Australia, climate free rider or free falling?
When it comes to global climate change, Australia is looking more and more like an exemplar of the free rider.
Commonly known in economic and political theory, a free rider is one who benefits from a good made possible by the collective actions of others, but refuses to contribute their share towards that good. This article will outline recent actions of the Australian government, with particular analysis of its recent budget, and will argue that Canberra is attempting to free ride on the efforts of other nations when it comes to tackling climate change. Yet, as the rest of the world moves to deal with global warming, Australia may find itself playing a losing game.
Climate change and the ‘free rider’ problem
Academics and commentators sometimes describe climate change as a particularly knotty prisoner’s dilemma, in which – as Stephen Gardner explains - it is collectively rational for all countries to contribute to the cost of tackling the problem, but it is individually rational for each country to avoid paying the cost. On the short-term view, the cost of acting to mitigate emissions is greater than the benefit of free riding on the mitigation efforts of others. So while world governments have committed to keeping global warming within two degrees above pre-industrial levels, national governments – mindful of domestic priorities - have not acted consistently with meeting that goal. Almost everyone, it seems, wants to be the free rider.
Presenting the findings of the Fifth Intergovernmental Panel on Climate Change (IPCC) late last year, Co-Chair of Working Group 1, Thomas Stocker, emphasized that, ‘…scenarios that envisage continued carbon dioxide emissions or postponed reductions of these emissions, indicate that options of limiting global warming to 2°C may become unattainable.’ In other words, we need to rapidly cut our emissions if we’re to have any hope of achieving the 2 degree goal. Following the expiry of the first commitment phase of the Kyoto Protocol – and with it the legally binding targets set by developed countries - hopes for a binding climate deal are now pinned on Paris 2015. Ideally, a legally binding international agreement will bring world governments out of their prisoner’s dilemma and make free riding impossible.
Australia, climate backslider?
Australia is already far from pulling its weight globally when it comes to climate change. Under the first commitment period of Kyoto, Australia was one of the few developed nations allowed to increase emissions, managing to secure the so-called ‘Australia clause’ - an eleventh hour land-clearing loophole that meant the country sailed through its target. Australia’s official commitment now is to reduce its emissions by five percent by 2020. Yet recent actions appear inconsistent with meeting even this modest objective.
In a recent analysis of 66 countries’ action on climate change, Australia was one of two countries – Japan was the other - that had regressed by moving to reverse credible domestic climate legislation. Australia’s government has introduced legislation to repeal the country’s so-called carbon tax, pledging to replace it with a policy it calls ‘Direct Action’ – voluntary payments under a form of baseline and credit scheme to businesses which pledge to reduce emissions. This measure is predicted to be highly expensive - as subsidies usually are. Yet the recent budget confirmed that expenditure on the Government's so-called Direct Action climate policy will be capped, irrespective of whether Australia's promised 5 per cent reduction in emissions is achieved.
Additionally, the Australian institutions that helped the country understand and act on climate change have all been weakened. Funding for Australia’s public science institution the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and Bureau of Meteorology has been reduced and the Australian Climate Change Science program amalgamated. The government has also introduced legislation to abolish the Climate Change Authority, the independent body established to advise the government on its climate change targets and policy mechanisms. It recently recommended that Australia aim for a fifteen to twenty percent reduction in emissions by 2020.
The programs and institutions that were helping to make Australia a part of global solutions to climate change have also been cut. The Government's decision to abolish the Australian Renewable Energy Agency is just the latest attack on one of the fastest growing industries in the country, following the introduction of legislation to abolish the Clean Energy Finance Corporation, and coinciding with the ominous ‘review’ of the country’s primary renewable energy policy driver.
Australia had also promised to contribute to stop the world's remaining rainforests being destroyed, especially next door in Indonesia. Globally, deforestation contributes about 12 per cent to global emissions as well driving numerous plant and animal species to extinction. Australia had previously contributed significantly to international forest and environmental programs, but almost all such funding appears to have been cut. Most of the cash for tackling deforestation previously came from Australia’s Foreign Aid budget, yet aid spending suffered the biggest single cut in the Budget, compromising Australia's promised contribution to the Millennium Development Goals.
At the same time, the recent Budget makes life easier for the small number of coal and other fossil fuel companies who drive climate change – those Tom Burke calls the ‘climate makers’. Corporate tax rates have been reduced and many company tax concessions maintained. Fossil fuel companies keep their fuel tax rebate, gain an exploration development incentive and have been told to expect the repeal of the carbon and mining taxes. In Australia, big business no longer has to pay for the pollution it pumps into the atmosphere.
Australia: free rider or free falling?
This domestic recklessness in dealing with climate change is echoed in the government’s international stance. Australia has gained a reputation for attempting to ‘wreck’ international climate negotiations. After failing to send a Minister to last year’s Warsaw negotiations, the Prime Minister has reportedly indicated he will not attend this year’s crucial climate talks. Australia has sought to create an international alliance against pricing carbon, so far reportedly winning Canada to that ignoble cause. Hosting the G20 summit this year, Australia has refused to allow climate change on the official agenda as a standalone item. Such deliberate sabotage is worse than free riding, and the world can only hope Australia does not succeed in its attempts to derail international progress on climate change.
With his eye firmly on domestic audiences, the Australian Prime Minister Tony Abbott said recently that he would not ‘take action on climate change which clobbers our economy.’ Free riding is only ‘rational’ if the free rider receives a benefit despite their refusal to contribute. The IPCC’s latest report on climate impacts confirms that climate change will hit Australia hard, so Australia’s gamble will only pay off if the rest of the world still manages to take effective global action: either Australia succeeds in free riding, or succeeds in wrecking the game for everyone.
Yet there is a third option: that, as the rest of the world moves to tackle climate change, Australia becomes isolated and losing the game, with stranded coal assets, tourism assets like the Great Barrier Reef degraded by coal expansion, and a workforce unprepared for the decarbonized economy. Already Australia’s trade-exposed coal export industry is being hammered by a depressed thermal coal market, and while analysts debate whether low prices are cyclical or structural, the news that the United States and possibly China are imposing hard caps on coal pollution can be read as hastening structural decline. In this context, the government’s choice to place its faith in coal over renewable energy seems reckless at best. As the rules of the global economy change in response to tackling climate change, Australia’s attempts to wreck or free ride on global climate solutions look increasingly irrational: moves made by a government in climate policy free fall.
