The market will sort out our emission targets
Sometimes the misery of opposition traps politicians in a rictus of perturbation and panic.
One example is the suggestion in The Australian of anxiety within federal Labor about climate policy.
If true, it’s a distraction. The energy sector is changing gears with no regard for opinions in Canberra’s factions, Labor or the Coalition’s.
Not more than 80km from Parliament House outside Yass, General Electric is installing 46 of the world’s most powerful onshore wind turbines. To stand 200m, their 79m blades will start churning next year, dispatching power for 100,000 homes, each year replacing 600,000 tonnes of greenhouse gas emissions.
As a reminder how quickly renewable technologies are developing, these new platforms are 50 per cent more powerful than the version they replace.
Snowy Hydro will buy the power and says it will firm up this wind with the output of its hydro and gas assets to create reliable, affordable energy.
The transition is occurring, driven by the market.
After I was appointed professor of business and climate at the University of Technology Sydney I opined on this page that Labor’s commitment to reduce emissions by 45 per cent by 2030 may need revisiting. It was how things looked less than a year ago.
It was left to Ross Garnaut, Australia’s leading authority on the economics of climate, to set me right when I encountered him at the memorial for the late Bob Hawke.
Garnaut said that the 45 per cent target was going to be achieved, regardless of Labor’s defeat.
It was being locked in by decisions being made in boardrooms.
“It’s going to be achieved — that is, unless government takes anti-economic decisions to stuff it up. Like subsidising coal. Or as the sources of power change, mismanaging the grid.”
BHP confirmed the shift in business policy last July by accepting responsibility for “scope 3” emissions (that is, the emissions of its customers). Rio Tinto this week signed up to net zero emissions. Combine this with Microsoft’s commitment to removing all the carbon it has emitted since 1975 and you have a lot of capital looking, among other things, for high-quality carbon abatement.
One expert tells me the Australian farm sector might potentially offer offsets worth $1bn a year, compared with last year’s investment in this sector of a modest $50m.
We have 20 years of method development and experimentation, plus a solid compliance architecture in a nature-based carbon market. Here’s the potential to draw in international capital to benefit Australian landowners.
That is one reason the Business Council of Australia now supports net zero emissions by 2050. It knows there is international capital looking for investment in the new technologies but acutely sensitive to shifts of government policy. Where long-term commitments are being made, it seeks the policy certainty that comes with a net zero commitment.
Any coalminers with, say, 15 years’ experience, have witnessed technological change close up.
They also have a realistic idea of how markets work. Their union came to me when I was premier supporting privatisation of state-owned coalmines because they knew only private ownership would deliver the capital to upgrade them.
They know international markets are the basis for their job security.
They are also realistic about the endgame for a coal-fired power station like 50-year-old Liddell in the Hunter Valley. But they also know our thermal coal is more efficient than those of competitors such as Russia or Indonesia.
Overseas demand will, as always, determine the security of coal jobs. Some buyers, like the Europeans, may be moving to carbon tariffs whatever we say. They may even require us to commit to net zero emissions by 2050, as their own national governments do.
Miners don’t want lectures on transition but they are open to an argument about industrial diversification. Having seen technological change in their industry and wanting futures for their kids, why wouldn’t they be? Work by one of my colleagues at the Institute of Sustainable Futures at UTS suggests some overlap between coal regions and mapping of new engineering jobs in renewables.
A Labor candidate in such a community can be comfortable arguing that coal-fired power is not going to be kept going with government money, Soviet-style, but Australia will continue to be an exporter of our relatively clean coal and that’s compatible with our Paris commitments and a net zero emission target by 2050.
Business moves ahead regardless, with a single request to government: fix the grid, give us storage and let investment and markets drive the transition.