Open letter to Australian senators from climate action groups

Dear Australian senators,

The delay in the passage of the US climate legislation through the U.S. Senate and the near-certainty that a new binding climate protocol will not emerge from the Copenhagen conference, presents Australia with an important opportunity.

The undersigned groups active on the climate ask you to defer a vote on the CPRS bills and to refer the bills to an all-party, joint houses parliamentary committee to review the process of the development and amendment of the CPRS Bills and to recommend a more effective process for generating the tools needed to drive the urgently needed transformation of the physical economy. Or failing that, we ask you to vote against the Bills.

We believe that most Australians and most Federal politicians feel that climate change is a serious issue that demands an effective response. But privately many parliamentarians probably have a feeling that the draft CPRS legislation, as it now stands (and even more so as it will be after further amendments), is very cumbersome and will be costly and substantially ineffective. Draft legislation that was once thought to be at least "a worthwhile starting point" or "better than nothing" has now reached the point where it is actually worse than having nothing - because it will create significant unnecessary costs for the community and industry and yet it will seriously block the needed industrial restructuring in Australia on the necessary timescale.

We acknowledge that the development of the legislation has been a long and difficult process and so our recommendation to defer consideration of the legislation and to set up a parliamentary review might seem to be either a backward step or merely a delaying tactic. On the contrary, we believe that our recommended course of action is the fastest way to see highly effective legislation adopted with multi-partisan support in Australia.

We think that a number of crucial flaws in the development process for the legislation made a bad outcome inevitable:

• the Garnaut Review, in failing to recognise the significance of the emerging climate science and by adopting unsafe climate goals, misjudged the scale and speed of change that was necessary, and consequently inappropriately recommended a cap and trade system as the primary tool for driving the structural change in the physical economy;
• following the Garnaut review, the government jumped straight into framing legislation, without conducting any prior in-depth discussion with the community about the seriousness of the climate issue and the possible responses and so the main forces that were activated by the government's climate initiative were the companies/interests that would have immediate difficulties with a cap and trade system and possessed the financial resources to lobby for their own interests;
• And finally the government saw the task of passing climate legislation as a normal political problem that could be solved through ‘horse-trading’ and ‘getting the numbers’ through a partisan approach. This meant that there was no ethical or scientific bottom line, the Garnaut recommendations were seen as just "one input" or the opening gambit in a process of progressive compromise, the Greens and Nationals were sidelined and ignored, and the Liberals were played with to get their vital votes while disadvantaging them as much as possible.

The outcome is legislation that institutionalises cost-deflection and massive rent-seeking, that loads major costs onto those sectors of the economy and society that did not engage in or were not successful at the cost-deflection/rent-seeking game, that seriously slows structural change, that gives very poor signals for ongoing innovation and that is aimed at environmental targets which, if successfully applied globally, would still result in catastrophic climate change.

To vote the CPRS bills into law now would be to lock in a very poor version of the wrong mix of policy tools.

What is needed?

The starting point must be the science and the ethics.

The Arctic sea ice that is needed to keep billions of tonnes of permafrost carbon frozen and out of the air (a quantity 4 times the total carbon from all sources now in the air) is now 80% gone.

The Himalayan glaciers on which over a billion people depend on for summer irrigation are melting right now so fast that they will be gone by mid-century.

South-eastern Australia is currently gripped by a climate change enhanced drought that is cutting food production and delivering deadly heat waves and catastrophic fires.

The Great Barrier Reef is within a decade of annual coral bleaching events that will rapidly destroy more than 60% of its area.

What this means is that the earth is dangerously too hot right now – after slightly less than one degree of warming.

The impacts of uncontrolled climate change are going to be so severe, eventually, that it will not be possible to successfully adapt to them. By about 2025 is it estimated that climate induced tensions around the world could start to trigger wars over scarce food and water and the right for climate refugees to move.

As a problem which has been caused, to date, mainly by richer countries but with impacts felt globally, the solutions need to be framed to meet the needs of all people globally – which means the solutions should meet the needs of the most vulnerable not the most secure and comfortable.

The only way to cope effectively with climate change is to undo the problem at emergency speed. Since the earth is already too hot and we already have too much CO2 in the air, three strategies are needed to solve the problem. We have to stop adding CO2 and other greenhouse gases to the air (that means the emissions target needs to be zero), we need to take the excess CO2 out of the air (because otherwise temperatures won’t fall noticeably for many hundreds of years) and until the temperature of the earth is able to fall naturally to a low enough level, measures will be required to cool the earth directly (eg. by changing the earth’s reflectivity).

The most recent credible assessments of climate change impacts make it clear that reaching climate temperature goals by 2050 is decades too late, that the so-called 2ºC ‘guard rail’ is much more than IºC too high and that a 450 ppm CO2 target level in the atmosphere is well over 100 ppm too high. But to restore safe climate conditions before critical damage is done or major climate tipping points are passed means that the economy needs to be physically restructured within a decade or two at most. None of the versions of the CPRS legislation, with or without proposed amendments, is capable of driving this sort of change in terms of scale or speed.

There are two key questions to be resolved in any structural change. One is whether existing plant and equipment is to be retired early? And the other is whether the required changes in the structure of the economy need to be expressed fully and immediately in new investments or whether there is time to go through incremental changes over several investment cycles?

Whether it was fully intended or not, by the time that cost-deflection and rent-seeking lobbyists had got to work on the CPRS structure and won extensive concessions, it was clear that there would be very little price pressure to retire major investments early. Even in this situation it might have been expected that a market instrument like the CPRS would still be useful for driving innovation in new investments, but by granting unlimited access to cheap overseas offsets, even that pressure has been substantially dulled.

On the other hand what is needed is indeed the early retirement or modification of emissions-generating assets and accelerated investment in new assets to create the zero emissions/drawdown economy. If this is the need then maybe it would work better to develop a schedule of early retirement or modification of emissions-causing assets and then to compensate asset holders at the time of retirement/modification. With the current CPRS system strong pressures have emerged to ‘compensate’ asset holders that are actually doing nothing to cut their emissions. This perverse ‘need’ seems to be created by the CPRS structure.

If there was a known schedule for the retirement of emissions-causing assets this would create a market demand for new assets.

There also needs to be clearer standards for the emissions performance of new assets. Given the increasing severity of expected climate change, it is likely that some previously anticipated technological transitions will no longer be appropriate eg. the increased use of fossil fuel gas.

Is there any useful role for a cap and trade system or for a carbon tax? Maybe these mechanism are in fact best suited to driving change in the parts of the economy not covered by the direct scheduling of asset retirement or modification. It may well be that a carbon tax set to levels that would achieve emissions targets (heading rapidly to effectively zero) is probably better for innovations because the zero emissions / drawdown technologies can rely on steady prices.

The benefit of referring the draft CPRS legislation to an all party, joint houses committee is that it would facilitate a fundamental rethinking of how best to drive the needed change in the physical economy. More and more people are now seriously considering the possibility that a World War 2 intensity of economic mobilisation and change might be needed to achieve the required climate outcomes fast enough. How should this be organised in peace time? How can technological innovation be maximised? How can the total cost of change be minimised?

Maybe the difficulties that the national Parliament has experienced getting the CPRS legislation through the Houses are a blessing in disguise? If the CPRS was law now, Australia would have locked itself into a very expensive, very ineffective mechanism that would have slowed down the rate of economic change during precisely the decades when the maximum change was needed.

So in summary, in the interest of effective climate and economic outcomes, we urge you to either refer the CPRS Bills and any proposed amendments to an all-party, joint-houses committee for a thorough rethinking.

Alternatively we ask you to vote against the CPRS Bills.

Yours sincerely,

Philip Sutton, Convenor of the Climate Emergency Network

Letter endorsed by:

Climate Emergency Network and the Safe Climate Coalition and 24 other groups

[A copy of this letter has been sent to all House of Reps MPs saying that it has been sent to all Senators. The letter will be sent by email and by post, and it will be sent to the media.]