Former reserve bank governor Bernie Fraser, who has had a horse and cattle property in Palerang, recently answered questions from Jenny Goldie about why the Abbott government appears so keen to disown renewable energy and ditch a price on carbon. [spacer style=”1″ icon=”none”]
As one US pundit put it, the Australian government has positioned itself as a ‘rock-throwing fringe dweller’ on the global climate response stage. Why is this?
At press time, the dramatic intervention and votes of the Palmer United Party in the Senate look poised to save the Climate Change Authority, the Clean Energy Finance Corporation and the Renewable Energy Target from being scrapped by the Coalition.
Economist Bernie Fraser [pictured below] was the Governor of the Reserve Bank of Australia from 1989 to 1996. More recently, Fraser has served as the Chair of the Climate Change Authority. The authority, which includes business leaders, was tasked with providing independent advice on Australia’s carbon price, emission reduction targets and other response initiatives. So Fraser is well-placed to know what is happening at the federal government level. He recently told public audiences that it as a “safe bet” this Australian government will not change its minimum emission reduction target from five to 15 percent as recommended by the authority and has characterised as a “barren” toolkit Coalition policies to pay industries not to emit carbon pollution.Confirming the familiar territory underpinning these policies including attacks on the windfarm sector, he told the Bulletin that: “[The federal governments’ position] is being buttressed by their big business supporters – the Minerals Council, the conventional energy generators – who want to see things go on the way they are and take advantage of all the coal that they have in the ground and make a profit on it… The mining companies generally are strong supporters of the government ideologically. They are on the same wavelength.”
The government is falling down in not displaying any real concern for community interests as distinct from the self-interest of companies.
Fraser has said that the authority’s recommendation of 15 per cent emissions reduction by 2020 “was not even on the government’s radar”. When asked about its recommendations of 40-60 per cent by 2030, Fraser laughed and replied they “are not within coo-ee”.
In terms of the likelihood of the federal government changing its stance, Fraser did not think it was susceptible to international pressures despite things happening on the global scene including the US, most recently President Obama’s announcement on regulation to bring down coal plant emissions, but more significantly, in China.
Fraser said businesses that rely on and use a lot of electricity have been persuaded by propaganda that the carbon price and the renewable energy target are pushing up the price of electricity. “But the facts are that even the impost of the carbon price and the RET arrangements are relatively small,” Fraser said.
Attack on renewable energy target
The Renewable Energy Target (RET) is one positive incentive step in federal legislation since the Howard years. It is now under threat from an Abbott review panel stocked with players linked to the fossil fuel industry chaired by sceptic Dick Warburton.
Along with small-scale solar (like household panels) or existing hydro generation, the RET target called for 41,000GW-h capacity (enough gigawatt hours to power 3.7 million Australian homes) to come from ‘large’ renewable energy projects (i.e. wind or possibly solar thermal) by 2020.
When asked about the likely outcome of this review, Fraser replied: “Just the mere fact of the review [has meant] the heavy investment that was required and was in the pipeline to put up a lot more wind farms and so on – that investment has fallen off and then been postponed and delayed and whatever.
“We’re not going to get 41,000GW-h from the large renewable energy scheme by 2020 because investors have backed off, delayed, deferred, pulled out of projects that were in the pipe-line earlier on because they’re all expecting the Warburton Review will be winding things back.”
China has announced a cap on coal imports and India too appears to be having second thoughts about importing more thermal coal.Were the coal companies not aware of this?
More than half of China’s new generating capacity from renewable sources
“They’re certainly aware of it,” Fraser said. “They should be concerned about it and they should be starting to prepare for changed circumstances down the track. In China, every year, they add more energy generation capacity than Australia has in total, but in the increase they constructed last year, more than half of that was from renewable sources and less than half came from coal.
“Mining companies need to start doing something about it as well and governments should be trying to encourage them to do something about it.”
Even if the government is not susceptible to international pressure, what about domestic pressure?
“There is a lot of pressure out there in the broader arena,” Fraser said. “We meet quite a lot of business people who are concerned about the implications of global warming. And there’s quite a growing renewable industry, as in solar. There was in wind too but it has hit a bit of a brick wall for the time being. There’s continuing investment in energy efficiency improvements, in buildings and in all kinds of processes.
“There are actually substantial numbers of people out there who want to do things differently. There are lots of people active in the CSIRO and non-government bodies and in universities who are writing and spreading material on the risks and dangers of what’s going on out there.
“Despite the chorus of denial coming from the other side – including some newspaper, radio and TV commentators who are at best confusing people and at worst turning them off or boring them – I think there’s a momentum building up domestically as well as internationally that in time will cause the pressure to mount on governments, particularly on skeptical governments like the present one.
Trading schemes same from Howard to Gillard
Former Prime Minister John Howard wanted to introduce a ‘cap and trade’ emissions trading scheme back in 2007. Bernie Fraser thinks that, in retrospect, it might have been preferable to the carbon tax introduced by the Gillard Labor Government.
“The arrangements that were put in place [by Labor] in principle weren’t all that different from the cap and trade arrangements. The Labor Government arrangements were intended to move to a trade arrangement [ed note: by July 1 this year] but with the initial few years of a fixed price.
“But it happened at a time when the fixed price was very high and that turned a lot of people off and made the arrangements complicated and expensive. But the two arrangements – what Howard was talking about in essence and what Labor put in place – were fundamentally of the same variety.”
Does this government accept the science?
“The leading spokespeople for the government always say they accept the science and yet they don’t follow through on policy actions, what the science dictates,” Fraser said. “This leads me to the conclusion that a lot of the talk about accepting the science is lip-service and a bit of tokenism in what they’re doing. If they really accepted the science that would require more action.”
The Queensland Government has just approved a large mine in the Galilee Basin that is now awaiting approval by the Federal Government. When asked about the apparent anomaly between trying to cap domestic emissions and trying to export coal as fast as possible, Fraser said it was in the self-interest of mining companies to get the coal out of the ground, put it on ships and make a profit without worrying about the environmental or climate science implications.
“They don’t have to worry about community interests – it’s not their responsibility. But it is the responsibility of government to look beyond the self-interest of companies and to have regard for the community interest including that of future generations in Australia. I think the government is falling down in not displaying any real concern for those community interests as distinct from the self-interest of companies.”