An important effect of the recent Rudd backtrack on climate change policy is that it has reduced the credibility of government climate change policy. As Laura Tinkle remarks today ‘One thing that is certain is that the changes this week have not helped rebuild any solid and noisy base of support for the government’s emissions trading scheme’ (AFR p.63).
Why is credibility important? Why is it important to know that the government will have the backbone to take tough decisions on climate change in the face of determined opposition and to carry through with its stated policy intentions?
1. Credibility is important because the intention of raising charges on GGEs is not only to penalise the GGE emitters of energy users to induice less consumption. These charges are also intended to have supply-side effects that encourage energy suppliers, industries and consumers to undertake substantial investments that longer-term will switch the economy away from being reliant on carbon fuels. In many cases these investments are sunk costs – they cannot be retrieved once made. Hence investors will be fearful of half-hearted attempts to deal with climate change that will later be revised once these sunk investments are made. Investors will reason that GGE emmision charges will remain politically unpopular and that governments will hasve incentives to encourage sunk conservation investments and then relax the charges.
Kevin Rudd’s actions in caving in to the polluters has plausibly increased such fears and reduced the prospect that such investments will be made.
2. Credibility is important in seeking global greenhouse controls in Copenhagen this year. The more countries that have clearly committed to take strong action to switch away from carbon-based energy supplies the greater the prospect of a global agreement to control emissions. Australia carries a voice in such negotiations that goes well beyond its contribution to emissions. If a major international energy exporter makes clear its own determination to take determined action that sends a significant signal to other countries.
One path to develop a credible climate change response is to remove emissions control from the political arena entirely. An independent agency could be set up to achieve the emissions cutbacks that have been agreed to by politicians at minimum cost. Generally that will involve sticking to an emissions trading scheme in the face of ongoing pressures on government to relax or dismantle it.
It is important too for pressure groups such as the Greens and the Australian Conservation Foundation to act as a cohesive force in opposing policy backtracks. You want what Laura Tingle calls a ‘noisy base’.
The Greens have done what they could this week but the apologetics from Don Henry and Ian Lowe from the ACF make me wonder whether these people have, perhaps inadvertently, shifted into the Labor cheer squad. I wonder how they would have reacted had it been a Government led by Malcolm Turnbull who announced the policy backflip.