Labor yet to reveal costs of carrot and stick climate policy

Labor has announced the emissions reduction plan many thought Malcolm Turnbull would deliver. It is a carrot and stick approach to climate policy with giveaways to households masking a tougher regime for business.

Sensitive to any charge of a new carbon tax, Labor will instead refashion and expand the Coalition’s existing carbon reduction programs to meet its ambitious target of 45 per cent by 2030.

Households will be offered cash to install batteries for solar systems and encouraged to adopt electric cars. Business will be allowed to use international offsets but a Labor government will forgo the bonus credits achieved under Kyoto two, setting a contest with the Coalition over policy purity.

Labor will double the original investment in the Clean Energy Finance Corporation by $10 billion and stick to its 50 per cent renewable energy target.

It will reinvigorate the Climate Change Authority and do a comprehensive climate change assessment on likely and potential impacts of climate change on all aspects of Australian life.

The language adopted in the ALP policy launch is of a softly softly approach. But it is in essence a cap and trade system that must inevitably involve penalties for companies that do not meet tougher targets. The program will be built on the Coalition’s existing safeguards mechanism.

Companies that miss targets will have to buy cover, facilities that do better will be able to make money from selling credits.

Labor says it will turn its back on the government’s recapitalised $2.5 billion emissions reduction fund, but will nonetheless lean heavily on the land sector to find new ways to store carbon dioxide.

The ALP will work with the grazing industry to help it meet the livestock corporation’s own target of carbon neutrality by 2030.

Like the Coalition’s direct action plan there is a big opportunity in Labor’s approach to the land.

Agriculture will have an opportunity to sell carbon storage projects to industry. Such schemes have the potential to improve soil fertility, protect habitat, expand forestry operations and deliver tangible benefits. Labor will provide an extra $40 million over four years to develop new methodologies and establish a carbon assessment standard to generate confidence in the abatement schemes.

State governments can expect heavy intervention from Canberra to wind back land clearing so the commonwealth can book the carbon dioxide emissions savings. Labor was quick to indicate Queensland would be left alone because the state had already adopted a new approach.

This puts NSW in the frame and indicates Labor knows exactly how sensitive bush seats will be to any additional restrictions. There is little detail on what the caps will be for industry and how they will be tightened but Labor says trade-exposed sectors will get special treatment. This will ensure they face comparable impacts from ­climate change policies as their competitors do in relevant international markets. Exactly how this will work and still allow Australia to meet Labor’s higher targets has not been explained.

For vehicles, Labor plans tough new standards for carbon dioxide emissions. The reality is none of the most popular cars currently sold in Australia would meet the planned standards. The standards will be applied to car retailers who will be able to offset high emissions car sales with low or zero emission car sales. In short, Labor has offered higher ambition but little detail. This is particularly true on how much it all is going to cost.