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Friday, May 27, 2016

How Many Climate Policies Does the Coalition Have?

At the Paris COP21 talks in December 2015 the Australian Government signed on to the 1.5 degree warming target when it cut a deal with St Lucia, a Caribbean island nation, to back the target in exchange for being allowed to carry over its savings from the Kyoto Protocol.

Before this in June 2015 the Australian Government produced a booklet "Coal in India" with projections of India's demand for coal out to 2040. There are 3 different scenarios for these projections - via the International Energy Agency:
  • Current Policy Scenario which projects energy demand based on policies already in place.
  • New Policies Scenario which takes into account announced policies to reduce coal-fired energy production that haven't yet been implemented.
  •  The 450 scenario that projects coal demand where carbon emissions are limited to levels consistent with global warming increasing be 2 degrees Celsius.
Then on 13 May 2016 the Australian Government announced its support for expanding the Australian coal export industry based upon a projection that India's demand for coal would triple by 2040.

This is the "Current Policy Scenario" that the Australian Government charted in June 2015.

The Australian Government is now funding new coal fired power stations in India and Indonesia through the Asian Infrastructure Investment Bank. It has allocated nearly $1 billion of taxpayer funds for this purpose.

Australian PM announces new commitments at Paris climate talks

Posted on 01 December 2015
Today world leaders gathered in Paris on a wave of historic momentum in the fight against climate change. An unprecedented 150 Heads of State will stand up and speak about climate change, demonstrating Climate Change is clearly at the top of the political agenda

Prime Minister Turnbull announced three new commitments including ratifying the second commitment period of Kyoto protocol, doubling clean technology R&D by 2020, and additional climate finance for vulnerable countries.

WWF welcomes the announcements as useful steps towards tackling the global problem of climate change, but Australia can and should do more, with current technology, as part of its fair share to limit global warming to 1.5 degrees.

Speech by Josh Frydenberg MP, Minister for Resources, Energy and Northern Australia
The Future and Growth of Mineral Exports, and the Policies to Support Mining Jobs and a Strong Economy
Date:   Friday, 13 May 2016 4:02 PM
Location:   NSW Mining Industry and Suppliers Conference, Sydney
Introductory remarks
I’d like to acknowledge my fellow speakers Stephen Galilee, CEO, NSW Minerals Council; and Dr Brian Fisher, Managing Director, BAEconomics.
It’s great to join you for your annual conference, my first since being appointed Minister for Resources, Energy and Northern Australia.
More than seven months into this role, I have been highlighting the work your members do to support the Australian economy and to support jobs.
The mining industry and commodity exports provide an economic lifeline for our regions and the rest of Australia.
And NSW has a special place in Australia’s commodity export trade.
Indeed, New South Wales—from the Hunter, through the Central West, to the Illawarra—has pride of place in Australian mining history.
Australia’s first commodity export started here in this state.
It’s been more than 200 years now since that happened—since the first shipment of coal left Newcastle.
Today, Newcastle boasts the world’s largest coal export terminal, delivering much-needed jobs and revenue to the state’s economy.
Challenges and Future Prospects
Of course, there are challenging market conditions facing the resources industry.
Like you, we continue to monitor the volatility on world commodity markets because any impacts extend to government finances as well.
We’ve come to the end of a decade long super cycle marked by record prices as a result of an unprecedented ramp up in demand. We’ve returned to more normal, cyclical patterns of demand.
Unfortunately these developments have resulted in job losses, particularly in resource-dependent towns and regions around the country.
These challenging market conditions are expected to continue for some time.
However, I’m confident that Australia is better placed than most other countries to ride out the current cyclical downturn and be ready for the next market upturn.
Our pre-eminence as a global resources and energy powerhouse is built on the Australian industry’s ability to innovate and adapt in the face of intense global competition and volatile prices.
An example of such innovation that will be well known here in NSW is Northparkes’ fully automated underground mining operations. The breakthrough, a world first, allows the mine to operate continuously 24/7, delivering optimal daily production at improved safety and reduced cost.
By 2020, India is forecast to overtake China, Japan and the EU to become the largest coal importer in the world as it seeks to almost treble coal fired power generation between now and 2040.

Coal in India, June 2015

Office of the Chief Economist

Department of Industry, Innovation and Science

Coal in India - June 2015

The IEA World Energy Outlook

The IEA WEO provides three scenarios for long term energy use and the mix of sources that will supply it.

The first is the Current Policies Scenario (CPS), which is essentially ‘business as usual’ and projects the trajectory for energy consumption and production based on economic, energy and climate change policies that are already in place. The second is the New Policies Scenario (NPS) which is the IEA’s central scenario and takes into account announced policies that are yet to be enacted.

For example, it includes policies announced by the United States to accelerate the decline of coal-fired electricity , which will take effect from 2017 at the earliest and announced measures by China to reduce local pollution and limit coal use.

The third scenario, the 450 scenario, models a world where carbon emissions are limited to levels consistent with global temperatures increasing by just 2 degrees Celsius. This scenario outlines a set of policies and actions that would produce a trajectory of energy related greenhouse-gas emissions consistent with this international goal.

India's coal demand, by scenario

Australia to contribute $930 million to Asian Infrastructure Investment Bank, Joe Hockey says

Australia will become a founding member of the Asian Infrastructure Investment Bank (AIIB), Treasurer Joe Hockey has announced.
Mr Hockey has committed to contributing $930 million into the bank over the next five years, making it the sixth largest shareholder.

New Beijing-backed Asian Infrastructure Investment Bank struggles to convince on environment and sustainability issues

Indonesia’s Ministry of Finance was quoted praising the AIIB's readiness to provide USD 1 billion in loans to Indonesia over the next four years, including for coal-fired power projects

Friday, May 6, 2016

Greg Hunt ignores coal mining impact on Great Barrier Reef

In the outline of submissions filed on behalf of Minister for the Environment, the Australian Government Solicitor explains that the minister did not think the burning of the coal “would be a substantial cause of climate change effects” and would have “no impact on matters of national environmental significance”.
He concluded that there “was no requisite relationship between combustion emissions and increases in global temperature”.
Further, the minister argued that since the net impact was “difficult to identify”, there was no need to impose conditions on the mine, such as that climate impacts would be offset.
“Put simply, because any increase in net global greenhouse gas emissions was a matter of speculation, there was no need for or utility in the imposition of conditions.”
These submissions on behalf of the minister fail to mention fugitive emissions from coal mining. His department revised projected fugitive emissions from coal mining in 2014-2015, dramatically lowering the 2012 projected impact of coal mining. 
Fugitive emissions projections

Australia’s emissions projections 2014-2015

Department of the Environment, March 2015


“In 2013–14 fugitive emissions from fossil fuels were 41 Mt CO 2 -e. This represented eight per cent of Australia’s total emissions. From 1999–2000 to 2013–14, fugitive emissions grew by 3 Mt CO 2 -e, or seven per cent.
Fugitive emissions arise from the production, processing, storage, transmission and distribution of fossil fuels such as coal, oil and natural gas. The greatest share of fugitive emissions comes from coal mining activities, including a small amount of emissions from decommissioned mines.
Rising export demand for Australia’s energy resources, particularly coal and LNG, is expected to lead to large increases in production volumes and fugitive emissions over the projections period. From 2013–14 to 2034–35, Australian coal production is expected to continue its recent strong rate of increase as global demand, particularly in China and India, increases.” (page 20)

Changes to the National Greenhouse Gas Inventory

“The incorporation of new NGERs data has resulted in recalculations throughout the time series for open cut coal mines and fugitive emissions from natural gas transmission sectors.” (page 29)

Changes to the emissions outlook

“Emissions from fugitives are projected to be 25 Mt CO 2 -e lower in 2019–20 than reported in the 2013 Projections. In particular, projections of fugitive emissions from coal mines are lower as a result of three main factors. First, production forecasts have been revised downwards since the 2013 Projections, after recent falls in global coal prices caused by surplus supply and relatively weak demand. Second, the projections assume a higher rate of flaring than in the 2013 Projections. Third, more accurate emissions factors have been applied.” (page 29)

Australia’s emissions projections 2015-2016

Department of the Environment, December 2015

This publication has been relabelled "Tracking to 2020: an interim update of Australia's greenhouse gas emissions projections" and further revises downwards fugitive emissions from coal mining.



"Fugitive emissions from coal are projected to be around 9 Mt CO 2 -e lower in 2019–20. Australian coal production, although expected to grow strongly, is projected to be lower than in the 2014–15 projections.

This is due to:
  • world coal supply growing faster than import demand, and coal prices falling as a result; and
  • a number of high cost producers having ceased production." (page 25)

Greg Hunt's approval for the massive new Adani coal mine seems in conflict with the reasons his department has lowered projected fugitive emissions from coal.

Encouraging workforce participation

Leigh Sales' interview with Labor Leader Bill Shorten on ABC730 on 5 May 2016 drew questions from an article in The Australian on 13 February:
"The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government...

There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among them 1.9 million are working age households."
Leigh Sales - 730 Report

The answer to those questions Leigh Sales asked was contained in the same article:
"As far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a ­prisoner of demography.
If society wanted families to have children, this was part of the deal." 
That some number of households may be "net beneficiaries of the tax and transfer system" during part of their working lives is a sore point in the Abbott and Turnbull Coalition Government.

An article "Half of families pay no net tax if welfare benefits deducted, new figures reveal" published in May 2014 shortly before the Joe Hockey delivered his first budget alleged:
The exclusive modelling for News Corp Australia by the National Centre for Social and Economic Modelling at the University of Canberra reveals 48 per cent of Australia’s 12.2 million “income units” pay no net tax.
What the real figure is remains unclear. Many of the 3.6 million households targeted by Scott Morrison's 2016 budget that are "net beneficiaries of the tax and transfer system" may in fact be retirees living on the age pension.

A set of charts published with the more recent article on 13 February 2016 shows these households targeted in the 2016 budget are mostly "single parent" working households and "older" households that aren't of working age.

Who pays net tax and who doesn't

Child care and other family allowances enable workforce participation for people who otherwise would not find it economic to work. This creates jobs in the child care industry, boosts economic output in the businesses in which they are employed, and increases revenue and profits for businesses where these families do their shopping.

Cutting transfer payments to these families disadvantages everyone: lowering workforce participation will reduce jobs and growth.

As children grow up, attend school and then leave home these families may well become net contributors of tax, that is used to help younger families just as they were once helped, and to help provide the age pension to others, until they themselves eventually retire and once again become net receivers of tax transfers.

It is simplistic and naive to ask whether such an arrangement is "fair" or "acceptable". An objective understanding is that it makes bloody good sense.

The Coalition Government made the same simplistic error with its thought bubble of imposing high tax rates on backpackers who generate income for Australian farmers.  The likely effect will not be an increase in Government revenue at all. The backpackers will simply choose different holiday destinations, crops will go unharvested, farm income will fall and Government revenue will be slashed.

Such naive measures that haven't been thought through will reduce workforce participation.

They are destructive of jobs and growth.

Bill Shorten explains the opposition's response to the federal budget

Labor Leader Bill Shorten faced Leigh Sales on the ABC’s 7.30 Report last night on his budget reply speech.
Mr Shorten’s claims that a mother on $65,000 with high school aged children will be worse off under the budget plan faced scrutiny.
Leigh Sales claimed that about half of Australian taxpayers, or 3.6 million households, get more in benefits than they pay in tax and asked if Mr Shorten thought that's acceptable.

Sales: Let’s go straight to the Budget, you seem upset that the Budget isn’t giving every last Australian a direct handout. Is that your idea of responsible economic stewardship?
Shorten: Well, it’s a question of priorities, Leigh. What we believe is that the Government shouldn’t be giving millionaires a $17,000 tax cut whilst a working mum with two kids at high school on $65,000 is actually facing losing over $4,700...
Sales: Sure, but let’s stick for the moment with the low income earners that we’ve been talking about. Many people under $80,000 a year get more in Government handouts than they pay in tax.
Shorten: Oh, I think if you look at who does best out of the system it’s the very high net worth individuals.
Sales: But that’s true isn’t it what I just said.
Shorten: Well, actually, I don’t agree that Australians who get child care funding from the federal government are getting as much as the people who get the tax subsidies from negative gearing.
Sales: But the people who are getting tax subsidies are actually paying the taxes that pay for the other people who aren’t paying any tax to have child care.
Shorten: I think, if this country - if the argument that the Liberals are advancing is that because you’re rich and you pay the taxes you’re meant to pay, somehow you’re at a disadvantage to people who are poor...
Sales: With - just to return to my point about households. According to the ANU Center for Social Research, 3.6 million households get more in handouts than they pay in tax. That’s about a third of families. Do you think that’s acceptable?

3.6m households pay no net tax after churn

The Australian |
The one-third of working households receiving more in government benefits than they pay in tax — many of them families — will be targeted by the federal government [emphasis added] in a bid to make the system fairer, cut spending and rein in waste.

Scott Morrison, Social Services Minister Christian Porter and their departments are working on ways to untangle the tax-and-transfer system with a focus on the 3.6 million households who are net beneficiaries of government payments.


 “We actually have an earnings problem in this country,” Mr Morrison told The Weekend Aus­tralian. “People are not earning enough. The country needs to earn more. And the tax burden on the earners in this economy is something that is a very high economic goal that we have to ­address. Fairness is a two-way street. You’ve got to look at the fairness to those who receive the benefits, but it’s got to be fair on those who are paying for it.”


Modelling by the Australian National University Centre for Social Research and Methods using 2013-14 ABS Survey of Income and Housing data paints a picture of these households, setting them squarely in the territory of “Howard’s battlers” who swept the conservative prime minister to victory in 1996.

There are 3.6 million households that are net beneficiaries of the tax and transfer system out of 8.8 million and among the 1.9 million working age households, 608,509 of these are couples with dependent children.


ANU Centre for Social Research and Methods research fellow Matthew Taylor said: “People get a bit excited about the lifters and leaners rhetoric but I would suggest, in as far as the objective of the system is lifetime income smoothing, the percentage of net taxpayers is to some extent a ­prisoner of demography.”

If society wanted families to have children, this was part of the deal, he said.