Australia will achieve less than a third of the carbon emission cuts it has pledged to make by the end of the decade, analysis firm Reputex said, stoking doubts over the government’s climate policy.
Since taking office last September, Prime Minister Tony Abbott’s government has unravelled a number of the policies and institutions put in place by its predecessor that sought to drive cuts in greenhouse gas emissions.
When the Senate changes next month, the government plans to repeal the nation’s carbon tax and replace it with a A$2.55 billion (HK$18.5 billion) Emissions Reduction Fund that will pay big emitters to cut their carbon levels.
Reputex, a major carbon market analysis firm in Australia, in a report released on Thursday said the fund would fall far short of meeting a target of cutting emissions to 5 per cent below 2000 levels by 2020, meaning it would also miss its international obligations under the Kyoto Protocol.
“The proposed Emissions Reduction Fund (ERF) will be undersupplied when it commences in July, with the government facing a shortfall of over 300 million tonnes,” Reputex said.
Environment Minister Greg Hunt was not immediately available for comment, but responded to earlier criticism of the ERF by saying he was confident Australia would meet the target.
In order to meet the target, Australia must cut around 420 million tonnes of carbon dioxide between now and the end of the decade.
But even if the fund is willing to pay A$20-30 per tonne of CO2 companies can cut, it is unlikely to stimulate reductions of more than 120 million tonnes, according to the report.
If it sets the price around A$10 per tonne, the level the government has indicated it would be willing to pay, emissions are unlikely to drop by more than 30 million tonnes over the period, Reputex said.
The majority of cuts would be made by Australia’s biggest-emitting companies, Reputex said, meaning the biggest polluters would also receive most of the government’s climate funding.
The government plans to launch the fund in July, but has deferred some key decisions on how it will work, such as whether there should be a punishment for companies if their emissions rise, until next year.
“The government has flexibility in how it will ultimately deal with this shortfall, including the ability to set more stringent baselines, to introduce an emissions cap or top-up its ERF funding in subsequent years,” said Hugh Grossman, managing director at Reputex.
Prime Minister Abbott has put economic growth on top of his agenda, and has so far rejected any environmental policies he thinks are costly.
“We should do what we reasonably can to limit emissions and avoid man-made climate change, but we shouldn’t clobber the economy,” he said this week.