Australian news, and some related international items

Abbott’s Direct Action climate policy no help to small and medium businesses

Small and medium businesses locked out of ‘direct action’, Coalition warned Coalition’s emissions reduction fund is ‘unlikely to be able to be accessed by small to medium enterprises for building upgrades and energy efficiency’, according to Senate submission The Abbott government has been told its signature “direct action” climate policy could lock small business out of funding to improve energy efficiency, and create broader risks for the economy in terms of growth, technological innovation and job creation.

The Coalition has also been warned explicitly that the success or otherwise of direct action is “co-dependent” on what other policies and regulations remain in place – particularly the renewable energy target (RET) that the prime minister has signalled could be wound back, or scrapped altogether.

The Clean Energy Finance Corporation (CEFC) – a financing body the Coalition wants to scrap along with Labor’s clean energy policy – has used its submission to a Senate inquiry into direct action to argue that successful greenhouse abatement requires both policy and regulatory certainty, and the right incentives to ensure emissions are reduced at the lowest possible cost.

The $10bn “green bank” says the proposed design of the Coalition’s emissions reduction fund – the centrepiece of direct action – “must address the challenges experienced by abatement project developers in obtaining upfront finance to implement abatement projects.”

“In particular, the proposed five-year forward contracts will be insufficient and may need to be for longer than five years’ duration to be effective in attracting the necessary finance for abatement projects,” it says.

The emissions reduction fund is due to start buying abatement from July this year.

The CEFC says the fund as foreshadowed is “unlikely to be able to be accessed by small to medium enterprises for building upgrades and energy efficiency” and this means the economy could forgo benefits including competitiveness, technological development, innovation and jobs growth.

It also says the efficacy of direct action in meeting its stated objectives depends on whether or not the large-scale renewable energy target and the small scale renewable energy schemes remain in place.

If the renewable energy target is gutted or goes, the government may not be able to deliver its own policy, it says. “It is possible that the removal or substantial downscaling of the RET may revive the profitability of more carbon intensive forms of energy, and make the direct action task harder,” the submission says.

Abbott signalled before Christmas that the RET could be wound back or the scheme scrapped altogether.

Opponents of the RET inside the Coalition party room have long contended that it drives up power prices. Maurice Newman, a key business adviser to Abbott, is another trenchant critic.

The Coalition promised pre-election to review the target. In sending a broad signal that it could be wound back, the prime minister said his government was focused on reducing electricity prices.

The CEFC also points out in its submission that the new government’s plan to abolish it is not cost-free. Treasury’s economic forecasts put the cost of carbon price repeal at more than $7bn.

“The policy intent to abolish the CEFC is estimated to cause a loss to the budget of between $125m and $186m per annum once the corporation’s investment base reaches $5bn – that is half of its $10bn funding allocation,” the green bank says.

The CEFC says it could still play a significant role in meeting the objective of lowering carbon pollution if it was allowed to fulfil its mandate. “There is significant abatement opportunity that will be lost without the CEFC as there are real market barriers otherwise unaddressed,” it says.

January 28, 2014 - Posted by | AUSTRALIA - NATIONAL, politics

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