in the electricity sector from its existing policies. An absolute limit on total emissions for the sector has already been set under the safeguards mechanism. Arithmetic and legislation are required to change the absolute limit to an emissions-intensity limit. </p>
<p>The advantages and disadvantages of an emissions intensity scheme against other forms of carbon pricing have been debated by academics, economists and policy wonks ever since Australia first committed to tackling climate change. But two things are clear. </p>
<p>First, an emissions intensity scheme would provide the stable carbon policy that the electricity sector needs to have investment confidence and contribute to electricity security. </p>
<p>Second, an emissions intensity scheme would, for some time, limit the impact on electricity prices. Apparently, these are matters of importance to both sides of politics.</p><img src="https://counter.theconversation.com/content/70137/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tony Wood owns shares in Origin energy and other energy and resources companies through his superannuation fund. </span></em></p><p class="fine-print"><em><span>David Blowers does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Why is everyone talking about ‘emissions intensity’ schemes this week?Tony Wood, Program Director, Energy, Grattan InstituteDavid Blowers, Energy Fellow, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/701942016-12-09T00:22:35Z2016-12-09T00:22:35ZVIDEO: Michelle Grattan on the government’s carbon emissions policy<figure>
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<p>University of Canberra Deputy Vice-Chancellor (Education) Professor Nicholas Klomp and Professorial Fellow Michelle Grattan discuss the week in politics, including the emissions intensity scheme for the electricity sector, where the government stands if the economy continues to contract, what options Malcolm Turnbull has for the future of carbon emissions policies, and Turnbull’s overall performance for the year.</p><img src="https://counter.theconversation.com/content/70194/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The University of Canberra’s Nicholas Klomp and Michelle Grattan discuss the week in politics.Michelle Grattan, Professorial Fellow, University of CanberraNicholas Klomp, Deputy Vice-Chancellor, Education, University of CanberraLicensed as Creative Commons – attribution, no derivatives.