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Pub: Sydney Morning Herald

Pubdate: 06-Dec-2008

Edition: First

Section: News and Features

Subsection: News Review

Page: 34

Wordcount: 2069

Sins of emission

Elizabeth Farrelly.

The Rudd Government is pinning its carbon reduction hopes on the very market mechanics that compounded the mess in the first place, argues Elizabeth Farrelly.

‘What’s carbon paper Mummy?’ It’s a nine-year-old’s question, from someone who has never seen a typewriter, never known a world without photocopiers; someone for whom carbon is unquestionably the bad guy. For whom carbon – as in footprint, emissions, trading – is something to be deplored, minimised and taxed.

Yet carbon is the basis of life; the very flag that marks organic chemistry off from the other sort. Carbon, sitting as it does slap-bang in the boring, cardigan-wearing middle of the periodic table, forms four covalent (or electron-sharing) bonds in a peculiar tetrahedral structure.

If it were any other way there would be no alcohol and no sugar. But waste no time imagining life devoid of gin and tonics because without the 10 million-odd other compounds comprised solely of carbon, hydrogen, oxygen and nitrogen, there’d be no life, either. Worse, there’ll be forever, but no diamonds. No James Bond.

So Peter Colley, of the Construction Forestry Mining Energy Union, is right to argue that carbon is not intrinsically evil. Even the act of carbon emission cannot be intrinsically evil. We all breathe, after all, and carbon dioxide is what we produce. Our CO2, if you want to see it that way, feeds forests.

In any case it is often argued – much as South Africa used to argue for keeping politics out of sport – that morality should be banned from the environment debate. This is seen to favour carbon-trading, as if the market were itself some sort of cleansing device, some sort of astringent value-free science.

The flaws in this argument are many, from the failure of both markets and scientism, to the ludicrous presumption that things are somehow cleaner in an amoral context.

But is ‘carbon’ – which now includes not only carboniferous gases like CO2 and methane (CH4) but also disulphides and other greenhouse nasties – actually a bad guy? Or is it just too much of a good thing, in the wrong place? Tree-carbon that’s just got out into the air? Is climate change really the moral issue of our times, as Kevin Rudd and others insist, or is it really just a tidiness issue?

Well, yes and no, in that order. We are, at our core, moral beings, driven, however hazily and crazily, by notions of right and wrong, should and ought, crime and punishment. Climate morality – or carbon ethics – may be more complex than most, running from individual responsibility (should I drive the kids to school today or let them walk and be late?) to global politics (is it okay that the poorest nations, having contributed least to climate change, will be both most affected by it and least equipped to survive it?). But it is still morality.

The power balance between these individual and collective goods offers a third moral ground; the village green, so to speak, of the debate, that shows climate change to be a classic tragedy of the commons. Emissions generated at an individual or corporate level go into the shared atmosphere. So the moral issue becomes one of resource allocation: how should the right to pollute – and, conversely, the right to survive – be apportioned around the planet? This is carbon ethics.

Tim Flannery told the Property Council earlier this year that his climate change optimism derives from his recognition that “the climate problem is really a pollution problem”, that pollution is really a dirt problem and that we are, as a species, “hardwired for cleanliness”. Cleaning up around the campfire is, he argued, what we do – not least because cholera-driven natural selection has long favoured the clean-up gene.

Cleaning up is a simple enough task, although simpler still would be not chucking the charred bones in the first place. But sorting out who will do the work, when and in what order; how to divvy up the benefits and who, if the fire must be smaller now and more sporadic, gets to sleep by it, cook on it, stare into its mystic depths. Now that’s complicated.

So far this year we’ve had Garnaut (draft); government green paper; Treasury modelling; and Garnaut (final). All agree – and this itself is a major advance over the benighted, rear-view Howard years – that it’s Situation Scary.

There are still climate sceptics out there, bless them. Still they argue like three-year- olds that it’s not happening, if it is happening it wasn’t us, and if it was us we should make sure we bear no more than our “fair share” – whatever that means – of the punishment.

That was the Howard stance. Kevin-the-Rudder’s official position, by contrast, at least recognises that the last 13 years have included Australia’s 12 hottest ever. At least predicts that such years will become more frequent and more dramatic in an un-carbon mitigated future. At least recognises that, already, there is a clear 60-year pattern of steadily increasing temperature and decreasing rainfall, both concentrated on our most populous areas and benign only around the top north-western corner of Western Australia.

It unflinchingly predicts, further, the effects of sea-level rise, drought and temperature on agriculture, industry, tourism and life in general, including a “92 per cent decline in irrigated agricultural production in the Murray-Darling Basin, affecting dairy, fruit, vegetables, grains” and acknowledges that acting later would be much, much more costly. And it would be much more difficult and much less effective.

In response to which the Government has committed to an emissions trading scheme (known as CPRS or Carbon Pollution Reduction Scheme) from 2010. Already, from July this year, it has initiated the compulsory carbon audits on which the scheme will be based, with reporting due mid next year – though many experts argue that few businesses are even close to achieving this.

Can it work? This is the first and biggest question, bleeping red before the white paper and legislation. Is the system as proposed likely to take us – as a nation, and a planet – where we need to go?

Then there are the subsidiary questions. Where is it that we need to go? How hard do we need to work at this? What are our ethical obligations towards the planet, towards other species, and towards future generations? On the here and now, what is a fair and reasonable – ethical – way of apportioning the costs and, if they eventuate, benefits?

The Rudd Government has built its climate change platform on the so-called “three pillars” (and yes, you might well wish one more for stability). These are: reduce Australia’s greenhouse emissions, adapt to unavoidable climate change, and work towards a global solution. Slip slop slap.

The first pillar includes our CPRS which proposes, in summary, to require all Australian producers of over 25,000 annual tonnes of CO2 (this comes to roughly 1000 of our 1.76 million businesses) to bid for permits. These permits, one per tonne of CO2 equivalent, will be auctioned at day one and issued, within an overall yet-to-be-established carbon cap, to the highest bidder. The idea, of course, is that the cost of buying them acts as a disincentive to pollute.

Will it work that way? Why rely on the market ideal to fix what it has already broken? As even Garnaut recognised, “climate change risks are a consequence of the greatest example of market failure we have ever seen”. And yet, he believes, an emissions trading system “will correct the market failure”.

Why would we think so? Are we not witnessing, from child care to airlines to banks, demonstration after demonstration that our blind faith in market capacity to produce, tailor and deliver services as if they were goods has been wildly misplaced? As Hugh Outhred, associate professor in energy systems at the University of NSW argues, “you can’t solve a problem with the tool or system that created it”.

Think about it. Any emissions trading system is really a market in government-issued pollution rights. The Government has declined to establish either any numerical carbon cap or any target this side of 2050, but – presuming these are set below demand – the price of polluting should rise, at least initially, thus enhancing the disincentive effect.

But as the scheme begins to take effect, and industry switches to clean technology, carbon prices must fall. So (unless the cap is stringently and consistently lowered) the disincentive will diminish and carbon pollution will become cheap again. If, on the other hand, this does not happen, the scheme is not working.

In other words the scheme is inherently self-devouring; if it works, it’ll undermine itself; if not, it’s not working. Hmmm.

Even if this effect is minimised by the strict progressive cap reduction, other factors will work against it. Some are common to all such markets, like the way commodifying the act of pollution, in turning a fine (which has moral weight) into a fee, destigmatises it, removing the primary disincentive of shame.

Or like the way making pollution a luxury renders it not only desirable but worthy of emulation – just as obesity is a status symbol in starvation cultures. Or like the way markets favour the wealthy, making future pollution a prerogative of the rich, leaving the poorest countries least able to catch up.

Other factors are particular to our CPRS. The first is vagueness: a characteristic Australian commitment phobia, so that even the vague “60 per cent by 2050” reduction targets are hedged by verbiage like “Australia will make its fair contribution” to a global solution, belying a Howardesque “we will if you will” attitude that can only be described as chicken shit.

There’s no indication of a trajectory, or starting cap, and no commitment to either the “soft-start” 550 parts per million target or the 450 parts per million that Garnaut preferred but failed actually to recommend.

Second, because the scheme covers only the grubbiest 0.013 per cent of companies, the rest of Australia’s 7.6 million businesses can gaily pollute away. Exacerbating this is the fact that not all the permits will be auctioned; even within the Dirty Thousand, around a third of permits will be given away free – you heard, free – to (wait for it) the worst polluters, aka “emissions-intensive trade-exposed industries”. User pays? I don’t think so.

In the same vein, the Government proposes “direct assistance” (pronounced, cash) to coal-fired power stations. And a cent-for-cent cut in fuel tax for heavy road-users, to offset any impact.

So, while you pick yourself up off the floor, let’s get this straight. We want to reduce carbon emissions. Tick. But in doing it we’re going to exempt coal-fired power stations, road companies and other carbon-intensive industries.

That’s like urging a smoker to quit, then buying him a carton of fags every week to ease the transition. Like solving the drug problem by issuing free-trade licences to Colombia, Peru and Afghanistan. Yup, that’ll work.

Combine this with the passing-on of the cost impost from affected industries to consumers, and the entire system amounts to taking money from the users and giving it to the polluters. Not all polluters, mind. Just the most vile and recalcitrant.

So, should we suspect the Australian Government of still having its greenhouse policy drafted by the coal lobby, only more discreetly now than in the Howard years? Who can say for sure. But certainly it has that more-talk-than-walk feel.

All of which brings us to the mother of all dirty words. Tax. Political acceptability aside, what does a carbon market achieve that a carbon tax does not? All market models assume an eventual global market, but this really amounts to a vast uncontrolled experiment, of which no one can predict the outcome.

The Government promises to “use every cent raised by the sale of pollution permits to help Australian households and businesses adjust” but the chances are much of the profit will be made by subsequent on-sales, and the Government will find itself in the position of Aboriginal artists, selling diamonds for peanuts.

Business whimpers constantly for certainty and what could be more certain, to paraphrase Ben Franklin, than tax – except perhaps the wages of the sins of emission, namely, death.