Easter offers no escape from our responsibility for climate change

Easter is a good time to look up from the daily business of life – getting and spending – and think harder about what we’re doing and why we’re doing it. How grateful are we to those who make sacrifices for us, and how much of our effort goes into sacrificing for others?

For years, I’ve been proud to support Tearfund, a Christian overseas aid organisation. This year its meditations for Lent have focused on its report, They Shall Inherit the Earth: Christian attitudes to climate change.

Why should Christians be particularly concerned about climate change – or what someone in the report prefers to call “climate justice”?

One reason is that those who are and will be worst affected by climate change tend to be the poor – both those in relative poverty in our wealthy country and those in absolute poverty in less developed countries.

You don’t really understand Jesus and his teaching if you haven’t noticed his preoccupation with the poor.

But another reason is that Christians are called to be “stewards of the earth”.

Tim Healy, a lecturer at Alphacrucis College, says “our acceptance of the God-given mandate to care for the earth is an expression of obedience to Jesus’ command to ‘love our neighbours’ – not only those down the street but ‘down time’ as well.

“It’s those who live in the years beyond our own who stand to benefit the most from our faithful and responsible stewardship,” he says.

Susy Lee, an author, says she prefers the term “climate justice” because “the people most likely to be causing [climate change] are not the people most likely to suffer from it.

“The Kingdom of God has a lot to say about justice. God created the world and asked us to look after it justly.”

The report recounts the experience of Hattie Steenholdt, who was on a Scripture Union beach mission trip when bushfires raged through Mallacoota in the early hours of New Year’s Eve in 2019, and stayed around to help.

“We’re called to be stewards of the earth, and yet we live in a time and a society that puts the self first . . . so it is countercultural to go ‘hey, this is something big that’s going on and we’re all playing a part in it’.”

The Christian notion that we’re all responsible for caring for the earth doesn’t sound a million miles from the Aboriginal commitment to “country”.

Many Australian overseas aid agencies include our First Nations people among those they help. And, when it comes to climate change, our Torres Strait Islanders are (forgive the pun) in the same boat as the other South Pacific nations whose worries about climate change we’ve taken so little notice of.

Aunt Rose Elu, last year’s Queensland Senior Australian if the Year, is from Saibai, one of the seven Torres Strait Islands.

“When I was young,” the report quotes her as saying, “I remember that the sea was beautiful, crystal clear and the sea breeze would blow through the houses so beautifully.

“Recently I was home on Saibai and I was shocked by the changes I saw. I cried for my home. The sea level was higher than I have ever seen it. The walls were not working. The graves of my ancestors are being eroded. The high tide washes them away.”

Kuki Rokhum is a director of one of the local Christian organisations that Tearfund works with in India. She says “it is the poorest countries, and within them the poorest people – who have produced the lowest carbon emissions, and have the least resilience to allow them to respond – that feel most strongly the effects of climate-change related disasters, droughts, floods and extreme temperatures.

“With increased disasters there will be more climate-related displacement.”

Farmers in north-west India are already struggling because of unpredictable rainfall and extreme heat, but they know that future generations will feel the impact of a changing climate even more acutely, the report says.

For the family of 80-year-old Dhulji Meghwal, and many others, rainfall has become sporadic over the past two decades and extreme temperatures have led to dry and degraded soil.

“One bigha of land [around 0.4 acres] used to produce enough for the whole year. Now, that land will produce only enough for six months. People are falling into debt because they are purchasing seed from the market and then not getting the production they expect,” Meghwal says.

Economists eschew “anecdotal evidence” and prefer to stick to lofty concepts, backed up by copious facts and figures. Perhaps they’d be more persuasive if they got down to cases more often - as aid agencies have long understood.

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Blaming the states for national policy failures won't wash

It seems everywhere you look you see governments failing to lead, failing to take charge, failing to be prepared for problems they should have seen coming.

Last week it was the flooding, before that, the distribution of rapid COVID testing kits and vaccines, before that, the Black Summer bushfires, and before that, soaring prices in the National Electricity Market along with the federal Coalition’s inability to agree on action to reduce greenhouse gas emissions.

The items on this seemingly disparate list have a few things in common. Most arise from the effects of climate change. All of them involve shared responsibility by the federal and state governments, with the all too familiar squabbling, duck-shoving and cost-shifting.

We’re learning hard lessons about what’s needed to get a better-functioning federation. One is that when ordinary Australians are facing dire emergencies of flood or fire or cyclone, they demand that both levels of government be on-the-job doing what needs doing.

Another lesson is that when you’ve got one federal, two territory and six state governments, one of them has to take the lead, and the one that should do so is obvious: the feds.

On climate change, it’s not just that the Morrison government has failed to do anything much to “mitigate” (reduce) our greenhouse gas emissions beyond belatedly accepting the target of somehow achieving net zero emissions by 2050.

It’s also that it has failed to lead the states in adapting to the climate change we already have and, even if we do make it to net zero on time, will get more of: worse and more frequent extreme weather events.

Why does Scott Morrison seem so bad at working on problems we can see coming, until they’ve actually arrived, and we’re in crisis? Then, when we are in crisis, he makes the excuse that it’s a “state responsibility”, which so infuriates the people left stranded by fire or flood.

I think part of the reason is his deliberate downgrading of public service advice on policy. Until recent years, it’s been a prime responsibility of department heads and their senior people to advise the minister of looming problems in their area of responsibility and to develop detailed options on how the feds – often in partnership with the states – could go about fixing the problem.

But when you tell the public servants that you want their diligent obedience, not their advice – as Morrison did – all you’re left with is advice from the growing number of ambitious young Liberal apparatchiks that populate ministers’ offices.

Plus, of course, the occasional expensive report from one of the big four accounting-turned-consulting firms, whose business model is to produce lovely reports with lots of glossy pictures, that tell the paying customer what you think they want to hear.

What they don’t want to be told is that they should get started on a response to this potential problem or that one, just in case they come to a head some time in the future. “That’s the boring stuff public servants are always banging on about, and it’s a real pain.”

“Do you know they’ve been harping on for years about being prepared for some possible pandemic? Yeah, sure. What other long-shot bet do you want me to waste money on? Talk about useless.”

The beauty of getting your advice from the young would-be-pollies in your office is that, like their masters, they’re always focused on the politics of the now. “How can we draw attention away from the latest stuff-up? How can we look like we’re responding decisively? Why don’t we rush through a law making illegal something that already is? The punters would love it.”

As soon as the election is called officially, the public service goes into “caretaker mode” and begins preparing extensive policy recommendations for the incoming government. They prepare a Blue Book to give the Coalition should it win, and a Red Book should Labor win.

The Grattan Institute, our leading independent think tank, has a tradition of preparing its own Orange Book, proposing policy priorities for whichever side wins. It includes a section on energy and climate change, one of the most important areas of shared, federal and state responsibility.

Grattan’s Tony Wood says that, one of the three things that should be done to ensure electricity plays its major role in achieving “net zero” is to “better co-ordinate state and federal government objectives in the National Electricity Market.

“Frustrated at a decade of federal ‘climate wars’, state governments are increasingly going their own way on electricity and gas [and electric vehicles],” Wood says.

That’s another lesson we need to learn: whenever the feds leave a policy vacuum, the states fill it – badly. Only leadership by the Federal government can make our ramshackle federation work.

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The climate-change changes the politicians don't want to talk about

It’s strange to think that both sides of politics are leading us to a policy-free federal election campaign at a time when we have so many problems we should be debating. Not that the parties won’t have policies written on a bit of paper somewhere, but that they don’t want to talk about them.

Why not? Because any policy you propose can be used by your opponent to spread scare stories about your intentions. Last time, for instance, Scott Morrison used Labor’s support for electric vehicles to claim it was out to destroy the weekend.

This time, one issue neither side wants to dwell on is climate change. We have – at long last – reached bipartisan agreement on getting carbon emissions down to net zero by 2050. And on the question of how far we should have got by 2030 (yes got, not gotten; you may have reverted to English as it was spoken when the Pilgrim Fathers left England in 1620, but I haven’t), the parties are offering a genuine choice between ambitious and unambitious.

But neither side wants to talk about how we’ll get to net zero. Which leaves us in debt to a top energy expert, Tony Wood, of the independent think tank the Grattan Institute, who does want to talk about it.

Wood and his team flesh out something we know: that the main strategy is to get as much as possible of the energy we need from electricity.

“Households and business will rely on low- or zero-emissions electricity more than ever as it replaces their current use of petrol and diesel for transport and gas for cooking and heating,” he says.

Thanks to the move to renewables, emissions from the electricity sector have fallen consistently over the past five years and are expected to fall much further over this decade. But, on present policies, emissions from all other sectors – including transport, industry and agriculture – are expected to stay much the same.

To achieve net zero by 2050, demand for electricity is likely to double, at least. That means installing a lot more wind and solar (including rooftop) to meet this increased demand and to replace existing coal and gas-fired power stations as they’re retired.

As the anti-renewables crowd continually reminds us, this requires much ingenuity, effort and expense to ensure a reliable supply of power across the national electricity grid, despite the ups and downs of demand and the vagaries of wind and sun.

But it also involves a lot of investment in changing the transmission grid from one that largely moved high-voltage electricity from a handful of big power stations in the country to the big cities, to one that joins up a multitude of small commercial and household sources of solar and wind power. An increasing proportion of homes will be putting power into the grid sometimes and taking it out other times.

The Morrison government is insisting on a large and continuing role for natural gas in the electricity system. Wood is far from convinced. “The large-scale use of gas as a ‘transition fuel’ – supplying ‘base-load power’ with lower emissions than coal – does not stack up economically or environmentally,” he says.

Nearly 80 per cent of Australia’s hugely increased gas production is exported as liquefied natural gas. It’s sold at the world price, meaning “the good old days of low-priced east-coast gas are gone, making gas an increasingly expensive energy source”.

At present, gas provides about a quarter of Australia’s local energy consumption and contributes close to 20 per cent of our emissions. And whereas electricity prices have been falling, gas prices have been rising.

Gas has been declining as a share of Australia’s power supply since 2014, and this is likely to continue. “Gas will play an important backstop role in power generation when the sun isn’t shining and the wind isn’t blowing – but this role will not require large volumes of gas.”

In the home, people value being able to choose between gas and electricity for cooking and heating, but this can’t continue. They’ll save money and reduce emissions when all new houses are all-electric.

“The uncomfortable truth is that natural gas is most likely in decline in Australia, and achieving the net-zero target requires that to happen … Attempts to hold back the tide through direct market interventions, such as contemplated in [Morrison’s] National Gas Infrastructure Plan, will probably require ongoing subsidies at great expense to taxpayers.”

As for cars and other light vehicles, achieving net zero by 2050 requires all new cars to be electric or hydrogen-powered by 2035. That’s because, on average, our cars stay on the road for more than 15 years. The alternative is “costly and inefficient measures to scrap large numbers of cars in the 2030s and ’40s.”

To achieve the 2035 target, we need to do what almost every other rich country does. We need to do what the car manufacturers have asked for: set mandatory emissions standards. But neither major party is willing.

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There are many ways to stuff up productivity

A good New Year’s resolution for readers of the business pages would be to read more widely and think more broadly, so their thinking about economic problems and their solutions doesn’t get into a rut, returning repeatedly to the same old solutions to the same problems.

No reader of these pages needs to be told that the key to higher material living standards is improved productivity – the ability to create more outputs from the same quantity of inputs of land (raw materials), labour and physical and intangible capital.

Almost continuous productivity improvement over the past two centuries is the outstanding achievement of capitalist, market economies, the proof of capitalism’s superiority as a system of organising production and consumption.

It’s what’s made us so much more prosperous than our forebears were, with much of that prosperity spilling over from the owners of capital to the middle class and people near the bottom.

But, as I’m sure you know, over the past decade or so the rate of productivity improvement in Australia and all advanced economies has slowed to a snail’s pace. Hence, all the talk about productivity and what we can do improve its rate of improvement.

So far, a decade of hand-wringing hasn’t got us anywhere. We need to think more broadly about the problem.

One new thought is to wonder if there is – or should be – more to the good life than economic growth and a higher material standard of living. If there are ways we could improve the quality of our lives even if they didn’t lead to us owning more and better toys.

A negative way to express the same thought is to wonder if being able to afford better houses and cars will be much consolation if we succeed in stuffing up our climate, with more heat waves, rainy summers, droughts, bushfires, floods, cyclones and a rising sea level.

But we’ll return to those thoughts another day, and descend now to the more prosaic. One rut we’ve got into is thinking it’s up to the government to lift our productivity by “reforming” this or that intervention in the economy.

This is model-blind thinking on the part of econocrats, hijacked by rent-seeking businesses and high income-earners wanting more power to limit the earnings of their employees and more of the tax burden shifted to other people in the name of improving “incentives”.

The same people show little interest in reforms that really would increase economic growth by increasing women’s participation in paid work, such as free childcare.

Another rut we’re in is thinking that we won’t get faster economic growth until we get back to faster productivity improvement.

This has much truth, but it misses the deeper truth that the relationship between economic growth and productivity can also run the other way: maybe we’re not getting faster productivity improvement because we’re not getting enough economic growth.

In practice, what does much to increase the productivity of labour is businesses – in mining, farming and manufacturing, but also the service industries – replacing old machines with the latest, most improved models.

But business investment has long been at historically low levels, making our weak productivity performance hardly surprising. And the dearth of new investment spending is also hardly surprising considering consumer spending has been so weak for so long.

Nor is weak consumer spending surprising when you remember how weak the growth in real wages has been. One reason wage growth has been so weak, as Reserve Bank governor Dr Philip Lowe has pointed out, is the present fashion of businesses using any and every means – legal or otherwise – to limit labour costs and so increase profits. There are other paths to profitability.

While we’re thinking unfamiliar thoughts on the possible causes of our productivity plateau, remember this one: when businesses have been investing strongly in new equipment in the past, it’s often been a time when labour costs have been rising rapidly, giving them a strong incentive to invest in labour-saving machines.

(Note, it’s precisely because this increases the productivity of labour, and thus increases real national income, that the pursuit of labour saving simply shifts the demand for labour from goods-producing industries to services-producing industries, leaving no decline in the demand for labour overall.)

Last year some economists at the International Monetary Fund wrote a blog post on yet another contributor to weak productivity improvement, which will certainly come as a surprise to “Brother Stu,” federal Education Minister Stuart Robert, who late last month sent a “letter of expectations” to the government’s Australian Research Council outlining the Morrison government’s desire to prioritise short-term research jobs that service the interests of commercial manufacturers.

It’s possible he and Scott Morrison merely wish to swing one for the Coalition’s generous business backers, but my guess is they imagined they were striking a blow for higher productivity. If so, they’ve been badly advised.

Research by the IMF economists finds that productivity improvement in the advanced economies has been declining despite steady increases in research and development, the best indicator we have on “innovation” effort, the thing so many business people give so many speeches about.

But get this: they find that what matters for economic growth is the composition of spending on R&D, with basic scientific research affecting more sectors for a longer time than applied research (commercially oriented R&D by companies).

“While applied research is important to bring innovations to market, basic research expands the knowledge base needed for breakthrough scientific progress,” they say.

“A striking example is the development of COVID-19 vaccines which, in addition to saving millions of lives, has helped bring forward the reopening of many economies . . . Like other major innovations, scientists drew on decades of accumulated knowledge in different fields to develop the mRNA vaccines.”

Which suggests the Morrison government has just jumped the wrong way in its latest intervention into the affairs of our universities. Should have done more R&D of their own before jumping.

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Masterpiece: the spin is Morrison's plan to reach net zero is dizzying

The more our politicians are full of bulldust – known euphemistically as “spin” – the more they rely on our short attention span. They make a grand announcement that doesn’t bear close scrutiny, but the media caravan moves on before it’s had time for a closer look. Well, not this time.

I’ve been looking more closely at the Plan to achieve net zero emissions of greenhouse gases by 2050 that Scott Morrison unveiled last week, shortly before jetting off to Glasgow.

It’s full of . . . hyperbole. A masterpiece of the spin doctor’s art. A document carefully crafted to mislead.

For someone claiming to have a Plan to achieve a difficult objective over the next 29 years, it was surprising to see Morrison claiming the Plan contained no new policy measures. By implication, no additional cost to taxpayers.

That’s true – and untrue. We know, for instance, that Morrison had to promise to spend a lot of money just to get the National Party’s permission to commit to achieving net zero by 2050.

So, what policy promises did Morrison make, and how much will they cost? We weren’t told. They weren’t mentioned in the 130-page plan. We’re told we’ll be told sometime before the election.

The Plan says Morrison’s “technology investment roadmap” will “guide” more than $20 billion of government investment in low emissions technology to 2030. So, further spending of $20 billion?

If that’s what you thought, the spin merchants would be pleased. They love giving the impression we can have our cake and eat it. But no, this is not new policy. All the $20 billion has already been announced.

And much of it has already been spent. Much of it by the previous Labor government. A bit over half of it is spending by the Australian Renewable Energy Agency and the Clean Energy Finance Corporation.

These were set up by the evil Julia Gillard in 2011, in association with her job-destroying and cost-of-living killing carbon tax. Tony Abbott tried to abolish them along with the tax, but failed.

Now they’re produced as evidence of how much the Morrison government’s doing to promote new emissions-reducing technology.

The Plan claims the government’s $20 billion will “leverage” more than $80 billion from government and the private sector by 2030. (What it doesn’t mention is that Australia’s total spending on research and development has plummeted since the Coalition returned to power in 2013.)

As to whether the Plan commits the government to spending a lot more, note that the modelling showing we can get to net zero by 2050 rests on various assumptions about the success of future new technology in producing clean products at specified low costs.

For instance, clean hydrogen will be produced for under $2 a kilogram. Carbon emissions from fossil fuels will be captured and stored at a cost of less than $20 a tonne.

But these happy assumptions come with an asterisk. The asterisk leads to very fine print saying “subject to offtake agreements”.

Oh yes, what are they? The Plan doesn’t say. But they’re the government agreeing to buy loads of the clean product at a price that allows the real customers to pay a very low price. That is, it’s a massive subsidy.

How much will the government buy? At what price? Morrison couldn’t tell us if he wanted to because these deals are way off in the future – if they ever happen. They’re not a new policy to spend taxpayers’ money, they’re just an assumption the modellers needed to make - that the necessary money would be spent - to achieve their prediction that we’d get to net zero by 2050.

You’ve noticed that the Coalition which, ever since Abbott rolled Malcolm Turnbull as Liberal opposition leader in 2009, has been vigorously opposed to doing anything much to reduce emissions, has now embraced the net zero target.

But have you noticed that now he’s big on reducing emissions, Morrison is quietly rewriting history to remove any trace of that former opposition? Worse, have you noticed Morrison is now taking credit for any progress we’ve made to date?

Any progress made by the policies of his evil Labor opponents and – as with the pandemic – any progress owed to the policies of those appalling premiers?

This is why politicians have spin doctors. “Our Plan will continue the policies and initiatives that we have already put in place and that have proven to be successful, reducing emissions and energy costs,” some spinner wrote.

Next, Morrison’s claim that Australia’s on track to reduce emissions by “up to” 35 per cent by 2030, well above the government’s target of 26 to 28 per cent. Independent analysis commissioned by the Australian Conservation Foundation confirms this is quite believable.

But, apparently, it’s all the Morrison government’s doing. He speaks of “our record of reducing emissions and achieving our targets” and “our strong track record, with emissions already more than 20 per cent lower”. “We have already achieved 20 per cent,” his energy minister says.

But Bill Hare, of Climate Analytics, says the feds are doing little, but claiming credit from the hard work of the states and territories.

It was the NSW and Queensland governments that saved most of the 20 per cent by restricting land clearing. It’s the states that encouraged the record rollout of rooftop solar and large-scale renewables.

NSW, Victoria, the ACT and South Australia have strong electric vehicle policies. Meanwhile, Morrison & Co have been encouraging gas production with new subsidies – which, of course, won’t be paid for by increasing your taxes.

Spin is claiming credit for any good thing, but blaming others for anything bad. You’ve heard that the Plan “will not cost jobs, not in farming, mining or gas”.

But the actual promise says that “not one job will be lost as a result of the government’s actions or policies under the Plan”.

Get it? Jobs will be lost, but we’ve set it up so no one will be able to blame us.

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Net zero can't be reached by magic, but we can ease the pain

Scott Morrison’s long-term plan for net zero emissions by 2050 won’t impress anyone who’s been following Australia’s long and tortuous battle over climate change. But then, it’s not intended to.

His “learning” after miraculously wining the unwinnable election in 2019 is that whatever half-truths he tells voters will be believed by enough of them. Particularly since God is on his side, not the side of those other, untruthful and ungodly people.

No, his Plan – which is not a plan to achieve net zero, just an optimistic forecast that it will be achieved – is largely a political document, intended to be sufficient to convince those voters who aren’t paying attention that he’s “doing more” to cope with climate change.

His goal is not so much to fix the climate as to neutralise it as an issue at next year’s election. Climate change is an issue that naturally favours Labor. He wants all the focus to be on two issues that naturally favour the Coalition: the economy and national security.

He was walking a tightrope last week. He had to discourage voters in Liberal heartland seats who were worried about global warming from trying to send their party a message by voting for liberal independents – as they’ve done in Tony Abbott’s former seat and, briefly, Malcolm Turnbull’s – by convincing them he was serious about reducing emissions.

At the same time, however, he needed to reassure voters in the National Party’s various Queensland coal-mining seats that he wasn’t serious.

His solution was to produce a document that says: the boffins I hired assure me we’re on track to eliminate net emissions by 2050 but, don’t worry, this will be achieved by the miracle of new technology, without anyone feeling a thing.

There’ll be no new taxes, no new regulations forcing people to do things and no new costs on households, businesses or regions. We won’t shut down coal and gas production, and no jobs will be lost.

Does it sound a bit too good to be true? Voters in the Liberal heartland tend to be well educated and well informed. I doubt it will do the trick.

As we’ve seen with the pandemic, when our federal leaders fail to lead, others feel a need to fill the vacuum. The premiers, of course, but also many people from business and the community.

The latest report from Tony Wood and colleagues at the Grattan Institute, Towards net zero: a practical plan, offers a more realistic assessment of the challenge we face, says why we must get more achieved by 2030 and proposes ways this can be done without too much pain.

Perhaps because he’s not standing for office, Wood is frank about the difficulty in getting to net zero. The scale and pace of change involved in a net-zero target are “daunting, but they are outweighed by the consequences of the alternative.

“Factors outside Australia’s control will shape the flow of capital and the demand for our exports, while climate change itself will increasingly threaten Australians’ lives and livelihoods.”

Just so. Only a fool would believe we can avoid pain by doing nothing. We can seek to delay the pain, but that would relinquish our ability to influence our future, as well as making the pain greater.

The longer we leave it to make big progress towards net zero, the more pain we ultimately suffer. But also, our failure to throw our support behind the global push for earlier progress – which is what we’re failing to do in Glasgow this week – increases the risk that the goal of limiting warming to 1.5 degrees will be exceeded by the end of this decade, making it less likely we ever get back below it.

But while it’s foolish to think we can avoid pain, we shouldn’t imagine the pain will be intolerable. And here’s the trick: provided it’s done sensibly, paying a bit more tax and putting up with a bit more regulation is actually intended to reduce the amount of pain, and share it more fairly.

Wood accepts Morrison’s figuring showing that we’re likely to exceed the 26 to 28 per cent reduction in emissions by 2030 we promised to make in 2015. But we’ll still fall short of the 45 to 50 per cent reduction we’re being asked to make and other rich countries are agreeing to.

Wood’s plan for getting up to the higher target is neither heroic nor frightening. While we wait for the technological breakthroughs Morrison’s modelling assumes will come, we should get on with applying the technology we already have.

Generate electricity almost completely from renewables, and step up the move to electric cars and vans by tightening emission standards for petrol-driven cars, giving EVs tax breaks and supporting the spread of charging stations.

This is the first step towards the new green manufacturing industries that will provide the regional jobs for miners and gas workers to move to as other countries stop buying our coal and gas.

It won’t be easy or painless, but it’s not beyond the wit of decent governments.

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Praying for costless climate change: Lord, send down a miracle

Picture Scott Morrison kneeling by his bed, hands together, eyes closed, asking God to send him another miracle. Or maybe just giving Santa a list of all the things he’d like for Christmas.

Five things, actually. First, technology not taxes. That is, a sudden, unforced flowering of new technology that allows us to go on selling our fossil fuel to the world while – at negligible cost – the technology eliminates all our net emissions of carbon dioxide and other greenhouse gases.

Second, we reach net zero emissions by 2050 with “expanded choices, not mandates”. That is, no one should be forced to do anything. They’ll just choose to implement the new technology because it’s so wonderful.

Third, somebody somehow will “drive down the cost of a range of new energy technologies”. That is, reduce the cost of doing things without emissions so that it’s lower than the cost of doing things by, say, burning coking coal or burping methane. This, however, won’t destroy any jobs.

Fourth, we keep energy prices down with affordable and reliable power. That is, the solar and wind energy that we disparaged for many years is now cheaper than the coal-and-gas-fired power that we’re still trying to prop up, so you can thank us when electricity prices fall.

Fifth, we are accountable for progress. That is, just because we won’t show you our modelling, or tell you how much the deal with the Nationals will cost or what it’s going on, doesn’t mean we won’t tell you after the media’s lost interest.

We’re assured that Australia’s Long-term Emissions Reduction Plan will “achieve net zero emissions by 2050 in a practical, responsible way that will take advantage of new economic opportunities while continuing to serve our traditional export markets.

“This plan does not rely on taxes and it will not put industries, regions or jobs at risk. No Australian jobs will be lost as a result of the Commonwealth Government’s actions or policies under the Plan.”

As Energy Minister Angus Taylor summarised it, the plan “won’t impose new costs on households, businesses or regions.” Morrison says it will not “shut down coal and gas production”.

Other countries are pondering long and hard about how on earth they’re going to get to net zero. Until this week we had no idea either. Now, however, we have a plan that tells us how it can and will be done – at no perceptible cost to anyone or anything.

And if that isn’t hard enough to swallow, try this: the plan doesn’t involve announcing any new policy. So what’s changed since Monday? What’s different? What’s new is that Morrison now has modelling that says we’ll get to net zero with a bit to spare – without the need for any more changes.

The boffins added up the numbers and – surprise, surprise – we’re already on track to net zero. Is ScoMo lucky or what? The Americans, the Europeans, the Chinese, they’re all still struggling with it, but we’ve got it figured.

Funny thing is, it has the feel of Amateur Hour. Who wrote the report? The experts in the Energy Department? No, it was written by management consultants – McKinsey, and has all the colourful diagrams and big type and blank pages you expect from management consultants.

I hadn’t heard that McKinsey was expert on energy or climate science or technological innovation, but maybe I’m wrong.

So who did the modelling? Well, not Treasury – what would they know about modelling? We’ve been given the impression the modelling was done by McKinsey, but my guess is they contracted it out to some outfit that actually knows about modelling.

But management consultants and modellers do share a common temptation: to find out what bottom line the client’s after, and work back from that – a thought that came to me when I saw all the nice round figures in McKinsey’s lovely chart showing how net emissions in 2005 will be reduced to zero by 2050.

Reductions to date – 20 per cent (mainly from once-off land clearing restrictions in Queensland and NSW, which occurred before the 2005 starting point and the 2030 target were chosen). Next, reductions projected to arise from the government’s technology investment road map - say, 40 per cent.

Then reductions from “global technology trends” - say, 15 per cent. Reductions from “international and domestic offsets” – 10 to 20 per cent, but make it 10 per cent. Next, reductions from “further technology breakthroughs” - say, another 15 per cent.

Okay, you can stop there. We’ve made it to a neat 100 per cent. (I think I’m starting to see why Morrison isn’t keen to let the experts see the modelling.)

In a new paper from the Australia Institute, Bending the Curve, Dr Richard Denniss and colleagues assess the plausibility of the Morrison government’s belief that the course of our economy can be significantly altered without changes in policy, without the introduction of taxes and without new regulation or even legislated targets.

The authors say the plan “is based on the assumption that it is not just possible to forecast which technologies will be developed in the decades ahead, and the cost of deploying those technologies, but that such development is inevitable.

“In reality, as those who have pursued ‘carbon capture and storage’ in Australia for the last 30 years have clearly shown, it is not just possible that new technologies might be more expensive than expected, it is possible that they will fail completely to eventuate.”

The plan is just the latest iteration of “techno optimism,” albeit at the more optimistic end of the spectrum, they say.

“White it is inevitable that the cost of some existing technologies will fall rapidly, and that some new technologies will be developed, there is nothing inevitable about the timing of such improvements,” they conclude.

Morrison says his plan involves delivering net zero “the Australian way”. That bit I believe. This is the “no worries – she’ll be right, mate” way of doing it.

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Morrison's deal: Nationals rewarded for agreeing to harm the regions

Let me be sure I’ve got this right. Scott Morrison is ending his Coalition’s deep divisions over climate change by agreeing to pay billions in regional boondoggles in return for the Nationals refusing to lift their veto of any increase in Australia’s commitment to reduce emissions by 2030.

The usual way blackmail works is that the blackmailer returns to you something you really value in return for you paying the blackmailer an arm and a leg.

But the way Morrison’s deal with Barnaby Joyce and the Nationals will work is that Morrison – or rather, the taxpayer – spends billions on projects of doubtful value in return for the Nats’ agreeing to nothing more than symbolism: to reduce carbon emissions to net zero by 2050, which will be after all the signatories are dead and gone.

The first point is that agreeing to net zero emissions in 29 years’ time is a decoy and a fig leaf if that’s all you do. To make it real you have to make a commitment you can be held to: a much bigger progress payment in the next nine years to 2030.

That, of course, is what the Glasgow conference is about. The major countries agreed on net zero months ago (as have all our premiers and many of our business and industry groups). That’s just the price of admission to the room.

What you do in the room is proudly announce the big increase in your commitment over what you promised at the Paris meeting in 2016. Those few leaders unwilling to commit to a significant increase will be pilloried as “free-riders” (aka bludgers) on the other countries – and rightly so. You’re a brave man, Scott.

But the second point is more important: all of us will be worse off if Australia’s selfish delinquency damages the global effort to limit the extent of global warming, but the biggest losers will be the small businesses and voters the Nats’ claim to represent – the regions.

The regions will be the biggest losers because, of all the industries, agriculture will be the hardest hit by continuing global warming. Farmers’ loss of freedom to keep clearing land will the least of their worries.

But the regions lose also because we don’t get on with expanding our renewable energy industries – most of which happens in the regions – and lose any “first-mover advantage” in establishing the new generation of manufacturing industries processing hydrogen, clean steel, clean aluminium, and even clean cement using all-renewable electricity. This, too, will happen in the regions.

That is, we don’t get on with generating the new, well-paid and skilled jobs for mine and gas workers to move on to as the rest of the world stops buying our coal and gas.

The amazingly perverse nature of Morrison’s deal with the Nationals – we pay them for refusing to allow us to get on with protecting ourselves against the world’s turn away from fossil fuels – has been brought to our attention in a study by Matt Saunders and Dr Richard Denniss, of the Australia Institute, All Pain No Gain, released today.

They argue that whatever the final cost of the deal turns out to be – no doubt a lot more than its announced cost – it will be far exceeded by the cost to the economy of us not acting earlier to reduce emissions.

To put it the other way, modelling commissioned from Deloitte Access Economics by the Business Council of Australia finds there would be significant benefits to the economy if we lifted our target to reducing our emissions by 46 per cent by 2030.

Comparing this with other modelling by Deloitte, the authors calculate that the additional benefits over the next 50 years would have a “net present value” (the value in today’s dollars of all the incomings and outgoings over the next 50 years) of more than $210 billion.

Now, I never take modelling results too literally, but the Business Council’s argument does make sense. The higher target leads to increased investment in renewables, which increases growth and jobs, as well as greatly reducing the cost of electricity (because, once you’ve built the plant, the cost of extra solar and wind energy is negligible).

Morrison’s excuse for not increasing the 2030 target is that, without the coming new technology, this would force choices and cost jobs. But he’s got that the wrong way round.

As the Business Council (and the Grattan Institute before it) have explained, forcing the pace in industries where the technology is already well-developed – electricity and electric vehicles – leaves more time for the technology to be developed in other industries.

With friends like the chancers of the National Party, the regions need Morrison to see more sense.

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Problems abound, but we could yet emerge as winners

As we begin to lift our heads and look beyond the lockdown, it’s easy to see the many other problems we face. It’s possible to view those problems with fear and disheartenment – and it suits the interests of many groups to play on our fears.

But it’s almost as easy to see Australia as still a lucky country, with a populace that’s confident, resourceful, committed to the “fair go” and capable of co-operating to convert our problems into opportunities to flourish.

The keys to making life in Australia better rather than worse are to face up to all the change being forced upon us, and to unite in finding solutions that share both the costs and the benefits as fairly as possible.

Ideally, we’d have a political leader who offered us a more united, optimistic and confident vision of the path to a better world, but the sad truth is the two main parties are locked in a race to the bottom that we can’t even be sure they’d like to escape.

In reviewing our problems, let’s start with the pandemic. There’s a risk that we’ve opened up too soon, that our hospitals are overwhelmed and death rates rise unacceptably, forcing the premiers to backtrack.

But it’s only a risk and, assuming it doesn’t happen, I think we can be confident the economy will bounce back strongly and quickly, as it did last year. It won’t be quite as strong as last year because the feds haven’t splashed around nearly as much money as last time.

Even so, most households have saved a lot of their incomes and, as we saw last year, will spend much of the increase over coming months.

At a global level, the risk is that the pandemic continues for years more, as long delays in vaccinating everyone in the poor countries allow new variants to emerge. That the rich countries, having hogged all the vaccines, then lose interest in the topic.

Our first post-pandemic problem is that the economy will rebound only to the plodding rate of growth we were achieving before the plague arrived. Like the other rich countries, our rate of improvement in productivity – production per worker – is anaemic.

Our business people are going through a phase where the only way they can think of to increase profits is to use every tactic to keep wage rises as low as possible. The penny is yet to drop that, since wages are their customers’ chief source of income, this is not a winning formula.

Other problems abound: ever-rising house prices that can’t keep rising forever; adjusting to the ageing of the population and the growing demand for aged care; continuing digital disruption, with all its benefits to users but upheaval in affected industries; handling the growing assertiveness of China, while still taking advantage of being part of the global economy’s fastest-growing region; and the less tangible but no less worrying problem of the breakdown of trust in Australian and global institutions and relationships.

All that’s before we get to our biggest problem – responding to climate change – which, with the Glasgow conference starting in less than two weeks, is also our most pressing challenge.

No issue better illustrates the lesson that, if we want to be on top of our problems rather than crushed by them, we must face up to inevitable changes being forced on us by forces we don’t control.

We must stand up to powerful interests – our coal, oil and gas industries, in this case – hoping to stave off the evil hour as long as possible. They’ll protect their own interests at our expense for as long as we let them. We must be suspicious of political parties accepting donations from these urgers.

We must resist the blandishments of populist politicians – yes you, Tony Abbott – promising to save us from sky-high power costs (we got them anyway) because we can just let the whole thing slide.

Now we have the farmers-turned-miners National Party holding themselves out as champions of the put-upon regions and using their veto over adoption of the net zero emissions target to extort money from the Liberals.

People in the regions, we’re told, bitterly resent Liberal city slickers sitting pretty while imposing all the costs of adjustment on the bush.

This conveniently ignores two points. First, farmers are the biggest losers from climate change and the biggest winners from successful global action to limit further global warming.

Second, as Scott Morrison rightly says, coal mining jobs in NSW and Queensland will decline as other countries reduce their own emissions by ceasing to buy our coal and gas. But acting to get on with making Australia a renewable energy superpower – including by exporting hydrogen, clean steel and clean aluminium – will create many new skilled manufacturing jobs – all of them in the regions.

But only if we stop thinking and acting like losers, and do what it takes to be winners in the new, decarbonised world.

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The 'net' in net zero emissions offers a huge temptation to cheat

Perhaps the hardest part of reaching net zero emissions by 2050 is the “net”. We won’t get to zero emissions without it, but it’s tricky and presents us with a great temptation to turn the whole exercise into a rort.

The goal is “net zero” because it’s neither possible nor sensible for us to eliminate every last emission of carbon dioxide and other greenhouse gases. But that won’t be a problem provided we can offset what few emissions remain by finding ways to remove from the atmosphere an equivalent amount of carbon dioxide that’s already there.

How could we do that? By taking advantage of “carbon sinks”. Before we began burning fossil fuels – coal, oil and gas - for energy at the start of the Industrial Revolution, the amount of carbon dioxide in the atmosphere was fairly steady and so had little effect on the world’s average temperature.

There were natural emissions of carbon dioxide, but these were matched by natural processes – carbon sinks - that removed carbon dioxide from the atmosphere.

As the Grattan Institute explains in its latest report, trees, vegetation, soils and oceans absorb carbon dioxide as part of their lifecycle, and hold it for a period before releasing it again.

“Sometimes this cycle is short (for example, a plant that grows and dies within a year) and sometimes the cycle is long (for example, a tree that lives for hundreds of years and takes hundreds more to decay).

“Natural cycles tend to balance out: the carbon that is absorbed by a plant will be released when the plant dies, but will be reabsorbed by the new plant that grows in its place,” the report says.

But all our burning of fossil fuels has destroyed this natural balance. The past 250 years have seen a huge build-up of carbon dioxide in the atmosphere, which has trapped heat from the sun and caused a rise in global average temperatures, in the same way a greenhouse allows you to grow tropical plants in Europe.

We’ve reached the point where further addition to greenhouse gases in the atmosphere will cause average temperatures to become even more uncomfortable and damaging, as well as causing more extreme weather events.

The obvious solution is to move away from burning fossil fuel and get our energy from renewable sources – sun and wind – that don’t affect temperatures and weather patterns. We don’t have to stop producing and using fossil fuels immediately, but we shouldn’t get in any deeper by building new fossil-fuel power stations, coal mines and oil and gas wells.

But not all emissions come from burning fossil fuels for energy. Some come from, for instance, the coking coal used to make steel, from making cement and from burping and defecating cattle and sheep.

So, some emissions may never be eliminated and others would cost far more to eliminate than to offset by other means.

The obvious way to offset is to remove carbon dioxide from the atmosphere by beefing up our natural sinks – many of which have been diminished by economic development.

The Grattan report says we can avoid further land clearing, manage our forests better and restore forest to land that’s been cleared. We can manage fires better by doing planned burning earlier in the season.

We can store more carbon in soil by changing management practices – no-till agriculture, crop rotation, stubble retention on cropping land and sowing more productive grass varieties on grazing land. We can store more carbon – “blue carbon” – by encouraging more mangroves, sea grasses and tidal marshes.

But the report warns “there is still considerable uncertainty about the costs, permanence and measurement of many offsetting activities”. For this reason, offsetting should be used as a supplement to, not a substitute for, reducing emissions.

When governments encourage carbon removal by paying farmers and others who do it – or permit a market in which businesses required to reduce their emissions buy carbon credit certificates from others who’ve removed carbon from the atmosphere – they must ensure these transactions have “integrity”. That they’re ridgy-didge.

Grattan lists six requirements for certification: establishing a credible baseline for measuring progress; assessing how long the carbon will stay locked up; assessing whether, without payment, the activity would have happened anyway; ensuring no double-counting by people on both sides of the transaction; ensuring no adverse environmental side-effects; and requiring adequate monitoring, reporting, record-keeping and verification.

Many people fear carbon credits will be used to avoid reductions in the production of fossil fuels. And when you hear Energy Minister Angus Taylor assuring people in the coal, oil and gas industries that they “have a great future”, it makes you think such fears are warranted.

The Australia Institute recently ran a TV ad saying net zero is a fraud if the fossil fuel industries continue expanding. True.

And the sad truth is that Scott Morrison doesn’t have clean hands when it comes to using carbon credits to mislead us. He’s claimed repeatedly that our emissions are falling and we’re on track to “meet and beat” our target of a 26 per cent reduction by 2030.

In truth, emissions from the non-land sectors are continuing to grow. He’s able to say total emissions are down only because of a huge once-only reduction in emissions from land clearing that occurred before the 26 per cent reduction was promised in 2015.

Research by the Australia Institute and the Australian Conservation Foundation has found there was a massive surge in applications to clear native forest before the NSW government imposed limits on land clearing.

Since little of this approved clearing has actually happened, the administrators of the federal Emissions Reduction Fund have counted the difference as “avoided deforestation”, even though it’s quite implausible that anything like that much land could have been cleared in the time available.

Encouraging farmers to remove carbon from the atmosphere is a good idea. But there’s great scope for the unscrupulous to turn it into a fraud and another National Party rort.

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Cheapest, easiest way to reach net zero is to put a price on carbon

If Scott Morrison fails to front for the Glasgow climate conference at the end of the month, his preference to stay home while we’re dismantling the lockdown will be only one reason. The other’s that the conference isn’t looking like it’ll be a roaring success.

You wouldn’t know it from all Morrison’s agonising over signing up to net zero carbon emissions by 2050, but it’s the easy bit. The hard part about Glasgow is the expectation you’ll make an improved commitment on how much you’ll have done to reduce carbon emissions by 2030.

Unlike us, most of the big players have already put their revised commitments on the table. That’s the problem with Glasgow. So far, those commitments add up to much less than needed to hold the global average temperature rise to the “well under 2 degrees” agreed on at Paris in 2015, let alone the 1.5 degrees the poorer countries demand.

As many of us now realise, we wouldn’t be trembling in our boots over the enormity of getting our emissions down to net zero by 2050 – and making big strides long before then – had we not abolished after only two years the perfectly good carbon pricing scheme the Gillard government introduced in 2012.

By 2014, people had realised the carbon tax accounted for only a little of the huge increase in electricity prices we experienced, and that the Coalition’s talk of $100 legs of lamb was just a fairy story.

Of course, the carbon price would be higher by now, and we’d have had to extend it beyond electricity and gas to all other sources of emissions.

The series of studies the Grattan Institute’s Tony Wood is doing on how we can reduce emissions in other parts of the economy – transport, manufacturing, agriculture – shows that without the help of a carbon price it’s much harder going.

And it strikes me that insufficient reliance on a carbon price may explain much of the trouble the other parties to the Paris Agreement are having in making adequate progress. Indeed, it could be we won’t make it to net zero without the biggest emitters making greater use of emissions pricing.

In a recent paper, Ian Parry, of the International Monetary Fund, says more than 60 carbon tax or emissions trading schemes have been introduced at sub-national, national or multi-country levels. In recent months, China and Germany have launched major initiatives, the carbon price in the European Union has risen above €50 ($80) a tonne of carbon dioxide, and Canada announced its price would rise to the equivalent of $185 a tonne by 2030.

Even so, only about a fifth of all global emissions are covered by pricing schemes, and the global average price is only about $4 a tonne. Parry says that’s a far cry from the global price of about $US75 (more than $100) a tonne needed to reduce emissions sufficiently to keep global warming below 2 degrees.

Does $100 a tonne sound expensive? It is in the sense that the price increase built into the prices of emissions-intensive goods and services needs to be big enough to produce sufficient change in the behaviour of consumers and businesses.

But it’s cheap when you realise that the purpose of a carbon tax (or, equivalently, the proceeds from the government auctioning emissions permits to businesses who need them) is not to raise additional revenue but to change behaviour.

So the proceeds can be used to make equivalent reductions in other taxes, especially income tax. Thus people pay more for some of the goods and services they buy, but pay less income tax. People on welfare benefits have them indexed to cover their higher living costs.

As we discovered in 2012, introducing a carbon tax or emissions trading scheme (ours was the former that, after a few years, would become the latter) is a relatively simple business. You don’t tax emissions directly, but use scientific estimates of the average amount of carbon dioxide the production and use of that class of product emits.

But almost all economists recommend using a carbon price to decarbonise the economy also because they think it’s the policy instrument likely to achieve the objective with the least disruption to the economy and least loss of growth in the production of goods and services.

That’s what economists really mean when they say a carbon price is the cheapest way to get to net zero. They know that sufficiently large changes in relative prices will change people’s use of fossil fuels.

Get this: a carbon tax is a tax the government actually wants people to find ways to avoid having to pay. It’s intended to discourage people from using fossil fuels. How? By using electricity, gas and petrol less wastefully.

By switching to renewable energy (which is untaxed) because it’s relatively cheaper. By making sure that the next car or appliance or production machine people buy is more energy-efficient than the last. By increasing the monetary incentive for businesses to come up with less-polluting ways of doing things and inventing less-polluting machines.

To save face, Morrison has set his face against using the price mechanism to save the planet. But economic reality – or pressure from other, more sensible countries, or even voters – may yet change his tune.

One worry about putting a price on carbon is whether it would put our exporters at a disadvantage. A new and opposite worry is whether countries that have one when we don’t will protect their industries by slapping a “carbon tariff” on our exporters.

But the International Monetary Fund has come up with a solution to these worries that would also allow every country to use carbon pricing to make greater progress towards net zero. It proposes that the G20 countries (including us) phase in a uniform carbon minimum or “floor price” of $US75 a tonne of CO2 by 2030. Smart idea.

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Farmers have most to lose - or gain - from climate change

Doesn’t it strike you as strange that the born-again Scott Morrison – by now, presumably, deeply ashamed of his public fondling of a lump of coal during his unregenerate days – is being held back from signing up to the target of net zero carbon emissions by that fierce defender of farmers and rural Australia, the National Party?

Farmers are, if you’ll forgive the expression, at the coal face of the damage climate change is doing and will keep doing to Australia. They’ll also be among the chief beneficiaries of successful international action to stop further increase in global warming.

By now there’d be few farmers who didn’t understand that. Certainly, all the main farming lobby groups, from the National Farmers Federation down, have endorsed the net zero target and want to get on with it.

So what’s the National Party’s problem? Just that it sees itself as champion of two regional industries, agriculture and mining. Trouble is, the miners have always seen their interests as lying in fending off action to reduce the use of fossil fuels for as long as possible.

The Nats’ allegiance to mining gets stronger as you move north, and reaches its peak in Queensland. And it’s not hard to guess which of the two industries has the deeper pockets when it comes to generous support for the party cause.

But not to worry. The Nats’ method of operation within the Coalition has long been to blackmail the Libs into shifting more money from the city to the bush. It doesn’t have to be well spent as long as there’s more of it. And all the nudging and winking coming from the chief national Nat, Barnaby Joyce, suggest the Nats (or most of them) will surrender their principled position as long as the price is right.

One part of the price could be to exempt agriculture from any effort to reduce its own emissions. But a recent report from the Grattan Institute says that would be a mistake for two reasons. Agriculture accounts for 15 per cent of our total emissions, so we won’t make it to net zero if it isn’t pulling its weight like other industries.

But also, now the big countries are serious about climate change and are requiring their own industries to shape up, they’ll be using a carbon tariff to punish exporters from those countries that aren’t doing likewise. Any excuse to protect their own farmers from our more-efficient operators would not go unused.

So let’s start at the beginning. Farmers are disproportionately affected by climate change, including by higher temperatures, changing rainfall patterns and increasing drought, bushfires and floods.

As Grattan’s James Ha reminds us, federal government research says changes in rainfall have cut farm profits by 23 per cent compared to what could have been achieved in pre-2000 conditions.

Cropping farmers have done worst, but if global warming reaches 3 degrees, livestock in northern Australia are expected to suffer heat stress almost daily. As the climate continues to change, the value of some farming land may fall considerably and some properties may become increasingly expensive to insure.

Agriculture’s emissions of greenhouse gases have fallen somewhat in recent years, but this is a result of the drought. As herd size is rebuilt, emissions will increase – until the next big drought.

About three-quarters of agriculture’s emissions come from cattle and sheep. Most of this is our 24 million cattle and 64 million sheep burping methane (which causes a lot more warming than carbon dioxide), and then the nitrous oxide (also worse than CO2) that comes from their poo.

Then come emissions from the use of diesel to fuel most farm equipment, emissions from the use of chemical fertilisers and lime, and emissions from plant matter left after harvest.

All this makes farm emissions difficult to reduce. There are vaccines and dietary supplements to reduce methane belching, but they are not yet well developed and are hard to use on wide-ranging animals.

Farm equipment has not yet been adapted to use electric motors. Even so, there are practices that could be changed to manage farms more efficiently and with fewer emissions.

State agriculture departments have spent much over many years teaching farmers how to bring their practices up to date, and they need to spend a lot more teaching farmers how to adapt to climate change and reduce emissions.

Similarly, the CSIRO has spent taxpayers’ money on advancing farm technology over many decades. We should be investing in technological solutions to limit methane emissions. Where farmers need to buy expensive new equipment, the government could help them with “income-contingent” loans similar to HECS loans to uni students.

Farmers will gain directly from emission-reducing practices that also increase their productivity. They’ll be enormously better off from whatever the global effort does to limit further warming.

And, remembering the “net” in net zero, they’ll benefit greatly from doing things that allow them to sell “carbon credits” to firms in other industries – so long as it’s not just another National Party boondoggle.

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How Morrison can get going towards net zero - if he wants to

Scott Morrison seems keen to keep his job as Prime Minister, but not so keen to do the job PMs are paid to do: make tough decisions in the nation’s interests. So it’s up to the rest of us to step into the breach. And when it comes to the decision Morrison fears most – getting to net zero emissions by 2050 – no one’s keener to help out than Tony Wood and his team at the Grattan Institute.

Wood begins where everyone with any sense begins: by noting that the best way to reduce emissions at minimum cost to the economy - and all the people in it - would be to introduce a single, economy-wide price on carbon emissions.

But the temptation to win elections with populist bulldust about “a big new tax on everything” proved too great and so, with that off the table, we must find other, more interventionist, sector-by-sector ways to skin the cat (many of them requiring additional government spending, which will have to be paid for somehow).

The basic strategy for reducing our emissions is clear: move from fossil fuels to renewable ways of producing electricity (plus the use of batteries to store it), then meet all other energy needs with electricity. In practice, it’s more complicated, of course.

Official projections foresee emissions from electricity falling substantially over his decade, while the next four largest sources of emissions either grow or, at best, plateau. Grattan is producing a series of five reports proposing relatively easy and obvious ways of achieving early reductions in emissions in each sector.

Its thinking is to get early progress because, even if we were to reach net zero emissions just before 2050, that wouldn’t be sufficient to stop the increase in the global average temperature being a lot greater than 1.5 degrees – which is about as much as we can take without major social and economic disruption, not to mention personal discomfort.

If we take as many easy shots as we can now, that buys more time for technological advances to help us with the harder stuff. Getting some momentum going should help build public acceptance of the need for more, as well as giving business a clearer picture of where we’re heading and the risks it runs if it ploughs on regardless.

In any case, the latest report of the UN’s Intergovernmental Panel on Climate Change isn’t likely to be the last telling us temperatures are rising faster than earlier thought. It wouldn’t be surprising to see the 2050 deadline brought forward.

Wood’s first report in Grattan’s five-part series covered the transport sector. It proposed measures to achieve an early move to electric cars, while we wait for hydrogen technology to help with heavier transport.

Wood’s second report, on the industrial sector, was released on Sunday. This covers emissions arising from the production of coal, oil and gas – as opposed to their customers’ use of their products – emissions from the mining and processing of other minerals and metals, and emissions from processing in manufacturing.

As well as burning fossil fuels to help extract fossil fuels, coal, oil and gas production involves “fugitive” emissions of greenhouse gases during the extraction process.

The sector’s emissions have increased significantly since our base year, 2005, mainly because of our foolish decision to permit three different companies to build huge liquefaction plants on an island off the coast of Queensland and turn us into one of the world’s largest exporters of liquid natural gas. Liquefaction, it turns out, involves massive emissions.

The entire industrial sector accounts for almost a third of our total emissions, which are projected to be little changed over the decade. The good news is that 80 per cent of its emissions come from just 187 large facilities. Most of these are subject to the federal government’s existing “safeguards mechanism”, which sets a baseline – or maximum - for each facility’s emissions.

So Wood’s chief proposal is for this mechanism to be modified and extended. Existing facilities should be required to use technologies now available to gradually reduce their emissions. New facilities should be required to meet benchmarks substantially lower than existing ones.

“From now on,” Wood says, “every decision to renew, refurbish or rebuild an industrial asset potentially locks in emissions for the coming decades. Getting these decisions right will be critical for reaching net zero.”

Of course, when it comes to the many facilities producing fossil fuels for export, their future prospects will be affected more by other countries’ climate-change policies than by ours. Good luck finding customers for fossil fuels as the reality of global warming catches up with them as well as us.

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Global warming is too 'wicked' to just muddle our way through

It’s probably always true that democracies take too long to accept the need to act decisively to avert foreseeable problems. We never do it well, but always manage to muddle through. We wait until the problem’s reached crisis point. Everyone’s panicking, and thus willing to accept the tough remedies needed. But I fear climate change is too “wicked” a problem to be solved this usual way.

An extra problem for Australia is that we have a government rendered impotent by its internal divisions. The good news – of sorts – is that when the captain of the ship goes AWOL, the crew take over. The premiers – Liberal and Labor – are stepping in to fill the gap. And business can see the writing on the wall and is taking evasive action.

It’s obvious the world is moving to renewable energy and, before long, oil, gas and coal will become “stranded assets” selling a product for which demand can only decline. Here and overseas, banks are worrying about the security of their loans to fossil-fuel businesses, pension funds and investment managers are worrying about their members’ distaste for investing in polluting businesses, and energy businesses such as AGL and now BHP are dividing themselves into good bank and bad bank, so to speak.

Much of the wake-up call to finance and business is coming from financial regulators. Our Australian Prudential Regulatory Authority (APRA) has initiated a climate vulnerability assessment for banks, encompassing scenarios up to 3 degrees of average global warming, and has issued draft guidance for companies to stress test their own finances against scenarios of up to 4 degrees warming.

But in the report, Degrees of Risk, released this week by the Breakthrough – National Centre for Climate Restoration, and written by David Spratt and Ian Dunlop, the authors warn that if by these actions the climate-risk regulators imply warming of 3 to 4 degrees is manageable, or could be adapted to, APRA risks doing more harm than good.

Why? Because with warming of that extent, it’s doubtful we’d still have any banks. The authors say scientists consider 4 degrees of warming to be an existential threat, incompatible with the maintenance of human civilisation. And 3 degrees would be catastrophic, perhaps leading to outright chaos in the relations between nations.

If warming was anything like that bad, applying “stress tests” and doing “scenario planning” would be largely irrelevant.

The authors quote one professor saying that a 4-degree future is “incompatible with an organised global community, is likely to be beyond ‘adaptation’, is devastating to the majority of ecosystems and has a high probability of not being stable”.

Another prof says “it’s difficult to see how we could accommodate 8 billion people or maybe even half that . . . it will be a turbulent, conflict-ridden world”.

Among other impacts, the authors say, 4 degrees would in the long run melt both polar ice caps, with a sea-level rise of about 70 metres. Even 3 degrees would be catastrophic and make some nations, and regions, unliveable.

The authors say most people don’t understand what “global mean [average] warming” implies. As a general rule, global average warming of 4 degrees – covering land and ocean – is consistent with 6 degrees over land (that is, warming over the ocean would be a lot lower, bringing the average down) and with average warming of 8 degrees over land in the mid-latitudes.

That, in turn, risks an average warming of 10 degrees in summer. Or perhaps 12 degrees during heatwaves. All this is packed inside a tolerable-sounding global annual average warming of 4 degrees.

The authors say that Western Sydney has already reached heatwaves of 48 degrees. Add 12 degrees to that and you get summer heatwaves of 60 degrees. Phew.

Now, remember that psychologists and communications experts have been warning climate change campaigners that, if they make their message too frightening, the reaction of many people won’t be to rush out and join Extinction Rebellion, but to close their ears and do nothing.

Remember, too, that the modelling and projections of the climate scientists are far from certain sure and, as with the virus modelling of the epidemiologists, are based on assumptions that keep changing as our understanding of the phenomenon improves.

For these reasons, the UN’s Intergovernmental Panel on Climate Change has long erred on the side of understatement. But the risk with all this is that sensible people with the best intentions – such as regulators of the financial system – don’t realise how bad things could get.

The authors of Degrees of Risk say the science of climate change is inherently complex because it describes the dynamics of a multi-dimensional, “non-linear” system, involving many sub-systems and networks of adverse “cascade effects”.

“Some responses to increasing levels of greenhouse gases are relatively linear and able to be projected well by climate models” but other responses are “non-linear, characterised by sudden changes, rather than smooth progress, which take the system from one discrete state to another, possibly with system cascades” where one change touches off a chain of changes.

“Factors contributing to this non-linearity include the existence of tipping points – polar ice sheets [melting], for example – where a threshold exists beyond which large, system-level change will be initiated, and positive feedbacks [that is, self-reinforcing loops] drive further change.

“In a period of rapid warming, most major tipping points, once crossed, are irreversible on human time frames”.

The authors’ message to regulators of the financial system is that the risk to banks and businesses at degrees of warming of anything like 3 or 4 degrees are huge, but so uncertain as to be unmeasurable. We need to act on the precautionary principle of significantly reducing emissions now, so we never get to find out how bad it could be.

The more prosaic message I draw is that we mustn’t kid ourselves that climate change is just another problem with unpopular solutions that we’ll muddle through as we always do.

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How Morrison can claim emissions are falling when they aren’t really

Other world leaders have treated this week’s report by the UN Intergovernmental Panel on Climate Change as a “wake-up call,” whereas our leader, Scott Morrison, has mumbled something about how we’re on track to “meet and beat” our emissions reduction target, and gone back to sleep.

The report finds that whereas the world’s increase in average temperatures since the start of the industrial era is 1.1 degrees, our average land temperature has risen by 1.4 degrees over the past century – which does much to confirm the impression most of us have that droughts, floods, bushfires, heatwaves and cyclones are now bigger and more frequent than they used to be.

Climate change isn’t coming, it’s arrived.

At the UN climate change meeting in Paris in 2015, countries agreed to each reduce their emissions of greenhouse gases sufficiently to limit the rise in average temperatures to 2 degrees, and preferably no more than 1.5.

The report’s wake-up call was its revised prediction that warming of 1.5 degrees could be reached by the early 2030s, much sooner than formerly expected. So we’ve got even less time than we thought.

At the Paris meeting, each country announced its “nationally determined contribution” to the reduction in global emissions. It was agreed that each country would review and increase its contribution every five years.

The first round of increases will be announced at the next “conference of the parties” in Glasgow in November. In preparation for the conference, almost all of the world’s 20 biggest emitters – including the G7 countries, China and us – have committed to reach net zero emissions by 2050.

But 2050 is a long way off – perhaps too far off. What matters more is the increases countries make in their contribution targets in Glasgow. At their summit meeting in Cornwall in June, the G7 members agreed to increase their reduction targets to between 40 and 63 per cent over the same period.

It’s possible Morrison will decide to accept the net zero emissions target by 2050, and possible he’ll go to Glasgow promising an improvement on our original Paris contribution of a 26 to 28 per cent reduction on 2005 emission levels by 2030.

This week, however, he was promising nothing. Why not? Because we’re already set to “meet and beat” our original target. Indeed, the most recent figures show our emissions are already down 20 per cent on 2005, he said.

And, as he’s told us many times, we’re world-beaters when it comes to moving to renewable, wind and solar energy.

Now, you’ve probably heard there’s something sus about these wonderful don’t-you-worry-about-that figures Morrison and his ministers keep tossing around. The people who know and care about climate change say our emissions are getting worse, not better.

The doubters are right. But we’re indebted to the Australia Institute think tank for producing a careful report spelling out how the government’s figures are able to be so misleading. The Australian National University’s noted emissions analyst, Hugh Saddler, tests Morrison’s claims that, when it comes to reducing fossil fuels use and transitioning to renewable energy sources, we’re at the front of the pack.

Saddler compares our performance with 22 other decent-sized members of the Organisation for Economic Co-operation and Development, plus Russia, on a number of key indicators of energy transition.

Examining our performance relative to the others between 2005 and 2019, Saddler found that we started at the back of the pack in 2005, and either maintained that position or had slipped even further by 2019 on all the indicators.

Australia remains among the highest emitters on a per-person basis, and on the basis of emissions per dollar of gross domestic product. On those indicators where our performance has improved over the period, the others have improved just as much as we have, if not more.

The “emissions intensity” of our energy system – that is, emissions per unit of energy consumed – is the highest, except for Poland. Why? Because both countries were, and still are, heavily reliant on coal for generating electricity.

Despite all Morrison’s boasting about how much we’re spending on wind and solar power, the others are also spending more. Our share of electricity generated from renewables has slipped back relative to the others.

But here’s the killer punch: we were one of only three countries out of the 24 whose emissions from energy use actually increased between 2005 and 2019. By 18 million tonnes of carbon dioxide equivalent a year, according to Saddler.

How can this possibly be reconciled with Morrison’s claim that our emissions have fallen by 20 per cent? It’s simple when you know. Saddler is talking about emissions from energy use, whereas Morrison is also including emissions from what the UN calls LULUCF – land use, land use change and forestry. In short, land clearing and logging.

This source of emissions has been included in the official calculations since Australia insisted on it at the Kyoto conference in 1997. And be clear on this: so it should be. I have no patience with greenies who think taking account of what’s happening to “carbon sinks” is somehow immoral. Tell that to the people who worry about the deforestation of the Amazon.

No, the point is not that land clearing should be ignored, but that we wanted it counted solely because we knew it would make our figures look a lot better than they really were. Why in 2015 did we want to set 2005 as the starting point for our promised cut in emissions? Because we already knew the cessation of land clearing in Queensland would make our performance look good even if we didn’t do anything much to reduce our use of coal and gas.

Trouble is, this long-passed, once-only improvement in land use does nothing to transform our energy use away from fossil fuels and towards total reliance on renewables. It thus does nothing to get us to net zero emissions.

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Getting to net-zero emissions an easier ride than some want to think

I have a mate who – in normal times, anyway – gives me a lift to the gym in his new all-electric Mercedes. He loves its lack of engine noise and amazingly fast acceleration when the lights change (not that I’m implying he’s a rev-head hoon the police should be watching). I’m no car lover, but it’s certainly a smooth, quiet ride.

Most of us accept that, as part of the world’s move to net-zero emissions by 2050, we’ll all be moving to electric cars. Other countries are already further down this road than us.

We’ve made big strides in shifting electricity generation to renewables, and our emissions are falling. But electricity production accounts for only a third of our total emissions. Transport, in all its forms, accounts for about 20 per cent of total emissions, so its move away from fossil fuels is another part of the transition we should get on with.

In all the years we’ve been arguing about climate change, people have tried to convince us how costly it will be. How disruptive to industry and our way of life. All the higher prices, the tax we’ll pay, the jobs we’ll lose.

So far, however, there’s been little extra cost or disruption. The rise of wind and solar power has happened without much pain. And a report this week from Tony Wood and colleagues at the Grattan Institute think tank suggests the move to electric vehicles can be achieved without angst.

More than 60 per cent of the transport sector’s 20 per cent of total greenhouse gas emissions comes from the tailpipes of cars and light commercial vehicles, including our two biggest selling cars, Toyota HiLux and Ford Ranger utes. That leaves trucks accounting for 20 per cent of the sector’s emissions and domestic aviation for about 10 per cent.

Australia has about 18 million light vehicles, up from fewer than 15 million in 2010. And we’re driving bigger, heavier cars than we were a decade ago. (All those appalling SUVs. One day they’ll run over my little Toyota Yaris.)

At present, electric vehicles make up just 0.7 per cent of new sales in Australia. This doesn’t count hybrid electric/petrol cars which, because of their continued use of fossil fuel, can’t be a lasting part of the shift, Wood says.

Our tiny all-electric share of new sales compares with 2 per cent in the US, 3 per cent in New Zealand, 11 per cent in Britain and 75 per cent in Norway.

Because it takes more than 20 years to replace our light vehicle fleet, for our transport sector to make a sufficient contribution to the target of net-zero total emissions by 2050 we’ll need to get to the point where all new light vehicles are electric by about 2035, he estimates.

Government projections suggest that, if the market is left to itself, the move to electric vehicles will cause light vehicle emissions in 2030 to be 7 per cent lower than they were in 2019. This isn’t good enough.

So what can be done to speed the shift? Wood says governments should reduce the main barriers to buying an electric car. First, the high cost of switching and limited choice and, second, the lack of charging points.

We pay an average of about $40,000 for a new car. But we have fewer than 30 electric models to choose from – much lower than overseas – and of these, just three models retail for less than $50,000.

As with all innovative products, the price of electric cars is coming down as the novelty wears off and sales increase. They’ll fall further as batteries become cheaper to make. But the point where the price of an electric car falls below an equivalent conventional car is still some years away.

So Wood proposes removing several taxes on the purchase of new electric cars. Scrapping state stamp duty would cut the price by up to 6.5 per cent, he estimates. Remembering that, these days, all vehicles are imported, removing federal import duty would cut the cost by up to a further 5 per cent.

Exempting electric cars from the federal luxury car tax – a tax of 33 per cent of the price exceeding the first $80,000 – until 2030 would also help.

Australia is alone among the rich countries in not having mandatory fuel efficiency and emissions standards. And there’s a suspicion some foreign makers send us only the high-emissions conventional models they have trouble flogging in other markets.

So to these carrots, Wood adds a stick: to phase out petrol and diesel cars, the feds should impose an emissions limit on light vehicles and reduce it to zero by 2035.

Many people hesitate to buy an electric vehicle because they worry about finding places to recharge. Wood says governments should require all new buildings with off-street parking to make provision for vehicle charging.

Getting everyone into electric vehicles wouldn’t solve our emissions problem, but it would help. And it’s another indication that the fears of huge costs and disruption are greatly exaggerated.

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Reality is catching up with our freeloading, populist climate deniers

Don’t be taken in by the Morrison government’s outraged cries of “protectionism” against the EU plan to impose a carbon tariff on our exports to Europe. It’s we who are in the wrong, failing to do what we should have to reduce emissions, in favour of politicking and populism.

What we’re seeing is just the reality of the world’s need to act to limit climate change catching up with a government and federal party which, since Tony Abbott used denialism to seize the party’s leadership from Malcolm Turnbull in 2009, decided to make global warming a party-political football: a way to beat your opponents, not a need to tackle the nation’s biggest problem.

It’s a condemnation of our business people that, when their own side of politics offered them a way to postpone the inevitable costs of adjusting to a low-carbon world, they happily embraced it.

It’s a condemnation of Australian voters that they were willing to allow their preferred party to tell them whether they cared or didn’t care about their children’s future. It should have been the other way round. “It’s all too hard; you do my thinking for me.”

But the game has moved on since those bad days, and now it’s not just the rest of the world that’s realised there’s no future in denying the reality of climate change and the need to act. As each day passes, we see more evidence that our own financial regulators, banks, investors and businesses are accepting the inevitable and modifying their behaviour.

All our state governments – most notably the Berejiklian Coalition government of NSW – have embraced the target that all other rich nations have embraced, net-zero emissions by 2050. Everyone can see that our refusal to take climate change seriously is wrong-headed and unsustainable.

So, apart from being a national embarrassment – we’re the person stopped for not wearing a mask, so to speak – it’s no bad thing that even other countries have stepped in to oblige our national government to shoulder its responsibilities.

As part of their plan to reduce their emissions by 55 per cent by 2030, the Europeans are toughening up the emissions trading scheme they introduced in 2005, which imposes a price on the carbon emissions of European industries.

To prevent this putting their industries at a disadvantage against imports from countries that don’t impose a similar carbon price on their own industries, the Europeans plan to use a “carbon border adjustment mechanism”, a tax on imported cement, fertilisers, aluminium and iron and steel to bring their carbon costs up to those faced by local producers.

This not only levels the playing field for local industry, it eliminates the incentive for producers to move their production to countries without carbon pricing.

These problems are ones we ourselves worried about when designing Kevin Rudd’s original carbon pollution reduction scheme (which the Coalition and the Greens voted down in 2010) and Julia Gillard’s carbon pricing scheme of 2012 (which was repealed by Abbott in 2014).

So what the Europeans want to do can’t honestly be called protectionism. It bears no similarity with the new import duties China’s imposing on some of our exports.

What’s true is that it’s a messy but necessary way of solving the “wicked” problem of climate change which, being global, can only be fixed by all of the world’s big emitting countries doing their bit. This is why we can expect many other big countries – starting with America, and maybe extending to Japan − to impose similar carbon border taxes on those countries that try to freeload on those doing the right thing, while helping to sabotage the good guys’ efforts in the process.

So there’s no reason for any of us who believe climate change is real and must be countered to have any sympathy for the Abbott-Turnbull-Morrison government. All its sins of expedience and populist politicking are finding it out. It took a bet that the rest of the world wouldn’t get serious, and we lost.

The point is, had we stuck with either the first or the second version of our own emissions trading scheme – which were actually designed to fit with the Europeans’ scheme – we wouldn’t have this problem.

By now our exporters would be paying our carbon tax to our government (or, if they weren’t yet, we could easily fix it) rather than paying the same tax to foreign governments. Why’s that a good idea?

From the beginning, this government has used climate change as nothing more than an opportunity to attack the other side of politics by pushing populist delusions that taxes are always and everywhere a bad thing. Bad for the economy. Yeah, sure.

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Reform not a dirty word when it benefits the many, not the few

The idea that the economy needs to be “reformed” has been hijacked by the business lobby groups. Their notion of reform involves making life better for their clients at the expense of someone else. But that doesn’t mean there aren’t things that could be changed to make the economy work better for most of us, not just the rich and powerful.

Trouble is, Scott Morrison shows little interest in any kind of reform, whether to advance business interests or anyone else’s. Reform involves persuading people to accept changes they don’t like the sound of, and increases the risk they’ll vote against you at the next election.

Morrison’s government is making heavy weather of our most urgent problem – getting all of us vaccinated against the virus ASAP – so maybe it’s not such a bad time for him to Keep it Simple, Stupid.

But we do have an election coming up, in which it’s customary to think about what improvements could be made over the next three years. And it’s not illegal for us to dream about what could be improved if sometime, somewhere we ever found leaders interested in doing a better job as well as staying in office.

Next to the pandemic, the most important problem we need to be working on is climate change. That’s stating the obvious, I know, but not to Morrison and his Treasurer, Josh Frydenberg, whose recent intergenerational report paid lip service to the issue but then proceeded to project what might happen to the economy and the federal budget over the next 40 years without taking climate change into account.

What’s surprising is that another Coalition government, Gladys Berejiklian’s in NSW, did take account of global warming in its state intergenerational report. It found that more severe natural disasters, sea level rises, heatwaves and declining agricultural production would reduce incomes in NSW by $8 billion a year in 2061 under a high-warming scenario compared to a lower warming one.

Clearly, climate change will be bad for everyone in the economy – some people more than others – while acting to reduce our emissions of greenhouse gases will be a cost to our fossil fuel industries.

But the world’s demand for our coal and gas exports is likely to decline whatever we do. Our government doesn’t believe climate change needs to be taken seriously but, fortunately for more sensible Australians, the rest of the world does, and is in the process of forcing “reform” on our obdurate federal government.

In the meantime, however, our electricity industry is finding it hard to know what to do because the Morrison government won’t commit itself to a clear plan on how we’ll make the transition to all-renewable power.

Worse, our abundance of sun and wind relative to most other countries makes us well placed to become a world renewables superpower – exporting “clean” energy-intensive manufactures, maybe even energy itself - if we act quickly.

Right now, however, our need to choose between being a loser from the old world or a winner in the new world is sitting in the too-hard basket.

Moving to less strategic issues, Danielle Wood, chief executive of the Grattan Institute, gives a high priority to lowering barriers to workforce participation by women, by making childcare more affordable and improving paid parental leave.

We’ve long seen the benefits of free education in public schools. Making “early childhood education and care” free would not merely make life easier for young families, it would get more of our kids off to a better start in the education system and allow women to more fully exploit the material benefits of their extensive education, not just to their benefit but the benefit of all of us.

The benefits of getting an education greatly exceed getting a better-paid job – education broadens the mind, don’t you know – but it makes no sense for girls, their families and the taxpayer to put so much effort and money into gaining a better education, then make it so hard for them to do well in the workforce when they have kids.

One factor that’s widening the gap between rich and poor in the advanced economies is years of “skill-biased” technological change, which is increasing the wages of highly skilled workers while doing little to increase the wages of unskilled workers. Indeed, many routine jobs are being replaced by machines.

This says one way to ensure Australian workers prosper in the digital future of work is to ensure our workforce is well educated and highly trained. We must be willing to spend – to invest – however much it takes to have a workforce capable of providing the more analytical, caring and creative skills employers will be demanding.

We need to do more to help our teachers teach better so that fewer kids leave school early without having acquired sufficient education to survive in the world of work. Some teachers are better at it than others; they need to be used to train younger teachers on the job and rewarded accordingly.

Universities need to be better funded by the federal government, so they can afford to give students a higher quality education, vice-chancellors aren’t so eternally money hungry, unis stop exploiting younger staff with insecure employment and aren’t so dependent on making money out of overseas students and thus obsessed by finding ways to game the international university league tables.

How’s all this to be afforded? By all of us paying somewhat higher taxes, how else? By politicians giving up their election-time pretense that taxes can come down without that leading to worse quality government services rather than better.

Throwing money at problems doesn’t magically fix them, you must use the money effectively. But when mindless cost-cutting is the source of much of the problem, nor is it possible to fix problems without spending more.

If our politicians would speak to us more honestly along the lines of “you get what you pay for”, that itself would be a welcome reform.

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