Climate overview

by Polly Hemming and Richie Merzian

The bumper #Budget21 was small on climate action. Incredibly small. Only a miserly $19.3 million was dedicated solely for renewable energy and $30 million for a big battery in the Northern Territory (both welcome – just small). By contrast there was no shortage of spending on fossil fuel energy and related technologies. Around $1.6 billion over ten years was set aside to pay major polluters to 1) turn fossil fuels into hydrogen, 2) bury their emissions, 3) upgrade their equipment and practises and 4) meet and beat their agreed but weak emissions limits (under the Safeguards Mechanism). That’s not to mention around $300 million for the gas-fired recovery, undisclosed millions for liquid fuel security and a whopping $8 billion in fuel tax credits.

When it comes to the latest in greenwashing look no further than ‘clean’ hydrogen which will benefit from $275.5 million in budget support. As Prime Minister Morrison told the world at the United States’ Climate Summit last month “Mr President, in the United States you have the Silicon Valley. Here in Australia we are creating our own ‘Hydrogen Valleys’”. While it was awkward that President Biden had already left the room when the PM addressed him, it is even more awkward that these hydrogen valleys could be developed with fossil fuels – a process that releases more emissions than if you just burnt the fossil fuels directly for energy. The only way you possibly badge that as ‘clean’ is with the promise to bury some of the emissions underground.

Therefore, alongside the hydrogen funding is $263.7 million for carbon capture and storage (CCS), on top of the $50 million from the last budget.  CCS is the eternal promise to bury the problem under the carpet. The problem is that it hasn’t delivered – despite Australian governments spending $1.3 billion there isn’t a single successful large-scale facility in the country and fewer than twenty worldwide. Even the coal industry’s own CCS research and development fund lost interest and went into coal advertising (fancy a little black rock? ). Yet CCS continues to benefit from taxpayer support to justify the ‘clean’ hydrogen made from fossil fuels as opposed to green hydrogen made using renewable energy electrolysis (that is actually zero emissions).

The federal government’s general approach to major polluters is ‘technology, not taxes’ – otherwise known as all carrots, no sticks. This is visible in the $26.4 million to take up energy efficient equipment (which will save the businesses money). It is also visible in the $279.9 million to establish a new scheme to award large emitters, currently covered by the Safeguard Mechanism, with special credits for using “transformative”  (whatever that means) abatement projects to keep their emissions below their pollution threshold or ‘baseline’.

The Safeguard Mechanism was designed by the Abbott government to hold Australia’s biggest polluters to account if they exceed established carbon pollution thresholds (which they regularly do without penalty). If you want to see just how well the Safeguard Mechanism currently works and how good the government is at enforcing baselines, look no further than the Gorgon LNG and CCS project.

This new crediting function, to reward polluters for meeting and beating their weak baselines, was a recommendation from former CEO of Origin Energy, Grant King, who was also chair of the Business Council of Australia when they famously described a 45% emissions reduction by 2030 target as ‘economy wrecking’.  King was also recently appointed to chair the government’s Climate Change Authority, which (oddly enough) is projected to have a 40% cut to its modest budget towards the end of the forward estimates.

The government has also allocated $36.8 million to supporting ‘voluntary climate action’ (keep an eye out for this term in the lead up to COP26). This means putting in minimal money to ‘enable’ and ‘support’ businesses that are committed to climate action to do the heavy lifting instead of the government. Extra resourcing is going to the Government’s voluntary carbon neutral certification initiative Climate Active, where businesses purchase offsets to neutralise their emissions and pay to use the Climate Active trademark.

While the government has made much of its Technology Investment Roadmap in the budget, what is noticeably absent is any reference to the elusive Long-term Emissions Reduction Strategy, specifically the economic modelling underpinning it, that it is meant to be taking to COP26 in November. Earlier this year Government officials were unable to confirm whether any modelling had taken place so far, so it is surprising to see that funds haven’t been allocated to this important body of work.

> Back to Budget Wrap 2021

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