Pointless raising carbon targets with no road to get there

This opinion article by Business Council chief executive Jennifer Westacott was published in The Australian Financial Review on Monday 16 January 2019.

After a decade of dysfunction and gridlock on climate and energy policy in Australia, it’s about time commentators, some with openly conflicted interests, start sticking to the facts.

Whatever your thoughts on the solution to Australia’s energy and climate quagmire, dogged by politics after 2007 election, one thing is clear – misrepresenting or misunderstanding the Business Council’s views isn’t the solution.

It won’t do anything to help families and pensioners feeling the very real pinch of increased electricity prices, and it won’t lower costs for businesses struggling with high bills. Nor will it do anything to reduce emissions.

The Business Council supports action on climate change along with the policies needed to provide reliable, secure and affordable energy for all Australians. We remain disappointed that the potential for all sides to agree on a durable solution was kyboshed last year by political opportunism.

With over a quarter of the increase in power prices due to higher wholesale prices, Australia must put in place a workable and sustainable energy policy framework that will provide investor confidence and drive investment in new supply. That means providing long-term certainty about how emissions will be treated in the future.

We can’t keep chopping and changing on something of such national importance as ensuring a reliable and affordable energy supply for all Australians. We can’t continue with a perplexing situation where consumers, businesses and industry are forced to second guess which way our policy makers will jump.

Former Labor Minister Craig Emerson’s  recent opinion piece seeking to blame the Business Council for Australia’s energy woes misses a few key facts – not least of which is the fact that governments, of which he was once a member, and not industry groups, implement public policy.

Verballing our position and re-treading old political battles isn’t an action plan for the future, it’s an indulgence that punishes Australians by continuing the debate that has needlessly stalled progress.  

The answers to Australia’s energy problems aren’t political, they’re about good policy and that starts with clarity and a clear-eyed understanding of what needs to be solved. 

It’s time for some facts.

Firstly, the Business Council and our members want to see action to reduce Australia’s emissions and play our role in reducing the effects of climate change.

To this end, the Business Council has long supported Australia ratifying the Paris agreement, and believes that the National Energy Guarantee is the best option on the table to meet our international obligations while ensuring a reliable and stable electricity system.

Secondly, the Business Council supports a 26-28 per cent economy-wide emissions reduction target and the five year review mechanism.

Those calling for a more ambitious target have missed the simple point that you cannot reach a 45 per cent target without first reaching 26 per cent.

We are on track to meet the 26 per cent target across the National Electricity Market but as Mr Emerson concedes on the current numbers we are unlikely to do so across the broader economy. In fact, we don’t even have a plan to get there.

Calls to inflate our existing target, when we still have no mechanism in place to achieve it are putting the cart before the horse. Let’s get the policy right and then have a sensible debate about target trajectories.

Finally, while the impact of a 26 to 28 per cent target has been modelled and investigated, the exhaustive and detailed work simply hasn’t been done on higher targets. This is a sensible starting point, why not get the settings right to meet our obligations and then have a discussion about increasing the target? 

It is only prudent to first consider the impact a higher target will have on the economy, the policies needed to deliver this abatement, how emissions intensive-trade exposed industries will be treated, the technologies available and the availability and price of international permits. 

There will always be a cost to reducing emissions. Politicians and commentators pretending this isn’t the case are in large part responsible for our current mess.

Australians should not have to pay the price through a continuation of high electricity bills, or lower living standards or fewer jobs. Proposing a 45 per cent emission target, with no modelling, before we’re even reached a 26 per cent target would be risking just that.

The Business Council has a clear position, we need a workable plan for Australia to achieve the target it has already set.

If insanity is doing the same thing over and over again but expecting different results, there is hardly a better description of our  debate on energy and climate policy over recent years.

Continuing the political fights of the last decade might make some feel better about their political legacies, but it won’t deliver the lower energy prices that Australian families, pensioners and businesses deserve or the real action on emissions that Australians are demanding.