26 May Want top dollar for your carbon emissions? Australia is your place
If you are a company looking for the absolute best price you can get for your carbon emissions reductions, then following an announcement on Tuesday May 27 2015 you need look no further than Australia. In evidence presented to Senate Estimates, the Clean Energy Regulator revealed that the Australian taxpayer had effectively paid $66 per tonne in the first round of the Federal Government’s flagship Emissions Reductions Fund (ERF), and not $13.95 as initially calculated (please see my blog “First Auction yields 47 million tons of carbon abatement-but at what cost?” for more information).
CEO of the Clean Energy Regulator Chloe Munro confirmed that approximately 75% of the projects awarded contracts to supply emissions reductions to the Abbott Government (107 out of 144) were pre-existing, and therefore effectively paid for under the previous Labor Federal Government’s market based mechanism. The remaining 25% of the projects awarded contracts in the first round of the ERF can reportedly realise 10 million tonnes, and given that the Federal Government payed $660 million, this effectively gives rise to a price of $66 per tonne.
After reassuring myself that it wasn’t April 1 (April Fools Day in Australia), I checked the date on the Media Release (see link below), and confirmed that indeed it was May 27. Although my Doctorate isn’t in Business, I would think that $66 per tonne is too good an opportunity to pass up! Being serious though, this raises further questions regarding the efficacy of the ERF to achieve the Government’s well publicised emissions reductions targets.
One of the first questions must be what price will be needed in the remaining three rounds of the ERF (as proposed) for the Australian Government to achieve its targets? Presumably the price will need to be almost rock bottom. Secondly, as someone who has good knowledge of the ERF, I wonder how many Australian based projects will be viable at that price? Thirdly, if the Government can’t realise sufficient emissions reductions to achieve their targets domestically, how are they going to “sell” having to purchase international emissions, when the whole point of the ERF was to provide Australian funds to Australian companies to reduce Australian emissions? Can anyone not see the problem here?
This revelation also makes me rather nervous about what the Australian Government will announce in Paris, and I think it would make most people similarly nervous. I wonder how other Australian taxpayers feel about this, especially given that when its all said and done, the Government will ultimately be representing every person living in Australia when they commit to emissions reductions in Paris, and by purchasing international emissions, they are effectively shunning domestic companies that are owned and staffed by people who vote.
Everyone living in Australia needs to think about this, and decide whether they are happy with how messages like this are interpreted internationally, especially given that thanks to social media, announcements can be spread internationally very quickly.
After reading this, I would encourage everyone to share it with their family, friends and work colleagues as much as possible. I think it is time that people of such standing as US President Barack Obama had a conversation with the Australian Government as to the implications of such actions and how they are perceived by other Governments that are establishing track records now rather than waiting for Paris. In order to bring it to President Obama’s attention however, this blog will have to go viral. Are you prepared to assist with this?
To those who wonder why I’m so passionate about climate change, I would simply say that we must act because denial isn’t just a river in Egypt any more.