More than $5.5 billion has been spent by federal governments during the past decade on climate change programs that are delivering only small reductions in greenhouse gas emissions.
An analysis of government schemes designed to cut emissions by direct spending or regulatory intervention reveals they have cost an average $168 for each tonne of carbon dioxide abated.
While some have reduced emissions cost-effectively, many of the more expensive schemes are exorbitant ways of tackling climate change, costing far more for each tonne of carbon avoided than any mooted emissions trading scheme or carbon tax.
The worst offenders have included the Labor government’s rebates for rooftop solar panels, which cost $300 or more for every tonne of carbon abated, and the Howard government’s remote renewable power generation scheme, which paid up to $340 for each tonne of carbon.
By contrast, the proposed emissions trading scheme blocked by the Coalition and the Greens in the previous Parliament was expected to put a price on carbon of $20 to $25 a tonne in its early years.
According to Rod Sims, chairman of NSW’s independent energy pricing tribunal and expert adviser to Parliament’s multi-party committee on climate change, the bad policies are eroding public support just when it is needed to finally establish a price on carbon.
”Some of these schemes were dreamed up because we weren’t doing the substantive things but some are amazingly expensive, and when we feel the pain of power price rises it lessens the public willingness to accept a sensible and efficient carbon price,” Mr Sims said.
”We’ve drawn down on our political capital with little to show for it and it’s going to make sensible action harder.”
The analysis of 17 federal programs with a total cost of $5.62 billion shows many of the schemes implemented by both sides of politics are at odds with the policy goal of tackling climate change at the lowest cost to the economy.
An investigation estimated the fiscal abatement cost of each scheme - the amount of government funds spent for every tonne of carbon abated.
This measure is designed to show how much environmental ”bang for the taxpayer buck” each program delivers. It does not include the costs or savings to households, businesses and other non-government players in the economy.
Fiscal abatement costs ranged from less than $1 a tonne for regulations phasing out greenhouse-intensive hot water systems and incandescent light bulb, to a high of $400 a tonne or more for tax breaks and production subsidies for ethanol introduced by the Howard government.
The Rudd-Gillard government’s household insulation program cost $172 a tonne, its rooftop solar panel rebates cost $300 or more a tonne, and its collapsed Green Loans program cost $120 a tonne. The Howard government’s remote renewable power generation program cost as much as $340 a tonne.
The weighted average fiscal abatement cost of all 17 programs examined came to $168 a tonne.
They will deliver about 25 million tonnes of carbon abatement in 2020 - less than a tenth of the total abatement needed to meet the government’s target of reducing emissions in 2020 by 5 per cent on 2000 levels.
By comparison, the main existing market-based scheme, the renewable energy target, will deliver more greenhouse gas reductions in 2020 than all 17 spending programs combined, with an estimated implicit carbon price of $38 a tonne.
The associate director of the Australian National University’s centre for climate law and policy, Andrew Macintosh, said: ”Market-based measures like a carbon price will be far more effective than this sort of scattergun approach.”
He called on the government to release its own estimates of the cost-effectiveness of climate change programs.
”The government is in a superb position, with the resources of Treasury and the Department of Climate Change, to calculate the marginal carbon abatement costs of its programs,” he said.
”They should publish those costs and, where the estimates are high, they should justify why we are investing in those programs.”
