According to analysis by The Climate Institute think tank the policy at the centre of Australia’s conservative Liberal-National government’s climate plans will deliver just one-seventh of Australia’s post-2020 carbon reduction goals.
The $2.55 billion Emission Reduction Fund (ERF), which may swell to almost $5 billion by 2030, will likely deliver about 355 million tonnes of carbon abatement, based on the price paid in the fund’s first auction, the group said in a report.
Liberal-National Prime Minister Malcolm Turnbull has maintained the climate goals of his predecessor Tony Abbott.
These project a modest five per cent fall in Australia’s 2000 emissions by 2020 and about 19 per cent out to 2030.
The Climate Institute said based on government projections, the goals imply Australia will need to cut emissions by a cumulative total between 2015 and 2030 of 2.5 billion tonnes, or about seven times the ERF’s likely abatement.
A test of the analysis came today when the government released results of its second ERF auction.
In a significant move for the government’s climate plans ahead of the Paris climate summit later this month, the second auction saw another 129 contracts signed for projects to reduce greenhouse gases.
If delivered, those projects would see 45 million tonnes of emissions cuts at an average price of $12.25 a tonne, lower than the $13.95 a tonne paid under the first auction.
The contracts signed stretch in length from one to 10 years, meaning not all the carbon abatement purchased will count towards Australia’s immediate 2020 emissions reduction goal of a 5 per cent cut from 2000 levels.
It brings the total spend from the emissions reduction fund’s two auctions to about $1.2 billion, and the total emissions cuts bought to just short of 93 million tonnes.
Climate Institute chief executive John Connor said at this rate the scheme would deliver just 15 per cent of the emissions cuts needed to meet Australia’s longer-term climate target for 2030.
By then the country has pledged to cut emissions by 26 to 28 per cent from 2005 levels (or 19 per cent from 2000 levels).
Also known as its Direct Action policy, the government had previously paid $660 million, or $13.95 per tonne, to farmers, landfill operators and other projects to eliminate 47 million tonnes of carbon.
Market analyst RepuTex predicts as many as 384 projects will bid for funds in the second round with the possibility of a lower per-tonne price and a large sum being spent.
Environment Minister Greg Hunt said in April the first auction “clearly prove[s] that the Coalition’s climate change policy is delivering real and significant abatement – just as we always said it would”.
A spokesman for Mr Hunt said there is “no doubt that the ERF is incredibly effective”.
“The results speak for themselves,” he said. “Our system is delivering massive emissions reductions.”
The Climate Institute has said Australia’s post-2020 targets should be much higher if nations are to keep global warming to within 2 degrees of pre-industrial limits.
The UK’s Met Office said on Monday that the mean global temperature in the first nine months of 2015 was 1.02 degrees above the 1850-1900 average, passing the symbolic one-degree milestone for the first time.
“We’ve probably got 1.5 degrees [of warming] locked in,” Mr Connor said.
A fairer target for Australia would be to aim for 4.7 billion tonnes of abatement by 2030, of which the ERF would deliver just 7.5 per cent, the Climate Institute said.
The current target may itself be hard to keep because the government is relying on payments to polluters or those storing carbon with little restraint on the rest of the economy to curb emissions, Mr Connor said:
“We are not sending a broad-based signal to emitters in the economy that they have to take responsibility”.
Mark Butler, the Labor opposition spokesman for climate change, said Direct Action would probably perform even worse than The Climate Institute predicts.
Almost three-quarters of the first auction went to existing projects, some as much as 10 years old, Mr Butler said, citing the Clean Energy Regulator.
Australian Greens Party deputy leader Senator Larissa Waters said weak baseline rules meant most big polluters would find ways to increase emissions without penalty.
“The so-called safeguard mechanism, which is meant to cap pollution, is set so high that it is meaningless, it is only safeguarding the Liberal party’s big mining donors,” Senator Waters said.
