Can Australia reach its climate targets?

The May 2022 election has frequently, rightly, been termed the climate change election. Yet on Tuesday, almost a year on, the word “climate” was not uttered even once by Treasurer Jim Chalmers in his budget speech.

This was an interesting omission. Multiple post-election surveys showed climate was the No. 2 concern of voters at the election and played a big part in moving votes from the Coalition to Labor, the Greens and independents.

The election was 11 interest rate rises ago, though. While the worsening climate crisis remains a major concern for progressives, particularly younger ones, at a time of elevated economic worries among Australians struggling to keep up with the growing cost of living, the treasurer obviously decided on a change of emphasis.

Climate-related initiatives were in there but were presented as economic measures aimed at “powering new jobs and new industry in our regions and suburbs”.

“Australia’s biggest opportunity for growth and prosperity is the global shift to clean energy,” said Chalmers, as he announced $2 billion for a new program named Hydrogen Headstart – the details of which are yet to be worked out – to encourage the production of green hydrogen to power industry and for export.

“Hydrogen power means Wollongong, Gladstone and Whyalla can make and export everything from renewable energy to green steel,” he said.

“Seizing these kinds of industrial and economic opportunities will be the biggest driver and determinant of our future prosperity.

“This budget allocates $4 billion to realising our future as a renewable energy superpower.”

Apart from the hydrogen policy, the other major initiatives of the budget went to energy efficiency measures, which makes environmental sense, given Australians are among the most profligate users of energy and have one of the biggest per capita carbon footprints in the world. They, too, were presented as cost-of-living measures.

A billion dollars will be provided in low-cost loans to 110,000 households to incentivise the shift to “battery-ready solar PV, modern appliances and other improvements” such as double glazing.

Another $300 million will go towards upgrades to 60,000 social housing properties, while $310 million will be given as tax relief for businesses to make them more energy efficient.

The balance of the $4 billion in new spending to which Chalmers alluded was made up of a raft of smaller initiatives, the largest and most important of which was $83 million to fund the previously announced national Net Zero Authority. This is intended to ease the transition of workers and businesses out of high-emissions industries such as coal power into new clean energy industries.

The announcements were widely welcomed by industry and environment groups, but, with the exception of the $2 billion to incentivise green hydrogen production, were hardly transformative. The money going towards making Australian homes cheaper to heat and cool, for example, simply aims to catch up with most other developed nations, whose buildings already are far more energy efficient.

The numbers look somewhat less impressive, too, when set against what other nations are doing. One budget night story in The Australian Financial Review on the hydrogen scheme compared it unfavourably with the “US government’s $US374 billion ($550 billion) green industry policy juggernaut, which includes production tax credits of up to $US3 per kilogram for hydrogen”, and suggested Australia risked falling behind as the United States and the European Union engaged in a so-called subsidy arms race.

Environment groups complained that the government continues to spend huge sums on subsidies for fossil fuel companies. In its response to the budget, the Australian Conservation Foundation (ACF) noted those subsidies would amount to some $50 billion over four years.

Chalmers’ first full budget is a good opportunity to assess how Australia is progressing on what he has called “the path to net zero”.

In evaluating this, there is an important distinction to be made between the Albanese government’s approach to domestic emissions and exported emissions – those produced when Australian coal and gas are burned overseas.

On the latter, environment groups say, little has changed. The new government is no less encouraging of new fossil fuel projects than its predecessor. Its rationale is that under the international rules, the greenhouse gases emitted by the burning of Australian coal and gas in other countries is the responsibility of those countries, and that, so long as there is a market, we can legitimately supply it.

On the domestic front, the first year of the Labor government has been marked by significant progress – albeit off the very low base set by the Coalition.

“To this government’s credit,” says Amanda McKenzie, chief executive of the Climate Council, “they have got a strong program of work, and they’re progressing it.”

In Climate Change and Energy Minister Chris Bowen, she says, “what I see is a minister who is very committed to the agenda that was promised at the last election, and getting it done and getting it done efficiently”.

McKenzie enumerates a number of big changes – either completed or in progress – beyond those in the budget.

“Most obviously the increase in the climate target is one of the first acts of government,” she says.

That target, for a 43 per cent reduction in Australia’s emissions by 2030, was a big improvement on the 26-28 per cent under the previous government.

Among measures directed towards hitting that target, and which McKenzie says have “impressed”, include the passage of the safeguard mechanism, which will progressively lower the permissible levels of emissions from Australia’s 215 biggest climate polluters, forecast to force them to cut their cumulative carbon footprint by 205 million tonnes this decade. Also in the works are new fuel efficiency standards, which will force carmakers to sell less-polluting vehicles, including electric cars.

There are many more. This includes a portion of the $15 billion National Reconstruction Fund, which Chalmers says will go towards supporting the development of green industries.

Then there is the Rewiring the Nation proposal to provide $20 billion of equity equally over three years towards building, managing and operating a transmission network, vital to connecting new renewable generation.

The ACF is in the process of compiling a scorecard, and though it is not yet finished, says Gavan McFadzean, the foundation’s climate change and clean energy program manager, “there is an increasingly good story to tell on domestic emissions reduction”.

“The data we see tends to tell us that, at the moment, we’re on track to slightly overshoot 43 per cent, but we think that when the government releases new vehicle emission standards they look good to make the 43.”

There are caveats, of course. Although the government looks increasingly likely to make the emissions reduction target it has set itself, there are questions about the adequacy of that interim target, if we are to meet the ultimate goal of net zero emissions by 2050.

“That 43 per cent is at the very lowest end – some might even say just outside the net zero by 2050 trajectory. You really should be around 50 by 2030,” says McFadzean.

“And of course, as we know, in 2025, the global community will be requiring a 2035 target that will need to be substantially more ambitious than that.”

He notes Australia’s ambition to jointly host, along with Pacific nations, the United Nations Climate Change Conference of the Parties, COP31, in 2026.

“The only way it will get a COP, via joint presidency with the Pacific, is by doing a lot better than 43 per cent,” McFadzean says.

The big worry is that, in the interim, what he calls “the elephant in the room” of Australia’s greenhouse emissions will be exposed for all to see.

That elephant is methane. Australia produces a lot of methane, in a variety of ways: from the digestive process of cattle, from gas leaks and also from coalmining. Exactly how much we produce is a matter of contention, but there is a growing body of evidence that it’s a lot more than the government officially admits. It is also a far more powerful climate warming gas than carbon dioxide.

“The International Energy Agency estimates that Australia underreports methane emissions on the global stage by about 60 per cent,” says Annica Schoo, ACF’s lead environmental investigator and a former bureaucrat with the federal Department of Environment and Energy. “The latest on Australia’s methane emissions from the IEA is 2.23 million tonnes of methane. Our federal government reckons it’s 1.37 million tonnes.”

Most of that extra methane, the suspicion is, leaks from open cut coalmines.

“If you’re an underground coalmine, and all of your emissions leave the mine through that specific vent, you’re able to measure your methane emissions fairly accurately,” says Schoo.

“But if you’re an open cut mine, your coal seams are just exposed to the environment and methane is sort of just leaking out into the atmosphere as you go. It has been really difficult to measure that.”

That measurement problem, however, is close to being solved through rapidly evolving satellite technology.

In the case of underground mines, she says, the currently available satellite data accords pretty closely with company reporting. But with open cut mines, there are huge disparities between what the satellites are seeing and what mining companies report to the government.

“If you take Glencore’s Hail Creek mine in the Bowen Basin, in Queensland, it reports about 10 per cent of the emissions that are picked up through satellite detection,” Schoo says.

It’s not only currently operating mines whose emissions are being picked up, either. Old mines, no longer subject to on-the-ground monitoring, are also shown to be continuing to leak large quantities of methane.

The government, says Schoo, will eventually be forced to rely on this new source of data. When that happens, as it must very soon, the consequences will be huge. Put simply, it will make it very difficult for the country to meet its 2030 targets on the basis of current policies.