Swan says climate is a key challenge but fails to meet it
If this Budget is supposed to get Australia doing its part in solving “the greatest moral challenge of our time”, then it is a failure. While there is $652 million over 4 years in new money for clean energy, this pales into insignificance compared with, for example, $27.7 billion over 6 years for roads.
As I said yesterday, this is a very unclear budget, lacking a clear strategy on energy and other resources.
Treasurer Wayne Swan said in his speech that climate change (which he mentioned 4 times) is one of “three key challenges” for the Budget, along with the return to full economic capacity after the GFC and and the costs of an ageing population. But the funding announced fell far short of this rhetoric.
What may confuse the media and the public is that the Budget night announcements are a mix of actual Budget measures and media releases that talk about old spending. For example, there was the belated announcement of the shortlist of companies that are bidding for Round One of last years’s $1.5 billion Solar Flagships Program.
This could be interpreted as a cynical attempt to trick people into thinking the clean energy commitment of the Government is bigger than it really is. To make it clear, the $1.5 billion is not even the granting of money promised in the last budget, it is simply the announcement of a shortlist of companies that might get the money.
Another example of old money dressed up as new, again via press releases from Resources and Energy Minister Martin Ferguson, are two ad hoc grants under the Renewable Energy Demonstration Program. These are for demonstration plants, for $31.8mill to add solar steam boost to coal plant at Kogan Creek in Queensland and $60mill for Whyalla Solar Oasis Consortium to install ‘Big Dish’ concentrated solar thermal power generation technology developed at Australian National University in 1994.
The $652 million of new Budget money over 4 years is for a Renewable Energy Future Fund, which spends the money saved because the ETS is not going to happen. When you compare an amount this small with the ETS, which was supposed to be a whole-of-economy reform, the tragedy is clear.
One big question here is that the expenditure spreadsheet suggests the ETS has been delayed another year, but without an explicit announcement by the Government. According to the PM the ETS is delayed until 2013 but the savings from its absence are being accounted up to June 2014. I suggest that the Greens Senators will want to pursue this issue carefully in Senate Budget estimate hearings, on 24 May.
The renewable energy industry will be happy with additional money but disappointed it is so ad hoc and short term. There is no systematic shift in economic priorities to cut Australian emissions to an acceptable level.
The Government has left all the details for the new money spending out of the budget, which gives it a raft of juicy election campaign announcements to make.
One indication of how little faith Resources and Energy Minister Ferguson has in a clean energy economy is his announcement on energy efficiency. His press release says that Australia will apply to become a full member of the International Partnership for Energy Efficiency Cooperation and then explains his understanding of energy efficiency in Australia.
Ferguson claims that Australia’s largest energy users have already committed to energy savings that will reduce Australia’s annual CO2 emissions by 0.7% of 2006-07 levels and that future savings might reach an additional 1%.
Energy efficiency experts in industry talk about savings in the order of 20-50% for the developed economies like Australia. To be aiming for 1.7% savings would put Australia at the bottom of the world in energy efficiency.
McKinsey and Company, for example, has applied its cost curve model to Australia and found that up to 20% of emissions reductions can be acheived, mostly from energy efficiency, at zero net cost! (This is by 2020, against 1990 levels.)
In order to see how bad the resources and energy strategy is, consider that the budget does nothing to claw back subsidies to the fossil fuel and mining industries that result in emissions increases and energy waste. According to various estimates, these include $1.7billion or so in fuel subsidies and onother $2-3 billion in other subsidies such as ports and rail infrastructure.
Some in the green movement are saying that this Budget is a win for anti-greens in the Labor Government, like Ferguson and a serious loss for the light-green, climate-concerned figures like Peter Garrett, Anthony Albanese, Tanya Plibersek, Lindsay Tanner and so on.
If this theory is right then these Ministers might want to demonstrate that they are prepared to keep the Government focused on “the greatest moral challenge of our time” in future Budgets, for the sake of the environment and their own electoral fortunes.
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