Over the weekend, the Intergovernmental Panel on Climate Change (IPCC) issued its "synthesis" report of the previous major papers released this year. Though Opposition Leader Kevin Rudd put ratification of the Kyoto Protocol as main priority, the differences on carbon emissions policies between the parties are remarkably small.
Rudd launched an initiative to increase the renewable requirements for electricity to 20% of the total. He said the annual cost would be only about $10 a head. These figures are based on modelling by McLennan Magasanik Associates (MMA) commissioned by the Renewable Energy Generators of Australia.
If the cost is really so trivial, what is all the fuss about? If we can achieve 20% renewables for $10 a head why not go a lot further? How much would it cost to go to 40%? Would doubling the share be only $20 per head? Or if we are counting the increment over and above existing commercial hydro power might not the cost be a still modest $40 per head?
If Rudd and Prime Minister John Howard really believed the figures, they would be in a race to outdo each other with ever-increasing green requirements.
Australia has a hotch-potch of measures targeting the greenhouse issue. Neither the Government nor the Opposition has quantified the overall costs of the present mixture of taxes, subsidies, tradeable emission certificates and downright command-and-control measures.
The variety of these makes it difficult to estimate how much the economy is being penalised. But the cost is highly relevant -- the debate is all about how much pain political parties are willing to inflict on consumers and industry.
The present measures include requirements such as the Commonwealth's Mandatory Renewable Energy Target (MRET). This and the state schemes involve consumer subsidies to renewable generators at an annualised cost of $600-850 million.
There is a further $499 million in federal spending on climate change programs identified by the Commonwealth's Department of Environment.
Over and above this are expenditures at least partly justified by greenhouse concerns. Among these is increased spending on the Great Barrier Reef, on "ecologically sustainable" fishing, environment research, "green" buildings, "sustainable" cities and the $8000 subsidy for photovoltaics announced in a year with a budget set at $150 million.
State governments also have policy instruments that add costs to reduce energy and greenhouse emissions. The most important are five-star measures on housing, which add $7000-$14,000 to the price of a new house and in aggregate annually cost $1-2 billion.
Also included are the energy efficiency standards on fridges and other appliances. And the Australian Greenhouse Office (AGO) has similar regulations ready to be introduced covering other energy-using purchases.
All this expenditure comes to about $3000 million a year.
The Government and the ALP say they favour a carbon tax or its equivalent. Both argue this is more efficient. But neither has tried to quantify the present measures as a tax or tradeable right equivalent.
In fact, the $3 billion a year in current programs can be used to estimate the carbon tax effects. Current expenditure and regulatory measures are equivalent to a tax of $10 a tonne of carbon dioxide on stationary sources such as power generation (which emit 280 megatons).
Except for true believers in environmental catastrophe, the issue is all about posture. The naked politics driving this debate is illustrated by the approach to nuclear power. The ALP has castigated the Government for considering this and, as a result, the Government has run dead on the issue.
Yet, if a drastic reduction in greenhouse gas emissions is to be introduced, there is no known means other than using nuclear power. Unfortunately politics out-trumps sound government in an election campaign.
Hopefully, once the election is over, populist approaches will be less dominant.
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