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  • Writer's pictureDavid James Connolly

Neither party is up for the job of dealing with climate change

Climate change is rated as one of the top two issues for voters in the forthcoming election.

However, politicians from neither party are up for the job required to deal with it. Two things stand out that should stick in the minds of young voters.

First, while Australia has been doing more on renewables since last year’s United Nations Climate Change Conference, or COP 21, it is important to understand that energy transition takes a very long time.

Currently, 89.3 per cent of our consumption is based on fossil fuels (coal, oil and gas), and only 10.7 per cent on renewables and hydro. Even with a plan that would work, it will take many decades to decarbonise Australia. But we don’t have such a plan.

The strategies on both sides are to set goals that will somehow be met with promises of things like more electric vehicles (EV), community batteries investment in the grid, and more investment for hydro and gas turbines.

The second point regards coal production. The gap between what we produce and what we consume is mostly exported to other countries to burn and cause climate change.

These exports of coal alone are two times the energy Australia consumes from all sources. Coal exports matter twice more than all the squabbling about what we do at home to meet our local goals.

While China is the biggest domestic producer of coal for its own use, we are the world’s biggest exporter - well ahead of our nearest competitor, Indonesia. If we had had a broad economic plan, we would never have become so addicted to this commodity.

If young voters are really interested in climate change, then doing something about coal is a standout. But this requires a long-term plan that neither party is willing to countenance. Quite the contrary.

Labor will: “Protect the competitiveness of Emissions Intensive Trade Exposed industries by ensuring they will not face a greater constraint than their competitors”. As Indonesia has no constraints, a Labor government can keep its promise to do nothing on coal exports.

The Coalition: “continues the policies and initiatives that we have already put in place and that have proven to be successful, while preserving existing industries and jobs, and supporting regional Australia ... it will not shut down coal or gas production”.

‘Proven to be successful’?

The Coalition asserts that they have done such a great job so far, we should elect them to do more. They claim that renewables make up one third of our energy mix. Really? It doesn’t look like that.

The energy minister says that renewables are 24 per cent of our electricity generation. That is quite correct. But that is not one third of our primary energy consumption, which includes the commercially-traded fuels.

Now, just in case you think that at least 24 per cent renewables plus hydro for electricity generation is good, then think again. Canada is at 67 per cent. The average for all European countries is 41 per cent. The United Kingdom is 42 per cent and New Zealand 37 per cent. Even poor countries are ahead of us (Vietnam 33 per cent and China 28 per cent).

The share of hydro and renewables in total energy consumption is only 10.7 per cent. To put this in perspective, the average for the entire world is 12.5 per cent. Indeed, it’s hard to find any advanced economy as bad as Australia (other than the United States of course).

What is the basic problem here? In essence, it is the age-old problem of the future versus the present.

If benefits accrue only to our grandchildren, and those benefits mean sacrifices for us today, we won’t give up our bad habits easily. Vested interests will also reinforce this desire, since a lot more dollars can be squeezed out of coal and gas exports for decades to come.

The promise that we can meet global goals without pricing or taxing carbon is appealing to voters who want to believe the fairy tale that we are already doing well on renewables and that future technology can help.

The reality, however, is that bushfires, floods, storms and the sea level issues are already present all over the world. It is hard to imagine the kind of world our grandchildren will face. Our record is appalling, and for coal exports we are big enough to matter globally.

Price and tax are key

The essence of any plan that can work in this very uncertain world is via pricing or taxing fossil fuels. If the trend in the price of carbon rises in a predictable way, it will bring about the required adjustments over time in a consistent manner.

The policies of the Coalition and Labor in this election are more like supplementary measures that should be part of long-term plan guided by the carbon price/tax system. But without the latter, they won’t be coordinated and coherent.

Let’s take Labor’s EV subsidy plan as an example. Not a bad idea. It would be great to have everyone driving EVs instead of large traditional cars and especially four-wheel drives and trucks. The upfront cost of an EV is much higher, in the 30 per cent to 50 per cent range. But they are cheaper to run and, with more charging stations, may become more practicable for longer trips.

Labor is happy to use the price mechanism if it means cutting taxes and tariffs to support EVs (bulletproof). But it is not willing to place surcharges on four-wheel drives and other large petrol-using vehicles (not bullet proof).

The price gap for EVs could fall if battery prices decline. But this is highly uncertain. Every country is pushing for more EVs so demand will be strong. Worse, key ingredients for batteries include lithium, nickel and cobalt. Rare earth is used in the broader EV technology. These are all in short supply and their prices are skyrocketing. It isn’t transitory.

We don’t know what the future holds. Will subsidies that are enough to make a difference be affordable? Will EVs prove to be a wealthy-family success story only? A broader plan based on price signals works without such uncertainty.

Getting rid of excess coal production (exports) is a must. All the scratching-the-surface things proposed for Australia locally pale into insignificance alongside our wretched coal export industry.

We need politicians who have the courage to take on the big issues. We do not have them. How do we send them the message?

Original article: here

Best regards,

David James Connolly

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