Maintaining the commons

The Coalition reveals a willingness to undermine environmental targets

Written with Freya Bundey

Throughout the election campaign, the Coalition has claimed that they are committed to the same carbon dioxide emission reduction target as the Labor government. However last week, and in response to reports modelling the impact of the Coalition’s Direct Action plan, Abbott has revealed a willingness to undermine this target.

Consequentially, Abbott has revealed that a Coalition government will put the profits of high emitting industries before the environment and global community, entrenching the status quo and legitimising the continued exploitation of national and global commons.

The official documents on the Coalition’s Direct Action plan have always maintained an emission reduction target of (a minimum of) 5% below 2000 levels by 2020, which mirrors the target set by the Labor government. The method of achieving this target has been the only point of difference with the Coalition claiming their voluntary environmental policy is less expensive and therefore superior.

Many commentaries and reports have suggested the Coalition’s policy is flawed and formal modelling by SKM-MMA and Monash University’s Centre of Policy Studies for the Climate Institute and Reputex for WWF-Australia have demonstrated that the Coalition would need to spend an extra $4-$35 billion to meet the 5% target. Without this additional funding, emissions are modelled to increase by 9-16% from 2000 levels by 2020 under the Direct Action plan.

These estimates are based on very favourable assumptions for the Coalition. For example, the Climate Institute report assumed that every project the Coalition decides to fund would be delivered. In other, similar schemes around the world, the experience has been that only 75% of projects would deliver.

Moreover, the reports assume no ‘additionality’ problems. Additionality concerns the funding of projects that would have occurred for other reasons, such as cost savings. Any funding in this case is simply a windfall gain for the industry or firm.

Although the Coalition claims that all funded projects must be additional to the business as usual case, this is very hard to prove and enforce and many additionality problems have occurred in carbon emission offset schemes around the world.

Despite the favourable assumptions in the reports, the Coalition initially claimed the estimates were far-fetched, biased and partisan and they were “confident” the 5% target could be reached.

Recently, however, Abbott has accepted that the 5% target may not be reached using only the budgeted funds in the Direct Action plan and he also pledged not to increase the available funds: “the bottom line is we will spend as much as we have budgeted, no more and no less”.

Such statements suggest a willingness to undermine the emission reduction target. More generally, Abbott has signalled a willingness to put the budget and the profits of the resource extraction industry before the environment.

A further example of this has already occurred with the Coalition’s Economic Growth Plan for Tasmania. The Coalition characterises the recent increase in World Heritage listed forests in Tasmania from 130,000 to 170,000 hectares as “rushed and political”, committing to reverse the extension. Again, the chief argument concerns the profits of the resource extraction industry, in this case foresters.

The fossil-fuel and broader resource-extraction industries have for too long been able to exploit the environment for free. This is not only disappointing for those who care for the environment but it is also economically inefficient. Labor’s carbon pricing scheme may be limited, but it does require resource owners to consider the external cost of their activities.

Of course, as resource owners can typically pass their carbon costs onto consumers, profits are generally left untouched. However, it is, in the very least, symbolically important to place a price on carbon and the external cost of firm’s activities.

In comparison, the Coalition’s Direct Action plan appears to be specifically designed to protect the profits of the fossil fuel industry. While the Coalition claims that this is good for the economy, it is really only good for a very small and privileged sector in the economy – the owners of natural resources. Moreover, in most cases, these owners are large multinational firms with shelf companies in tax-haven countries.

The other implication of undermining the carbon-emission target is the example Australia would be setting for the rest of the world. The atmosphere is a global public good and as such it is subject to the ‘free-rider problem’ – everyone benefits from taking care of it but no one has an individual incentive to do so.

This is why international environmental agreements are needed and, as a signatory to the Kyoto protocol and the subsequent international climate agreements, Australia has an obligation to set an example so that other countries will follow. This obligation is only more critical given that Australia has the highest per capita emissions of carbon dioxide in the industrialised world.

In contrast, the example an elected Coalition would be setting will encourage other countries (such as China and South Korea) to scrap their carbon emission targets and planned emission trading schemes and bring forth a new round of exploitation of the global commons.