AUSTRALIA’S CARBON TARGETS, Are we dinosaurs or winners?

Michael Molitor

October 2021

Last week Prime Minister Morrison announced he would, after all, attend the UN climate summit in Glasgow next month.  This suggests he has finally reached agreement with the Nationals to announce that Australia will commit to a 2050 net zero carbon emissions targets and, also likely, Morrison will lift Australia’s 2030 target up from a paltry 26-28 percent below 2005 levels to somewhere around a 50 percent reduction.  How do we make sense of these targets and, most importantly, will they lead to a meaningful decrease in our exposure to climate risks from, for example, more extreme weather events?

Every Australian State and Territory has announced a 2050 net zero carbon emissions target. Almost all of them have also set interim 2030 targets including, for example, the NSW Government’s target to reduce statewide emissions in 2030 to 50 percent below its 2005 emissions.

Here is a table highlighting all the current carbon targets across Australia:

What determines the size of the carbon targets set by these Governments and why do they differ? With a 24-hour news cycle impacting their policy-making activities, governments strive to under-promise and over-deliver. This leads them to set lower targets so they can be easily achieved. This may also explain why there is currently no correlation between the collective carbon targets set by governments and the total reductions in carbon emissions required to prevent the worst impacts of a climate system dangerously modified by human activity.

The total current pledges to reduce carbon emissions made by governments under the Paris Agreement, if not substantially increased, will lead to an increase in surface temperatures of more than 3 degrees Celsius—the Paris target is to keep surface temperature increases to below 2 degrees Celsius and, if possible, below 1.5 degrees Celsius. The key objective of the Glasgow Climate summit, which takes place next month, is to get governments to increase their 2030 pledges to a collective level which would keep surface temperature increase to between 1.5 and 2 degrees Celsius. To be clear, this is a big ask as Australia, for example, has yet to agree to a 2050 net zero target and it’s 2030 target, to be 26-28 percent 2005 levels is less than half of what would be required for Australia to contribute its fair share of the global carbon emissions reduction effort.

Dinosaurs vs Winners

I put all government carbon targets into two categories: (1) Dinosaurs and (2) Winners.  Dinosaurs are countries that erroneously believe they will be worse off economically if they are forced to reduce their carbon emissions to the levels required by the Paris Agreement.  Dinosaurs use every possible trick to make their task easier and to try and fool the public into believing they are taking meaningful action to reduce their emissions.  The Australian Federal Government is one of the leading Dinosaurs as their targets are meaningless and their accounting of carbon emissions reductions is bordering on fraud.

One of the best tricks played by Dinosaurs concerns the selection of the base year from which to measure their targets.  The 2030 targets are set as a percentage decrease against a base year which, in Australia, has been selected as 2005.  Is 2005 a year in which Australia’s carbon emissions where historically average, historically high, or historically low?  Dinosaurs pick a base year with the highest emissions thereby making the percentage reduction target easier to reach.  2005 was a year of historically high emissions in Australia. 

The other advantage of picking a high emissions base year is it will leave more emissions below the target giving governments the freedom to give this bigger breathing room to high carbon emitting companies. One of the challenges for governments is that there are always very big companies in their economies with high carbon emissions and few short-term opportunities to reduce their emissions. In some countries, like Australia, there are very big companies exporting carbon intensive commodities including, for example, thermal coal, coking coal, and natural gas. Dinosaurs will favor continuing to generate export revenue from coal and gas above maintaining climate system stability—and they justify this by saying if they stop exporting coal and gas then someone else will supply it and the carbon emissions will be generated just the same.

The other clever Dinosaur trick is to use dubious carbon accounting practices and count things which are unconnected to any dedicated attempts to reduce carbon emissions and exclude carbon emissions from your inventory. The Australian Federal Government counts the carbon emissions which are being avoided from, for example, reducing practice of savannah burning. This is equivalent to stating you are going to reduce your sugar consumption by 50 percent then claim your 20 percent actual reduction becomes 50 percent because you would have consumed a lot more in the absence of your target. This trick allows you to avoid having to make difficult reductions in emissions from high carbon emitting activities—which happen to generate more tax revenue than the avoidance of savannah burning.

Finally, the biggest scam perpetrated by governments is to suggest that these targets are legally binding. None of these targets are enshrined in law—they are all aspirational. Even the targets taken on by governments inside the Paris Agreement are non-binding—yes, there are no legal consequences for missing your targets. All the countries which signed the Paris Agreement are also parties to the 1992 UN Framework Convention on Climate Change [UNFCCC] and, unlike the Paris Agreement, the UNFCCC obligations are legally binding. One of the most important legal obligations under the UNFCCC is to ensure that governments do not take any actions to increase climate change risks by allowing, for example, your carbon emissions to increase. Ninety-nine percent of the 197 countries who are parties to the UNFCCC are in violation of this obligation.

The Opportunity for Winners

If, instead of being uniquely focused on the costs of reducing your carbon emissions and the impact this will have on your obsolete fossil fuel industries, you understood that decarbonization of your energy, transport, and food systems now represents the biggest economic opportunity in history, then your carbon targets would look a lot different.  Winners in the biggest economic opportunity of all time will select more robust base years from which to set their targets, will increase their targets to well above what the market will already deliver without government intervention, and they will set specific interim targets for phasing out coal, oil, and gas including the accelerated electrification of transport.   The food, stationary energy, and transport sectors are all so wildly inefficient today that decarbonizing them delivers significant economic and social benefits well above lowering climate risks.

For Australia to become a global carbon winner, it will need to change its existing targets and add a few more.  First, we need to change our base year from 2005 to an average of annual carbon emissions over the years 2000-2010.  Second, lift our 2030 targets to 60 percent below the new 2000-2010 average annual emissions.  Third, set targets for the electrification of passenger cars, trucks, buses, and trains.  Move to create phase out schedules based on 5-year increments for coal-fired and gas-fired electricity.  Set targets for energy storage at utility-scale and for smaller distributed applications including, for example, homes, schools, and shopping centers.  We need targets to help the market make intelligent decisions about how to identify and price climate risks and to subsequently direct capital to the best performing decarbonisation options. 

We now face the biggest historical fork in the road concerning the future of Australia. It’s up to us whether we get left behind as a dinosaur or take on robust carbon targets and become a global low carbon energy superpower [read Ross Garnaut’s 2019 book SUPERPOWER if you want to understand how to make this happen].

Photo of Bondi Beach mural by Aquabumps