Tuesday, July 29, 2008

Some climate change politics . . .

It looks like the Liberal party is having some problems coming to terms with the complexities of climate change. Here is a story from The Australian.

Nelson leaves Libs looking incompetent and inconsistent on emissions

Jennifer Hewett
July 30, 2008
The Australian

SO much for certainty. The Liberals' erratic approach to an emissions trading scheme will leave the business community as confused as the voters.

Brendan Nelson's spectacularly inept handling of the issue still means there is unlikely to be any such scheme in place by 2010 -- no matter how firm the Rudd Government's supposed timetable.

But the Liberals are now ready to argue they will support the introduction of an Australian scheme by 2011 or 2012 no matter what the rest of the world does.

The only question is how tough it should be. That's a pretty big and complicated question, of course.

However, it's a major retreat from the Opposition Leader's insistence of the previous few days that the introduction of any Australian scheme should be conditional on whether the other major emitters had made similar commitments.

That will make for a very angry Liberal party room meeting today after Nelson was comprehensively humiliated by his own dismayed shadow cabinet yesterday. It can only increase the sense of misery about his suitability for leadership.

Courtesy of Brendan on-again, off-again Nelson, the Liberals just look incompetent and inconsistent on an issue of huge importance to the economy and of potential vulnerability for the Government.

None of Nelson's tortured attempts to explain his position post-shadow cabinet altered that sorry equation.

But at least the Liberals seem finally to have a semi-coherent policy to try to sell from now on. The Opposition will claim that the 2010 date is too rushed and that it is pointless to risk the Australian economy with a botched system.

They should have plenty of leeway to argue that the Australian scheme should also have a very soft start because of the likelihood there will be relatively little action by the major emitters any time soon.

Given their recent policy peregrinations, it's hard to guarantee that the Liberals won't change their position on timing yet again. But that's the obvious intention of the moment. Nor will Labor negotiate enough concessions with the Greens in order to get the scheme through the Senate in time for the 2010 deadline.

Kevin Rudd will argue that a responsible government cannot give in to Green demands that would do excessive damage to Australia's economy.

It means the form and deadline for Australia's response to climate change remains as clear as the Beijing skyline on a still, hot day.

Most of the business community will be relieved at the prospect of a modestly delayed start. The yelps of pain that quickly followed the release of the Government's green paper are only going to increase in intensity and scope.

A suddenly much more threatening economic climate will also strictly limit commercial tolerance for experiments that will increase costs and decrease competitiveness. The massive lobbying effort from business under way at the moment is part of the financial reality check on Rudd.

But that doesn't mean there was ever going to be enthusiastic support from the business community for Nelson's big idea of indefinitely blocking any active response by Government either.

Remember, it was big business and particularly the Business Council of Australia that prodded the Howard government into commissioning the Shergold report as part of its intention to introduce a scheme by 2012.

At the time, then BCA president Michael Chaney described this approach as a sensible form of insurance.

It meant Nelson's determination to revert to a pre-Shergold position worried many business leaders. The Opposition was swimming too vigorously against the rising international tide.

The Rudd Government's dire pronouncements on the risks of inaction may verge on hysteria but Nelson's tough-guy approach was hardly risk-free. From a business point of view, this had less to do with Labor's emotive arguments about the fate of the Barrier Reef and far more with the potential difficulties for Australian companies because of the country's perceived inaction.

Business may see through the absurd Labor logic that implies a scheme imposed by Canberra will make the crucial difference on the future of rainfall patterns in Australia, for example.

But by making their support for any Australian scheme contingent on action by other emitters, the Liberals would have ensured that Australia had nothing other than Rudd's good intentions in which to cloak itself.

That would invite retaliation on Australian exports from areas such as Europe, for example.

It's also evident to many Australian chief executives that no matter how long it takes -- and whether or not developing countries sign up to formal reductions in carbon emissions quickly -- the pressure to shift to less carbon-intensive industries is only going to accelerate.

The developing world will be forced into adopting new technologies and approaches themselves -- if only to ensure their own societies remain viable. The Beijing smog is only a modest prelude of what will come otherwise.

That suggests that companies and countries leading in technological adaptation and energy efficiency will have their own version of valuable commodities to sell -- including making the use of Australian resources more attractive.

That may not require immediate dramatic shifts in the Australian economy, let alone the closing of the coal industry and its exports.

But it means that Australia should head steadily down the path of greater carbon efficiency and technological improvements, including the use of price signals. This can be so gradual that it makes the large reduction targets look much less achievable over the short term. But it's like a version of training wheels. It's more effective to start slow and limit the spectacular crashes rather than advance straight to speed racing in the Tour de France.

It's also more honest than the approach adopted by most other countries so far -- pledging to meet targets that are routinely missed.

And companies will at least be able to invest for the future with some confidence about how the new rules will be applied.

The political dilemma for the Liberals in delaying this beyond the next election is that it also delays the inevitable collision of rhetoric with reality.

It suggests a replay of the 2007 campaign where Rudd can campaign on the need for leadership on climate change without Labor or the voters having to face up to the costs. But that's likely to be a problem for a different Liberal leader to manage.


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