Date created: 15/06/09 3:02 PM
Last modified:15/06/0 3:02 PM
Maintained by: John Quiggin
John Quiggin

Rudd misread the weather

John Quiggin Australian Financial Review

18 December 2008

The White Paper on a Carbon Pollution Reduction Scheme, released on Monday, proposes a policy premised on failure. Most obviously and explicitly, the government is betting that the UN Climate Change Conference to be held in Copenhagen a year from now will produce nothing but empty words.

And of course, by making this bet so explicit the government is increasing the chances of failure. A recent analysis by China’s Xinhua news agency listed Australia, along with Canada, as countries whose backsliding over the past year had increased the likelihood of failure.

But failure is not a sure thing. Despite the efforts of such statesmen as Italian President Berlusconi, and intense lobbying from German heavy industry, the EU has reaffirmed its target of a 20 per cent reduction, relative to 1990 levels, by 2020. Moreover, the free issue of permits, a serious flaw in earlier rounds of the emission trading scheme will end, at least for firms in Western Europe by 2013. Poorer Eastern European countries will receive some of the auction proceeds to help them modernise their electricity industries.

In the United States, the end of the Bush Administration will remove the biggest single obstacle to a global agreement. From falsifying the science to corrupting regulatory processes, Bush and his cronies have done everything they can to prevent action on climate change. Internationally, they have encouraged obstructionist factions in other countries, such as China and India, then pointed to that very obstructionism as a reason for US inaction. Now that Bush is gone, there is at least some chance of the major global powers (the EU, US and China) reaching an agreement to save the planet.

Preparing itself against the possibility of a genuine agreement at Copenhagen, the Australian government is already rehearsing the argument that its proposed cuts, when expressed in terms of emissions per person, are ahead of those proposed by the EU. There are some good arguments for a long-term ‘contract and converge’ agreement based on equalising global entitlements for emissions per person. But such an approach would require countries like Australia, with high emissions per person, to make larger interim cuts than European countries with half our emissions per person. The government is trying to have it both ways, an approach that will fool no one when it is put up in Copenhagen.

The claim for an entitlement to high emissions per person with growing population does not stand up to scrutiny. Much of our high emissions levels reflects export-oriented resource and agriculture activities which are largely unrelated to population. There is no reason why a higher population should result in more emissions from, say, aluminium refineries.

High emissions also reflect low population density. As population increases, population density will rise and urbanization will increase. Again, the justification for our massively higher emissions per person will be eroded.

Going to Copenhagen with a proposal for derisory cuts based on a transparently spurious rationale may seem like clever negotiating tactics to the self-styled hardheads in the government. Either the talks will fail, in which case the government can disclaim responsibility for doing anything, or we can start negotiations with an ambit claim, and come out, as at Kyoto, with a favorable deal.

But this is a high risk strategy. As a long-term spoiler, Australia may be excluded from the inner circle of negotiations, then presented with a take-it-or-leave-it deal. Unlike Kyoto, such a deal might be backed up with sanctions against non-compliant countries. The EU is actively exploring this possibility. If the US signs an agreement, protectionist sentiment there will certainly focus on what is already being called “climate dumping”.

Domestically, the government’s strategy is also a bet on failure. Its choices on this issue were to stick to its election commitments, and risk a double dissolution, or to cave in to the demands of the greenhouse mafia, and hope to cut a deal with the Liberal Party. If it had followed the first approach, the government could have counted on strong backing from its own core supporters, but would have had to carry swinging voters as well.

Instead, the government has accepted defeat in advance, and tried to turn it to advantage by wedging the Opposition. The idea is to offer a package so weak, and unthreatening that Malcolm Turnbull cannot find any argument to reject it.

In view of Turnbull’s long and mercurial legal and political career, this seems likely to be a vain hope. But it’s the only hope the government has left.

John Quiggin is an ARC Federation Fellow in Economics and Political Science at the University of Queensland.

John Quiggin is an Australian Research Council Federation Fellow in Economics and Political Science at the University of Queensland.

Read more articles from John Quiggin's home page

Go to John Quiggin's Weblog