“The Minister will not be commenting on budgetary processes,» a spokesman for Minister Price said. “The government has a range of policies to address climate change, the centrepiece of which is the Emissions Reduction Fund, which has been very successful in driving low-cost emissions reductions.»
It is understood that any additional money would need to be large enough to signal the Coalition is serious about the issue since a paltry increase would merely serve as «a red flag» to critics who say the Morrison government is taking little climate action.
Australia’s national emissions reached a seven-year high in the 12 months to last June, a trajectory at odds with the country’s Paris climate commitment to cut carbon pollution 26 per cent from 2005 levels by 2030.
A sense of urgency that a stronger message was required from the government has been lately fuelled by the emergence of a slew of independents who plan to challenge sitting Liberal MPs on their climate records at the May election.
‘Not permanent policy’
While the ERF has its critics, industry bodies such as the Ai Group say they would welcome extra money going to emissions reduction efforts.
“The Emissions Reduction Fund is not a comprehensive or permanent approach to climate policy, and it would be expensive and impractical to try to make it so,» Ai Group chief executive Innes Willox said.
«But the ERF has played an important role in growing and sustaining a range of offset activities that Australia will badly need as we work towards our long-term emissions goals.»
Ai Group would support a funds top-up large enough «to allow several more years of auctions» while the country develops «more durable climate policies across the economy», he said.
Apart from plugging a policy hole, extra ERF money has added appeal for a government seeking to campaign for re-election on its budgetary management achievements.
Since many of the 477 projects already committed involve a string of payments out over a decade, the upfront hit to the budget is only a fraction of the total.
About five years in, payments to the end of last year tally $476 million — or less than the quarter of the total committed in the eight auctions so far.
$10 billion bill
Tim Baxter, a researcher at Melbourne University’s Australian-German Climate and Energy College, said the average price per tonne – mostly for landfill gas and avoided deforestation projects – had generally been rising as the cheapest options were used up.
The eighth auction cost $13.87 per tonne of carbon abated, compared with about $12.50 on average.
Whatever the government offers with this new round of funding, it probably won’t be enough, Mr Baxter said.
«By the government’s own numbers, we are set to miss our Paris target by 695 million tonnes,» he said. «If the government plans to meet Paris with the ERF, they would have to spend upwards of $10 billion, and I can’t see that happening.”
Peter Hannam writes on environment issues for The Sydney Morning Herald and The Age.