Wednesday, November 11, 2015

Turnbull’s Energy Politics: Cool-Headed or Blood-Minded

The appointment of Larry Marshall to head the CSIRO and Alan Finkel as Australia’s Chief Scientist highlight the integration of business into Australian scientific and political debate. Marshall is an ‘entrepreneur and venture capitalist’ who speaks of ‘lean innovation and ‘agility’. Finkel, ex-chancellor at Monash and proponent of nuclear power, has been billed as ‘a scientist and an entrepreneur… [who can] help Australia bridge the gap between scientific research and industry’.

This optimistic persepctive is supported by a new CSIRO report, Australian National Outlook 2015, released November 5, 2015, which highlights the ability to ‘decouple’ or ‘reconcile’ economic growth and multiple environmental pressures. The report argues that ‘Australia could make enormous progress towards a more sustainable future without a major change in what we value’. In other words, it rejects ‘communitarian limits’ on growth. Instead, energy consumption, water use and food output an all continue to rise while greenhouse emissions fall, stressed catchments can be maintained and native habitat restored.

This argument is also reflected in the Corporate Social Responsibility strategies of many of our biggest polluters. We Mean Business is ‘a coalition of organizations working with thousands of the world’s most influential businesses and investors… to recognize that the transition to a low carbon economy is the only way to secure sustainable economic growth and prosperity for all’. The organization promotes the idea that ‘shifting to a low carbon economy is the only sensible way to stay competitive in the market’. Members include The Climate Group, which, during ‘Climate Week NYC’, September 2014, launched a ‘multi-year initiative to encourage major companies to commit to using 100% renewable power. This initiative was called RE100. The Climate Group also organized the ‘Compact of States and Regions’ which provides a ‘single, global account of greenhouse gas (GHG) reduction targets made by state and regional governments’ (including South Australia and the Australian Capital Territory). On November 5, ’We Mean Business’ organised an ‘action’ in Sydney called the Australian Climate Leadership Summit  ‘hosted’ by CDP. ‘More than a dozen’ of Australia's largest companies signed up to one or more of a series of seven ‘pledges’. It comes as Commonwealth Bank and the NAB made well-publicized announcements about their own policies on climate change. The banks will look at increasing focus on renewable energy and at ways carbon intensive projects can lower their emissions.

These win-win-win scenarios do not provide a platform for the kind of regulatory changes necessary to limit global warming. As CSIRO’s National Outlook report illustrates: Governments need to choose. This will involve some pain. Haward Pender of the ACCR writes: ‘The political process of recognising the need for physical constraint of emissions is slow and difficult’. In particular, many assets, including mines and coal-fired power stations, are likely to become ‘stranded’.

There is no guarantee the Australian government will make the necessary decisions. As George Monbiot illustrated recently: ‘Banks, corporations and landowners wield an unaccountable power, which works with a nod and a wink within the political class.’ At the same time, it is not clear that the electorate supports a change in energy policies. Recent CSIRO research reported that less than half of Australians (45.9%) believe that climate change is happening and is caused by human activity. Moreover, this recent (now canceled) CSIRO survey found that that respondents assumed that only one third of Australians (32.8%) believed that climate change was induced by human activity.

Some reports invoke Turnbull’s ‘character’ as a reason for optimism. As Tim Buckley of the ‘Institute for Energy Economics and Financial Analysis’ writes: ‘Where Abbott clung to a status-quo outlook that refused to see the light, Turnbull is a realist who knows change is on the way’. Turnbull, by his own admission, will only act if it is in Australia’s financial interest to do so and if it is in his own political interests to do so.

In the meantime, the government continues the annual $5 billion subsidies for high-carbon assets that cannot be exploited without driving the planet far beyond the internationally agreed target of limiting global temperature increases to no more than 2 degrees C. These subsidies play an increasingly significant role in maintaining the financial viability of many fossil fuel mining operations. Carbontracker estimates these subsidies (including postponed rehabilitation payments, direct tax deductions and and fuel excise exemption) at $5.22AUD per tonne. Given the rapidly declining Australian Coal Price (-7.53% from last month and -17.86% from one year ago), the survival of the coal sector ‘may perversely come down to government intervention’. Carbon Capture and Storage technologies, necessary for the longer term survival of the coal industry, currently adds costs to generating power that are too high for the process to be applied in a stand alone commercial context and may be beyond the survival window for a lot of the coal mining companies.

Malcolm Turnbull recently argued that energy sources have physical and financial but not moral characteristics. Energy policies need to evolve, Turnbull argues, in a manner that is ‘non-ideological’, ‘clear-eyed’, ‘cool-headed’ and ‘rational’. Turnbull’s language is copied by Environment Minister Greg Hunt, who argues that, ‘so long as it produces reliable electricity… there are no moral qualities either way in different forms of energy or electricity’. At the moment Turnbull’s actions are more bloody-minded than cool-headed.

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