E&OE….
Topics: Emissions Reduction Fund first auction results
LEIGH SALES:
A major milestone was reached today in Australia’s plan to cut carbon emissions by five per cent by 2020. The first carbon abatement auction under the Federal Government’s Direct Action plan was held.
Now don’t switch off; I know it sounds a bit dry and complicated, but I will explain. In the auction, companies bid for government money to cut carbon emissions. They can undertake whatever sort of project they like to do that, anything from growing more trees to burying more carbon in the soil. The projects that cost the least amount of money per tonne of abatement are the ones that get the green light.
So, today, it was the first auction.
Projects that will altogether cut about 47 million tonnes worth of emissions got the go ahead and the price set at the auction was $13.95 per tonne. So in other words, the winning companies get about $14 from the Government for every tonne of emissions they cut.
To go through the ramifications of this, I’m joined live from Melbourne by the Environment Minister Greg Hunt.
Welcome to the program.
GREG HUNT:
Good evening, Leigh.
LEIGH SALES:
Minister, with this first auction today you’ve spent about 25 per cent of your budget to reach about 15 per cent of your goal. Doesn’t that demonstrate that your policy’s not going to be enough to meet Australia’s emission reduction targets?
GREG HUNT:
No, with respect, the presumptions in your question are quite wrong. What we’ve done today is achieve 47 million tonnes of emissions reduction. We are well on our way to achieving our targets. Amazingly, what we’ve seen is that we have produced four times the emissions reduction in the very first auction than was achieved during the entire carbon tax experiment at about one-ninetieth of the price, at just over one per cent of the price of emissions reduction under the carbon tax. So what you see is that you have a massively expensive project experiment which failed to achieve its outcomes…
LEIGH SALES:
But…
GREG HUNT:
…versus something which just today has in its first auction achieved four times, four times the outcome.
LEIGH SALES:
Minister, if you can address my point, at $13.95 per tonne, the amount set today, given that you have $2.55 billion to spend, you will fall short of Australia’s targets by about 57 million tonnes.
GREG HUNT:
No, that’s false.
LEIGH SALES:
Ok, so how are you going to reach the targets?
GREG HUNT:
Well, what are you assuming is the target?
LEIGH SALES:
I’m assuming that the target is five per cent by 2020.
GREG HUNT:
Correct. We’ll achieve it.
LEIGH SALES:
So are you going to reach that?
GREG HUNT:
Yes, we will.
LEIGH SALES:
Ok, so today…
GREG HUNT:
And we’ll do it not just by the skin of our teeth. We will go well beyond what we have committed. We will achieve in a very significant way, as we did with the first international period, our targets. We’ll achieve more than we set out to do, and more than that, we wouldn’t have done this under the carbon tax. If you think of 12 million tonnes from the entire carbon tax experiment versus just the first auction – four times as much, 47 million tonnes – it shows that the critics and the ALP were just plain wrong – a profoundly important outcome with 144 projects today.
LEIGH SALES:
Minister, if you are very confident that you’re going to meet the targets, in fact that you’re going to exceed them, why not put your money where your mouth is and then revise the targets drastically upwards?
GREG HUNT:
Well, what we now move to is the post-2020 period because we’re one of the few countries in the world that has achieved and beaten our first round of international targets. As of today it’s absolutely clear that we will achieve and beat our second round and…
LEIGH SALES:
By how much? You keep saying that, but by how much?
GREG HUNT:
Well we’ll see how the remaining auctions go. But it’s clear that we’ve had a stunning result, far greater, dramatically greater by an order of magnitude than any of the critics and any of the pundits thought we’d achieve.
LEIGH SALES:
And so that goes – sorry to interrupt, minister, but that goes to my point then – if it is drastically exceeded – in fact I think it’s exceeded by about 10 times what you said would be an outstanding result.
GREG HUNT:
Correct.
LEIGH SALES:
If that’s the case, then why not revise our targets for emissions reduction upwards by 10 times?
GREG HUNT:
Well, let’s firstly get this right, that we’re in the process of doing this without an unnecessary, incredibly punitive electricity tax. And we need to acknowledge that that debate has now been run and won and I think forever in this country that no longer do we need to hit families and pensioners, small businesses with a massive electricity tax. The next thing…
LEIGH SALES:
You’re still compensating them for that though under your own policies, even though it doesn’t exist anymore.
GREG HUNT:
Well families did receive a cost-of-living benefit under the Coalition.
LEIGH SALES:
How’s that a responsible economic policy?
GREG HUNT:
Well, what we see here is there are two things: families are better off, electricity prices are lower and we’re achieving our targets. That’s the definition – that’s the definition of responsible and now we move to the post-2020 period where we can be an incredibly constructive international citizen.
We’re working towards, at the moment, on the same basis as the Americans, the equivalent of minus 13 per cent of our 2005 emissions by 2020. That’s a very significant outcome and now we look beyond that. But as of today, what you see is projects around the country to reduce emissions by reforestation, through soil carbon, by reducing methane from landfills – practical projects right around the country.
LEIGH SALES:
By 47 million tonnes is what’s been promised.
GREG HUNT:
Correct.
LEIGH SALES:
By when will that be delivered?
GREG HUNT:
So those projects are on average, according to the advice from the Clean Energy Regulator, over a seven-year period. Some are shorter, some are longer. And this also puts to rest…
LEIGH SALES:
So by 2022?
GREG HUNT:
This also puts to rest…
LEIGH SALES:
So, Minister, sorry, just by 2022 then?
GREG HUNT:
Look, on average, they’re seven years. The first of the emissions reduction we are expecting, on the advice of the Regulator, within the month. So within the month, by the end of May we’ll have the first of those projects underway and the abatement provided to the Commonwealth or the emissions reduction, so we’re getting on with it immediately.
And then we have numerous other auctions to come and what’s known as the safeguards mechanism, so we will achieve all of this and it means that the critics associated with the ALP and the ALP were profoundly wrong. They had a policy which was expensive and didn’t work. This does work and is profoundly less expensive.
LEIGH SALES:
Minister, with this – with this policy – let’s talk about the current policy. Let’s talk about the current policy. With this policy, taxpayers are paying polluters not to pollute.
GREG HUNT:
Well that’s false.
LEIGH SALES:
Will you submit it to an independent audit so that we can see firstly if the promised abatement happens, and secondly, if it’s value for money?
GREG HUNT:
It’s actually already been audited. Deloitte has signed off on the first round of audit, so they ran through a probity process.
LEIGH SALES:
No, but – is it going to keep happening? Because we need to know if people are delivering what they’re promising that they’re going to be delivering for this money.
GREG HUNT:
Well yes, the answer is of course. We’ve already had a probity audit, at my request, present throughout the whole process. And even the Climate Institute today, I spoke with their leader, John Connor, acknowledged that whilst they have different views on mechanisms, that the process was outstanding and that the individual projects are really fine examples of emissions reduction.
Which is very different to the pink batts, green loans, cash for clunkers and then the carbon tax experiment which failed to reduce emissions, but cost Australians $15 billion under the previous government. There’s a legacy of failure and a present success.
LEIGH SALES:
On the carbon tax, you’ve raised it – you’ve raised it a few times, so let me ask you, under the previous government’s scheme, the carbon tax by now would have been floating at about $10 a tonne. Companies would have been paying that to the Government to pollute. Now under your scheme…
GREG HUNT:
Correct – to pollute.
LEIGH SALES:
To pollute. Now under your scheme, the Government is paying companies $14 a tonne not to pollute. How is that efficient use of taxpayer money?
GREG HUNT:
No, with great respect, there’s a fundamental error in that analysis. That is the ALP analysis and that’s why it was wrong. What they were doing is – let’s take the example of Qantas. Qantas was paying about $100 million a year. Was it reducing emissions because of the carbon tax? No. Unless they were going to fly less, they weren’t able to reduce their emissions, so it was a dead weight cost that wasn’t actually reducing emissions.
So, are we saying we should just be punishing people for ordinary business, which it really was doing in terms of electricity prices and gas prices for mums and dads and pensioners? In other words, it wasn’t achieving emissions reduction, which is the whole purpose here.
LEIGH SALES:
Minister, I’m sorry, we’re out of time, unfortunately. There’s so much more that we could discuss. Thank you very much for coming in.
GREG HUNT:
That’s right. Let me just finish with this point…
LEIGH SALES:
Very, very briefly.
GREG HUNT:
…that on today of all days, people should step back and realise that Australia as a nation is going to achieve our goals. We’ll do it without an electricity tax and we’ll do it in a way which is dramatically lower cost with dramatically better outcomes.
LEIGH SALES:
Ok, you’ve made that point already in the interview. Thank you very much.
GREG HUNT:
Thanks, Leigh.
(ENDS)