Page 296 - Week 01 - Thursday, 11 December 2008
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This legislation had a greenhouse gas emission reduction from 2005-06 of 4.4 per cent and then from 2006-07 of a further 4.8 per cent. There are no further decreases necessary, according to this legislation before us today. The benchmark is now set until 2012 at a flat 7.27 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of ACT population. Extending that benchmark until 2020 is not a strategy, it is status quo. And status quo in terms of greenhouse production is really an increase to the load currently borne by our atmosphere. Actually, it is worse than status quo, given that the ACT government’s own projections show that the ACT population is expected to increase by 12 per cent over the next 15 years. The government is planning around an increase of the ACT population to 500,000 by 2030 and, given that these benchmarks are based on a per head basis, the ACT can abide by the scheme’s benchmarks and still have a large net increase in greenhouse gas emissions.
This is really the crux of the problem. Members may be interested to hear about the work of the Centre for Energy and Environmental Markets at the University of New South Wales. The centre has done extensive research into various energy efficiency schemes and detailed analysis of the New South Wales-ACT scheme over a number of compliance periods. In combination with the problems I mentioned earlier they found that, despite abatement benchmarks being met, actual emissions have risen. Additionality from the scheme—that is, whether change would have occurred anyway—may be quite low, especially given the federal government’s weak mandatory renewable energy target. The abatement certificate database lacks reporting transparency, including uncertainty about the method used to create the certificates, how baselines were calculated and how compliance was achieved. There is evidence of market concentration in just a few types of projects. Waste coalmine gas, landfill gas and natural gas-fired plants make up the majority of certificates.
This scheme does not help progress new types of more sustainable alternative energy sources. The scheme’s performance against the criteria of effectiveness in terms of reduction of emissions efficiency or cost and equity is insufficient for the likely abatement task out to 2020. It is economically inefficient due to the low target, high auditing costs and regulatory overheads. Placing a price on greenhouse emissions is an important function of any emissions trading scheme and is necessary for the capacity building within industry and government required for the transition to a less carbon intensive economy. Unfortunately, the GGAS instead places a price on abatement certificates which represent the absence of imputed emissions with respect to a projected baseline.
It is possible that GGAS could delay meaningful action, not only due to the perception that emissions are being reduced but also because firms that base their business plans on it are likely to actively oppose any changes. The numerous design flaws in the scheme point to a poor design process and there is a clear conflict of interest in IPART being the scheme administrator as well as the compliance regulator with full responsibility for assessing the scheme. This highlights the need for good governance in designing the policies required to reduce greenhouse gas emissions. Baseline and credit schemes such as this one have often proved ineffective as there are inherent problems with compliance auditing as well as additionality. This is one of the reasons that the EU Energy Trading System, the proposed multi-state scheme in Australia, and
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