Opposition Leader Bill Shorten has been light on detail but this week did clear up a few things. First, he has confirmed that if elected he will not seek to use so-called ‘carry-over credits’ to meet Australia’s targets under the Paris climate treaty. Because Australia cut emissions by more than it pledged under the Kyoto treaty for the period 2005 to 2020, it could have tried to carry that over as a credit for the new deal for 2020 to 2030.
This sleight of hand would sap Australia’s moral authority to press other countries to act. It has already been rejected by European countries and Mr Shorten correctly described it as “fake action”.
Another new point is that Mr Shorten said he would allow the use of so-called international carbon credits, which sound similar but are very different. Under this policy, Australian polluters would be able to meet some of their emissions reduction targets by paying for climate reduction projects in other countries.
This is what prompted Mr Morrison’s joke in which he speculated Labor’s policy could result in buying emissions credits from Borat’s homeland of Kazakhstan.
It is strange that the Liberal Party, supposedly the party of business, is treating the idea as a joke. Businesses, such as oil producer Woodside, are big fans because it could be much cheaper than cutting their own emissions. Many companies already buy these credits on a voluntary basis as a public relation exercise to help them become carbon neutral. They are attractive because the cost per ton of reducing carbon emissions by, say, planting a forest in Papua New Guinea is currently only a fraction of the cost of doing it here.
Korea has already allowed the use of international permits for its new emissions trading scheme and it is likely they will be used soon in Europe, New Zealand and China to meet Paris commitments.
Yet international credits are not a panacea. For one thing, some of them can be fakes. A decade ago, Chinese companies were discovered to have sold permits based on misleading claims about reductions in carbon emissions from refrigeration gases.
There are also moral issues in foisting the responsibility for emissions reductions on developing countries. Moreover excessive dependence on international permits carries commercial risks. If other countries start to embrace them their price could rise dramatically.
The ALP is right to leave open the door to international carbon permits as a partial answer but it must ensure they are rigorously accredited and must not use them as a substitute for domestic carbon reduction. Most of the heavy lifting will have to be done here.