Carbon Politics Down Under

The final word in my short recent series on the developments in carbon policy in Australia should be given to Clive Spash , who was there on the inside and, as an academic economist of the social-ecological position, in a strong position to analyse the policy outcomes from a planetary perspective.

Spash has produced a paper describing how Julia Gillard was able to depose the previous Prime Minister Kevin Rudd, also of the Labour Party, because of the unpopularity of his carbon emissions trading scheme. The powerful mining sector lobbied strongly against this and the opposition thus generated, most on the basis of untrue claims about the effect on ordinary Australians, allowed Gillard to successfully challenge Rudd and create a new government with support of Green and independent MPs.

Spash describes how the political compromise involved a temporary carbon tax for three years, to be followed up by an ETS very similar to that which had been proposed by Rudd and at considerable political cost:

'That cost extends to allowing major emitters to make guaranteed windfall profits from pollution permits. The emission trading scheme suffers numerous problems, but the issues raised show taxes can also be watered down and made ineffectual through concessions. Taxpayers will get no assets from the billions of dollars to be spent buying-off the coal generators or other polluters. The scheme hopes to stimulate private investors to create an additional 12 percent in renewable electricity generation by 2020.'

Spash sets a much more stringent target of a wholesale shift to 100% renewable energy within a decade, the only proposal he considers 'serious' given the urgent nature of the issue of climate change. His working paper explores the difficulties of implementing meaningful greenhouse gas taxes in Australia.
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Defending Dissent

In support of the courage of dissenting economists I posted the news that Clive Spash had been forced to resign from his post at Australia's publicly-funded research body CSIRO almost exactly two years ago. The political disagreements over how Australia, one of the greatest carbon emitters per head of population, should address its climate sins, has resulted in the carbon tax also discussed recently on this blog.

The behaviour of CSIRO has now reached the Australian parliament, with questions raised over CEO Megan Clark's involvement with financial organisations involved in carbon trading and the fact that Simon McKeon, executive chairman of Macquarie Bank’s Melbourne office, was appointed as CSIRO’s chairman. In connection with the paper 'The Brave New World of Carbon Trading' that was at the heart of the dispute, Senator Colbeck asked:

'CSIRO’s internal review concluded that the original paper did not report new research or present empirical evidence to support all of the authors’ conclusions. The paper was also viewed as offering opinion on matters of government policy by applying a critique of neoclassical economic theory to the ETS. Therefore it was not approved for publication. Were those issues to have been rectified as CSIRO strived to do with Dr Spash, CSIRO would have supported the publication of that paper and any public comments that related to the papers findings.'

As Peter Earl notes in his post on the Real World Economics blog:

'This organisation apparently rejects institutional analysis, historical analysis, descriptive analysis and policy analysis . . . it is now evident that the fact that [Spash's] critique was levelled against the use of neoclassical economics as foundations for the policy was the heart of the problem. Their statement explicitly supports neoclassical economic theory and rejects anything critical of that theory because it is being used to support carbon emissions trading. According to the CSIRO this was not about the content or politics!'

This is a rare explicit statement of the role that neoclassical theory plays, much more one of catechism than of scientific theory. As the global economy spawned by four decades of neoclassical theory founders between the Scylla of ecological disaster and the Charybdis of the renewed credit freeze, we need thoughtful pragmatic economists like Spash more than ever.
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Kevin Rudd: My Part in His Downfall

This is my title but, as you will see from this guest post by Clive Spash, a not entirely inappropriate one. Kevin Rudd may come to be seen as the first premier to become a political victim of climate change.

Rudd's Demise and Corporate Power
by
Clive L. Spash

The demise of Kevin Rudd leaves some stark questions as to how Australia will ever tackle the power of the resource extraction sector. Rudd is cited as having become unpopular for having dropped a carbon emission trading scheme and for having advocated a tax on the mining sector.

Was Rudd wrong to ditch carbon trading? Clearly not in my opinion. Amongst many issues, the scheme (originally developed under the Howard government) was set to transfer billions of dollars to the coal and aluminium industries in 'compensation' and was designed to achieve no domestic reductions, pushing action onto the poor in other countries. Yet Rudd and his party refused to recognise such issues and only abandoned the scheme under political duress. Indeed explaining the general problems with such schemes, in academic terms, led to my own work being banned, subject to censorship and led to my resignation as a senior Australian civil servant. Is this something for which Rudd or his government could be blamed or is there a deeper malaise in Australian politics?


In November last year, the Australian Senate had a special one hour debate on whether the Rudd government was undertaking censorship. Rudd's party colleague, Minister Kim Carr, responsible for the CSIRO where I worked, later tabled a letter by the head of the organisation, Megan Clark, making a series of false allegations against me. Megan Clark is herself a former mining corporation (BHP Billiton) executive. In February this year, in a Senate Estimates Committee, the two attempted to deride my work on emissions trading and question its quality (despite its acceptance in a journal The Australian Research Council ranks as ‘A’ listed under its programme for Excellence in Research for Australia). Minister Carr readout a few selected phrases from a four page confidential journal referees report which can only have been placed in his hands by the CSIRO. These individuals have failed to suppress the work or damage its credibility, but what they did do was to expose the links between a Minister and the supposedly independent results coming from a government research agency. Carr also exposed the readiness of a Minister to place his own opinion above the scientific peer review process.

Rather than the Rudd government attacking alternative voices on climate change policy they should have been listening. They might then have developed a more sensible approach to tackling human induced climate change than the second hand policies of their opponents. Environmentalist should remember that Rudd's action of signing Kyoto meant not cuts in emissions but actually a commitment to an increase of 8 percent over 1990 levels. Rudd offered no alternatives to the rejected emissions trading scheme and seemed at a total loss as to what to do next. This failure to explore alternatives appears to be a long running Australian government problem, not just restricted to Rudd. For example, if research had been ongoing in a fair and open manner Australia might by now be leading the world in the renewable energy sector. Instead it is leading the world in resource extraction and sales of coal, especially to China.

Recent attempts to fund renewables also appear to have gone astray. Energy Minister, Martin Ferguson's solar energy flagship has been criticised as excluding those with the most advanced technology and best experience. Instead the short listed companies included some highly questionable fossil fuel corporations with little or no experience of large scale solar. The flagship was floated short on funds and with little regard to the requirements for creating and sustaining a solar sector. Ferguson has also appeared on television defending large greenhouse gas emitting energy technologies. He has stated the government does not select winners and these things should be left to the market (http://www.abc.net.au/lateline/content/2010/s2842402.htm). That markets are structured institutions set-up by social rules of governance and public policy seems to have slipped his notice, or perhaps not!

Rudd's own failure seems to have been one of too slowly becoming aware of where power lies in Australia. The final substantive act of Rudd's government was to try taxing super profits in the mining sector. This led to BHP, Rio Tinto, Fortescue Metal, Santos and the Minerals Council of Australia spinning propaganda about the tax destroying value for the miner and the nation. Opposition from Western Australia and Queensland inevitably followed. The fact that Rudd was overthrown from within his own party highlights the sensitivity of Australian politicians to mining interests.

The downfall of Rudd indicates on-going problems within Australia of how to control big coal, big mining and international corporations. Things could have been different. A politician brave enough to face down the climate sceptics while admitting emissions trading is a flawed approach should have offered real alternatives. A politician ready to take-on the mining sector and bring-in a serious resource tax should have been ready to first fight the same vested interests to put in place a tax on greenhouse gases. Revenue could then have supported a transition of the economy. A politician ready to seriously support a renewable energy sector could have taken Australia into a new era and weaned it off coal. Instead half hearted attempts at ill-conceived policies have left Australia as the biggest per capita carbon emitter in the world with a political economy heavily invested in exploitation of the environment. Tweet

Shooting the Messenger

As the political and economic implications of climate change become clearer, the response from the politicians and the corporate elite who dominate politics will be to pressurise scientists not to blow the whistle. On Monday I was at a public policy seminar in London where Professor Kevin Anderson from the Tyndall Centre publicly admitted that he and his colleagues had spent years sweetening the pill on climate change so as not to cause political offence and damage his chances of receiving research funding. 'Nobody would be funded to find that globalised capitalism is the cause of the problem', he said, a view which I was able to support based on my personal experience.

And now another leading climate academic has had to leave his job for telling the truth about the sorts of changes that are needed to protect the human species from the corporate machine that is destroying our planet. Dr Clive Spash resigned yesterday from his job at Australia's CSIRO so that he would be free to seek the truth about the economics of climate change.

His excellent report 'The Brave New World of Carbon Trading' is due to be published in a peer-review journal early next year and so has already been subject to academic scrutiny. But because he finds that carbon trading will not be effective in addressing the problem of CO2 emission - and in fact doesn't really make sense in terms of economic theory – his employers demanded that he change his findings.

Spash was told that he was in breach of CSIRO policy, which restricts its scientists from making statements about public policy. Put together with the limitations on research funding for academics identified by Kevin Anderson this removes livelihood options from environmentally focused academic researchers unless they are prepared to toe the corporate line.

The climate change debate is hotting up in Australia, having nearly caused an emergency election last week, so Spash's claims that he was being censored forced his boss, Megan Clark, to publish the report on November 26th, but only on the condition that the scientist would be punished for refusing to change his findings. Under intense pressure, Dr Clark publicly released the report on November 26 but warned Dr Spash that he would be punished for his behaviour and his refusal to amend it. Spash, who has been suffering from stress as a result of his mistreatment, consequently decided to resign.

To find out what all the fuss is about read Clive's paper. Tweet