Voluntary Climate Action Must Count

Growing uncertainty around key policy decisions here in Australia are fuelling confusion and doubt about how best to combat climate change. The government needs to clearly account for voluntary action separately – like buying Green Power –  thereby recognising the additional environmental benefits and preventing free kicks to polluters. A hard hitting exclusive article by Freddy Sharpe, CEO, Climate Friendly.

Article by Freddy Sharpe, CEO, Climate Friendly

Fixing climate change – if it’s worth doing, it’s worth doing well

Headline-grabbing behaviour by carbon companies in Papua New Guinea and the growing uncertainty around key policy decisions here in Australia are fuelling confusion and doubt about how best to combat climate change.

In particular, concerned individuals and businesses who want to do the right thing and voluntarily take action now are at risk of being discouraged from doing anything at all.  Quite rightly, we want to be absolutely certain that our actions are having a direct and meaningful impact on reducing emissions. And recent events do not inspire such certainty.

If you believe the economists, none of us should be acting voluntarily anyway.  Economic theory tells us that public benefit and private cost are not natural bed-fellows.  Strange creatures that we humans are, we would rather wallow in our communal mess than risk giving our fellow citizens a free ride at our expense by paying for the cleanup.  That’s why we have tax and welfare systems, to socialise the costs of what we euphemistically call externalities (minor things like ensuring clean air, healthy people and not cooking the planet).

However, many of us are taking voluntary action on climate change.  Reducing energy consumption, installing renewable technologies like solar hot water and solar electricity, buying green power and purchasing carbon offsets can all make a significant difference to our national emissions. 

As a result voluntary markets are growing rapidly and, in Australia, we are more than doing our fair share.  Last year, the global volume of voluntary carbon trades doubled and, after the US and Europe, we have the largest number of companies taking voluntary action. 

We need to encourage this trend, not undermine it.  There is one particularly bewildering paradox we need to resolve.  As a result of Australia having committed to a binding national target for its emissions by ratifying the Kyoto protocol in January last year, no voluntary activity now undertaken within Australia has any additional impact on our emissions.  In fact, the more that voluntary actions cut emissions, the more room big polluters have to pollute. 

To explain this absurdity, let’s consider an unrelated topic with which we are all familiar – the education system.  The government’s policy on education commits them to providing a certain level of funding for schools.   Imagine if the policy went on to say that, for every dollar of additional funds raised voluntarily by parents (through sausage sizzles and the like), the government would withdraw one dollar.  Overall, the funding target would be met but the incentive for any parent to act voluntarily would be totally removed.

So it is with emission reductions.  The overall Kyoto target will be met, but anyone acting voluntarily is giving a free kick to a big polluter who would otherwise be forced to reduce their emissions. 

A particularly good example of this confusion involves Australian Green Power.  When first introduced, this world-leading scheme allowed concerned electricity consumers to buy power, at a premium, from renewable generators such as wind farms.  Because we had no national emissions target, these purchases were guaranteed both to provide additional funding to the development of clean energy and to make genuinely additional reductions in our overall emissions.  Unfortunately, that second point no longer holds true.  While the context has changed, the scheme has not.

Happily, however, this whole issue can be quickly and easily resolved with a simple policy change.  The government needs to clearly account for voluntary action separately, thereby recognising the additional environmental benefits and preventing free kicks to polluters.

The current state of confusion is compounded by other unanswered questions, such as what (if anything) will replace the Greenhouse Friendly scheme.  This government programme, designed to support Australian voluntary carbon offset projects and which touches many businesses and consumers, is being phased out from July next year.  A key framework for future offset activities, the proposed National Carbon Offset Standard, has yet to be released.  Uncertainty abounds.

As important as policy certainty is the need to ensure trust in corporate behaviour.  The Global Financial Crisis has highlighted the universal truth that ignoring long-term risk for short-term gain will eventually prove our undoing. It’s only ever a matter of time.  It’s certainly true of climate change risk, as the science increasingly informs us.  By the same logic, short term actions that damage trust in the integrity of legitimate carbon markets must be avoided. 

The recent events involving carbon firms in Papua New Guinea highlight the critical importance of robust policy and legal frameworks that protect the interests of all parties.   These need to be supported by rigorous third-party validation and verification of emission reduction activities.  In this way, confidence can be maintained.

If acting on climate change is worth doing, and it certainly is, it’s worth doing well.  Eliminating confusion and ensuring transparent behaviour will provide the certainty and confidence that we need in order to act.

Source: www.climatefriendly.com