Angus Taylor (Hume, Liberal Party) Share this | Hansard source

I rise to speak on the Carbon Farming Initiative Amendment Bill 2014, the centrepiece of the government's Direct Action Plan. We know this bill will deliver on the coalition's commitment to establish an Emissions Reduction Fund, providing positive incentives to reduce emissions in place of the punitive carbon tax instituted by the previous government. Of course, the objective of this exercise is to reach our bipartisan target of a five per cent reduction on year 2000 emissions.

At a personal level, I have followed developments in climate science for over 25 years. Despite the blizzard that has dumped snow on the mountains just south of here, where I was brought up, I have watched the climate changing. I have watched the snowline rise, and I firmly believe our best bet is that human activity is at least partly responsible. I firmly believe the world needs to act.

But over 25 years I have also watched developments in climate policy and I have come to recognise, somewhat reluctantly at times, that overly aggressive and poorly directed unilateral action by any country is meaningless and futile. Overly aggressive and poorly directed action presents two fundamental problems for Australia. First, we risk trashing our economy for absolutely no reason. Second, we ignore the fact that the fundamental problem is one of reducing carbon emissions globally, not domestically. The atmosphere makes no distinction between carbon emitted from the US, China, Australia, Africa or anywhere else in the world, for that matter.

We know we are a long way from an international deal on this issue. In fact, the whole spectre of Copenhagen taught us a great deal. Above all, it taught us that getting to a global agreement was going to be extremely difficult—far more difficult than many thought it would be. In fact, a wonderful piece written by the former adviser to former Prime Minister Kevin Rudd, a guy called Andrew Charlton, laid out very clearly the extraordinary challenge the world faces in coming to a global agreement—a challenge which those on the other side of the House seem to ignore in taking the positions they do on this issue.

Often all of this is presented as a choice between progress and planet. I do not believe we need to make this choice. Progress versus planet is the narrative of the green revolutionaries, but the history of humanity is one of reconciling progress and planet. The two can, and should, live together. So the issue here for the coalition and for me personally is not the target, because that is a bipartisan target, but the means of getting there. And, of course, the comparison needs to be made in context, so let's look at the critical characteristics of the Australian economy in thinking about this problem.

First of all, and perhaps most importantly, our exports are extremely emissions intensive. Those from the other side of the House and elsewhere like to quote our carbon emissions per capita. What they forget to quote is the extraordinary emissions intensity and energy intensity of our exports, and amongst them are aluminium, alumina, coal, cement, fertiliser and the full range of agricultural products. It seems to me that those opposite are very quick to ignore the importance of these industries to Australia—their historical importance and, unquestionably, their future importance to our great country. The second characteristic of the Australian economy that those opposite ignore is the emissions intensity of our electricity grid. We emit about 0.9 tonnes of carbon for every megawatt hour of electricity. It is high by global standards. That level is actually a measure of the dominance of coal in our grid and the competitive advantage we have created as a country by having low-cost coal and low-cost energy.

Because of those characteristics of the Australian economy, the reality is that reducing carbon emissions is challenging and risks being expensive. It is an expensive place to reduce carbon emissions, particularly in our electricity grid. Cheap coal is, of course, a big contributor to that but increasingly, as we know, expensive gas is an important component of that as well. Across the world, countries are coming to the conclusion that the fastest way to reduce carbon emissions is to swap coal for gas. In Australia, with so much of our gas being exported and our gas price being determined by the international price, that is a very expensive thing for us to do.

The risk for us if we move too aggressively is that we will lose our export industries. Let's take a couple of examples of how this might play out in practice and what impact it will have on atmospheric concentrations of CO2 and carbon emissions across the world. For instance, if we were to cut our coal exports to China, that coal would then come from one of two places: from within China or from Indonesia. And let me tell you, Deputy speaker, we know that coal coming from either of those two sources will result in far higher emissions than coal coming from Australia.

If we look at Europe we see a very good example of how flawed policy can lead to counterproductive outcomes. There have been a whole series of papers and research done on the impact of the European trading scheme on global emissions and the one clear message coming from them is that the European scheme has failed. I am quoting here from a research paper published in April 2012 by a guy called Boitier. He tested a very clear hypothesis which has been confirmed in a series of papers and found:

… the de-industrialisation of the developed countries—

particularly in Europe—

in favour of developing countries led to a displacement of the pollutant activities towards the developing countries without a similar reduction of manufactured goods consumption in developed countries.

What that means in practice is that if you put an aggressive scheme in place and you push too hard and you do not think hard enough about how you structure the scheme, you simply export the emissions. That is exactly what the Europeans have done.

I have a chart in front of me that shows that in 1996-97, when Kyoto went into place, the Europeans consumed 10 per cent more carbon in what they ate and what they used than they produced, but by 2008, as result of the carbon scheme they had put in place, they consumed 25 per cent more than they produced. So what had the Europeans done? They had sent their carbon emissions off to China. If we design schemes the wrong way, as I believe the Labor Party and the previous government did, we will achieve nothing. In fact, a carbon tax structured the way the last government structured their carbon tax is a penalty on the competitiveness of our economy and our export industries. It is a penalty on one of our biggest sources of competitive advantage. The result is that it is costing every Australian household $550, it is costing jobs and it is costing investment. That happened because, in an alliance with the Greens, they put in place the world's highest carbon tax in on-again off-again way where no-one really knew what was going on at any point.

Let's contrast that with Direct Action. There are two fundamental features of Direct Action that make it a good program. The first is that it is an incentive, not a penalty. So we will not be exporting our emissions, we will not be punishing our exporters, we will not be punishing our economy. Just as importantly, it is broad based, not narrow. It is not just a tax on electricity. It is a program that extends deep into many activities our economy, including sources of abatement like agriculture, forestry and land use—and I will give some examples in a moment. At the more detailed level, it seeks to find the lowest cost emissions reductions through reverse auctions; it seeks genuine emissions reductions by requiring additionality, so an emissions reduction cannot be mandated by another source of policy—from the states, for instance—it has to be additional to any other program; and it involves streamlined administration. It will be much easier to participate in than the last government's Carbon Farming Initiative.

It includes a crediting mechanism and a purchasing mechanism with $2.55 billion allocated across the forward estimates, and it will include a safeguard mechanism. Despite what we heard from the member for Port Adelaide, the safeguard mechanism is anticipated and it will be a component of the scheme in time. It makes use of existing structures and processes like the Carbon Farming Initiative, the National Greenhouse and Energy Reporting Scheme and the Clean Energy Regulator. We did not want to create any more layers of bureaucracy than the last government already had.

As I said a moment ago, one of the really critical features of this scheme is that it covers a much broader range of activities than is even possible with a carbon tax. Let me give you some examples of the sorts of activities and the sorts of projects that could be supported by the Emissions Reduction Fund. It could involve cleaning up Australia's waste sector by capturing methane for flaring or generating electricity, improving local air quality in the process. It could involve capturing methane from waste water facilities at abattoirs and chemical-processing facilities, something of great importance to my electorate, where there are a number of abattoirs. Those abattoirs are looking at these options as part of what they anticipate will be the ERF. It includes energy efficiency improvements in the commercial building sector, including offices, retail chains and education facilities. This could include partial and full retrofits of existing commercial buildings, installation of energy efficient lighting or fans, or installation of co- and tri-generation. It will include projects to destroy the methane that is generated from manure in piggeries and dairies and projects to reduce emissions by feeding dietary additives to milking cows. This is a far broader ranging scheme. We know that the broader ranging the activities included in the scheme are, the lower the cost of reducing emissions, which is why those opposite are puzzled as to why we will be able to do this so cheaply.

Let me give you a couple of examples of the sorts of projects that are already working under the Carbon Farming Initiative that we will seek to expand as part of this program. Blantyre Farms, in my electorate, run by Edwina and Michael Beveridge, are capturing biogas generated by the decomposition of the piggery manure waste in anaerobic lagoons and the combustion of the methane component of the biogas. The methodology involved is destruction of the methane generated from manure in the piggeries. Already they have been issued 20,000 credits. Another example, just outside of my electorate, at Corowa, is the Rivalea piggery biogas project. They are capturing biogas generated by the decomposition of the piggery manure waste in anaerobic lagoons, and the methodology is destruction of that methane. They have been issued 16,000 credits to date.

One of the things that those opposite like to say is that this scheme is not similar to, is not being replicated by and has no analogy in any other part of the world. But, if we look across the world, the overriding approach to reducing carbon emissions is direct action. Let me give you a few examples. We see in Norway's Carbon Procurement Facility a direct abatement purchasing scheme. We see the same in Japan's Joint Crediting Mechanism and in the all-important United Nations Clean Development Mechanism. We are seeing, in a whole range of countries, energy efficiency such as energy intensity and efficiency target schemes, in place in countries like China, India, Indonesia, Japan, South Africa, Mexico, Russia, New Zealand, Thailand and Turkey, and in many states in the US—all examples of direct action. Those opposite love to crow about what President Obama is doing, but, frankly, what he is doing is direct action.

We realise that there is further work to be done in this area. There are further issues that need to be resolved in our broader carbon reduction policy. One of those is the RET review, and it is important that in the RET review we look at the lowest cost means of reducing carbon emissions. We also know that, in time, we will need to link what we are doing with what is happening internationally, but let's not get ahead of ourselves, because the international developments in this area are still relatively immature. I commend the Minister for the Environment on the work that he has done to get the bill here and I commend this bill to the House.

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