29 September 2015
by Giles Parkinson

No more excuses: Heat is now on Hunt

For the past two years, Greg Hunt has protested that he has been doing the best he can possibly do under the circumstances – being an environment minister in a government that downplays climate change, and is actively opposed to wind energy.

Hunt insists that he has been pushing for ambitious and effective policies as much as he can, and as much as he dared in a government dominated by the far right, and its ideological war against green policies. Did anyone understand the difficulties involved?

But if Hunt craved to be portrayed as a beacon of light in a sea of smog, he did not get a lot of sympathy from those involved in the sector.

Part of that was due to his own choice of rhetoric: in an attempt to appease and impress, or just to get along, Hunt on occasions tried to out-do even the extreme right on the costs of renewables and climate action.

That has now changed, the conservative forces that stood in his way appear to have been swept aside by the sudden rise of Malcolm Turnbull and his declaration that his government will be one looking to the future, not the past.

So, the next phase can be seen in two ways: a test of Hunt’s willingness and ability to introduce long-lasting and effective climate change policies, presumably with the indulgence and sponsorship of his new leader; and a test of the remaining power of the hard-line conservatives.

On the former, the question about long lasting and effective policies, the jury is divided. Few, if any, in the carbon abatement industry or the renewable energy industry believe the current policies are fit for the long term, or even much good for the short term. This is particularly so of the emission reduction mechanisms.

But under the new Turnbull government, Hunt has been invited to be both ambitious and innovative, and he has been given all the levers to do so. He no longer has any excuses not to act.

In addition to climate policy, pursued through Direct Action, Hunt now has carriage of the renewable energy target, which has been switched from the energy and industry portfolio.

His department now also has overview of the two statutory bodies providing real investment in new technologies, the Australian Renewable Energy Agency, also switched from energy, and the Clean Energy Finance Corp, shifted from Treasury and Finance.

This is good news for both the CEFC and ARENA, and for the prospects of the emerging technologies, financing models and business models they will help usher into Australia’s energy system, and the disruption that Turnbull speaks of with such enthusiasm.

The CEFC, for instance, should now be free of the constraints imposed by Joe “wind farms are offensive” Hockey, and the finance minister Matthias Cormann. The Abbott regime had tried to stop the CEFC from investing in wind farms and rooftop solar. The CEFC’s response, which has been sitting on the Coalition’s desks for several weeks, will now be dealt with by Hunt. It is expected that a much more nuanced investment mandate will be negotiated.

The big tests for Hunt will come from the renewable energy target and Direct Action.

Hunt – and Turnbull for that matter – have been dismissive of Labor’s 50 per cent renewable energy target for 2050, both relying on the estimated capital costs and dismissing this as an unnecessary cost to society.

But it’s about time this sort of rhetoric was junked. As most studies of high renewable energy targets conclude – from Greenpeace’s assessment of a global 100% renewable target, to the International Energy Agency’s assessment of a high level of renewables, or investment bank UBS’s assessment of Labor’s 50 per cent renewable target – these costs are offset by business-as-usual costs.

The same is true on emissions targets, where Hunt has been a notorious offender, ascribing a $633 billion cost to a 50 per cent emissions reduction target.

Hunt’s problems with the renewables target are more immediate, however. Unless some certainty can be provided by the government, and incumbents are told that they won’t be able to game the system, then it is possible that even the modest 33,000GWh target by 2020 won’t be met. Investment remains at a standstill.

What that policy needs is a re-affirmation from government that they both like and want renewable energy, and that it will not be cut back should they win the next election, which now seems more likely.

The second key measure is to extend the policy beyond 2020 – which is not to say that the same level of assistance should be continued, but that there has to be a long-term policy vision and a mechanism to achieve it.

The emissions reduction fund is controversial on two levels. The first, because there is huge debate over how much of the abatement is actually “additional”, meaning stuff that wouldn’t have happened anyway.

The second is the so-called licence to pollute under the Safeguards mechanism, which is basically a self-regulated ceiling that allows polluters to emit at their highest levels of the last five years, or even more if they can provide “justification”.

One can imagine that there will be a lot of work going down in Hunt’s department over the next few months about the true cost of Direct Action, and its ability to deliver Australia’s 26-28 per cent emissions target by 2030.

It was the good efforts of Hunt and foreign minister Julie Bishop to get the Abbott-led Coalition even this far. Paris may provide the platform and the justification for Turnbull to go even further, and to junk a policy that has no bite, or give it real teeth – such as decisive emissions standards and pollution controls.

Then we might see business clamouring for what everyone accepts as the cheaper option – bar the echo-chamber created by vested interests – and that is a carbon price.