Labor takes its lead from business on climate policy

Anthony Albanese has promised to deliver a climate change policy modelled on what business says it wants. This includes a managed carbon-trading scheme to force industry emissions lower to meet a near-term target of 43 per cent cuts by 2030 and net-zero emissions by 2050. The near-term target is enough to outbid the Morrison government’s target of 26 to 28 per cent below 2005 levels and the higher cuts (35 per cent) it says will be achieved. But Labor’s figure is lower than the 45 per cent target taken by Bill Shorten to the 2019 election, and well short of what is being promised by the US and Britain and what is being demanded by the Greens. As a result, Labor will be forced to defend its position from government claims that it represents a return to a carbon tax that ultimately will hit consumers and jobs, as well as complaints by environment groups that it does not go far enough.

The policy is a calculated break by the Opposition Leader from the small-target strategy he has followed to date and opens a clear point of difference with the government. Scott Morrison said Labor had not learned the lessons of defeat. “When oppositions don’t learn in opposition, that doesn’t mean they’re safe, they’re just as dangerous as they’ve always been,” the Prime Minister said. The more potent attack is that this is an opening bid vulnerable to being increased dramatically in the event of a Labor minority government directed by the Greens. Mr Albanese’s pitch to voters is the plan will cut power bills by $275 a year by 2025, create 604,000 jobs (mainly in the regions), spur $76bn in investment and reduce emissions by boosting renewable energy. Internationally, Mr Albanese says he wants to bring Australia out of the “naughty corner” on the issue of climate change and that Labor will offer for Australia to host COP29, something that convention says should be held somewhere in eastern Europe. To avoid a repeat of the 2019 campaign where Labor was unable to say how much its climate policy would cost, the party has turned to environmental and energy agency RepuTex to provide modelling. Mr Albanese has touted the RepuTex document as “the most extensive independent modelling ever carried out for an opposition”.

According to RepuTex, most of the promised new jobs will come from decarbonisation of the electricity sector followed by carbon farming and transport. A big driver of Labor’s promised decarbonisation is a revitalisation of the safeguard mechanism introduced by Abbott government environment minister Greg Hunt. The safeguard mechanism applies to facilities that emit more than 100,000 tonnes of carbon dioxide equivalent a year across a range of sectors, including mining, oil and gas extraction, manufacturing, transport and waste. Under the safeguard mechanism, firms are given a baseline of emissions they are allowed to emit and must buy carbon permits to cover any excess. If companies produce less than they are allowed they can sell the excess permits. Under Labor’s plan, the amount of “free” permits progressively will be reduced to force companies to reduce emissions or pay for offsets elsewhere.

RepuTex calculates that improvements to the safeguard mechanism will deliver 213 million tonnes of greenhouse gas emissions reductions by 2030. It says investment in industry abatement is estimated to create 1600 jobs by 2030, with five out of six of these jobs to be created in regional areas. Strengthening the safeguard mechanism has been strongly supported by the Business Council of Australia. In an October briefing paper, the BCA said the measure would deliver a strong carbon investment signal. The ALP policy has rejected BCA advice that the eligibility threshold for liable entities be reduced from 100,000 tonnes of CO2 a year, down to 25,000 tCO2 a year. But Mr Albanese has accepted arguments that companies exposed to high-emissions, trade-exposed industries should face no greater penalties than their international competitors to avoid sending jobs and investment offshore. By siding with business, Mr Albanese is reflecting a reality about how much things have changed in the corporate sector when it comes to decarbonisation. Mr Morrison will remain focused on the consumer.

There is plenty of politics still to be played on climate, but Labor’s policy represents something of a return to where things started when Peter Shergold first looked at the issue for John Howard. He recommended a market-based trading scheme that provided a predictable price, was geared to actions by international competitors and protected heavy emissions, trade-exposed industries. But the question remains, will Australians believe, as they have at previous elections, that is still too high a price to pay?