Federal climate change department chief Martin Parkinson yesterday named three areas which he thought would require ‘complementary measures’ in addition to emissions trading.
And, as the Wilkins review of existing climate programs calls for public submissions, Parkinson said he hopes state governments will undertake similar assessments of what programs should stay and go.
Energy efficiency an ‘obvious’ candidate
Energy efficiency measures and support for research and development are two “obvious” areas where emissions trading alone will not achieve what is required, federal Department of Climate Change chief Martin Parkinson told yesterday’s Climate Action Network Australia conference in Sydney.
Parkinson added that energy transmission networks were another potential candidate for so-called “complementary measures”.
“What is complementary to the emissions trading scheme?,” Parkinson put to the conference.
“It has to be policies that go to the heart of delivering solutions that the price mechanism alone isn’t fixing because there are other public policy or externality problems.”
Parkinson said energy efficiency was an obvious candidate, “but I think we need to be careful about just how much we think energy efficiency is not subject to some resolution through price”.
So too is research and development, Parkinson said. “Clearly it is just a given in economics that a price signal alone won’t drive enough research and development. Now then there is a real question is energy somehow an even more extreme version of this phenomenon or is it just the same as everything else?”
Parkinson said a third possible area, “which is I think a little bit more open to debate but I sort of tend to lean towards … is around the issue of some network externalities, it goes to things like transmission lines and the like”.
Avoiding perverse consequences from a renewables target
A renewable energy target and feed-in tariffs are “clearly … going to be an important contributor to the long-term emissions reductions required by the Australian economy,” Parkinson added.
“The question is how best to encourage the scale-up in use of renewable technologies, without any perverse consequences or perverse incentives.”
“It will be important to recognise that the more work that the renewable energy target does the less work the trading scheme does. If the emissions trading scheme is doing less work, the permit price of the emissions trading scheme will be lower.”
“That will mean there will be less incentive to seek out search out lowest cost abatement in Australia. So there is some quite complex interactions between the renewable energy target and the emissions trading scheme.”
Wilkins calls for submissions
Parkinson’s comments on complementary measures come just a few days after the review of climate programs headed by Roger Wilkins issued a call for public submissions.
“Australia has a significant investment in programs that are designed to address climate change issues both domestically and internationally,” Wilkins said in a Department of Finance and Deregulation statement issued last week.
“Now is an opportune time to review this activity in light of the proposed introduction of an emissions trading scheme and adopt a more strategic, principled and disciplined approach,” Wilkins said.
Submissions close May 20 and should go to reviews@finance.gov.au.
Meanwhile, Parkinson told the CANA conference the government hoped to see “similar reviews undertaken at the state level as we go forward”.
Taking Australia ‘to the front of the pack’
Parkinson said the government’s aim in designing the emissions trading scheme is “to propel Australia towards the front of the pack”.
Parkinson said the department was working on the assumption that petrol and other fuels would be included in the scheme, “and I think that is a real breakthrough”.
The form of measures to deal with concerns raised by groups such as the Brotherhood of St Laurence about the effects of policy measures on the poorest is still an open question, but “the development of them is not”, Parkinson added.
Ways to address the equity implications “are central” to the thinking on scheme design, he said.
Stopping coal exports not the answer’
Parkinson defended Australia’s black coal export industry, saying it would make no difference if Australia ceased coal exports.
“I see quite a lot of commentary that seems to imply that … Australia should stop exporting coal,” he said.
“There are 70 countries in the world that have commercially viable coal deposits. The vast bulk of the developing countries are [particularly] concerned about energy security. Even if Australia were to stop exporting coal tomorrow we still need to find a solution to the clean coal problem. Because they are going to use it no matter what we do.”
“So I think a key part of our challenge is to be how can we help find a solution to the coal issue and how can we then disseminate that in a way that gets the countries that are concerned about energy security concerned about the cost of energy that can actually get them to adopt the clean coal solutions.”
“It has also the advantage for us that if we do that we can sell as a package the coal and the way to make sure it doesn’t pollute.”
“I think this is a challenge for you as a group as to how you want to position yourselves in this debate.”
Parkinson added that Australia’s efforts to adapt to continued climate change were “really underdone” and referred delegates to a speech he gave earlier this month to the Planning Institute of Australia.
“I do think that adaptation is the elephant in the room. It’s mitigation that gets people’s attention, but it’s adaptation which we are really going to have to address.”