The victory of the Liberal party in the just-concluded Australian elections will see a new government formed under the leadership of Tony Abbott – the man who, in his campaign, vowed to dismantle the carbon tax introduced in the previous administration. This spells bad news in the fight against climate change, which was shown in a recent study to make extreme weather events more likely in the coming years.  Read more

Climate change to bring more sizzling summers, study says

By Wendy Koch in USA Today (5 September 2013):

Does climate change contribute to extreme weather such as last year’s record heat in the USA? New research suggests that, yes, it increases the likelihood these disasters will re-occur.

New research finds climate change will increase the risk of heat waves in USA

It finds that Sandy-like flooding will become more frequent along the coasts

2012 saw 11 “extreme weather” events costing more than $1 billion in damages

Brace yourself for more hot summers ahead. Extreme weather researchers report on Thursday that climate change makes the searing summer that the struck the United States last year much more likely.

In fact, July 2012-like heat is now four times as likely to strike the Midwest and Northeast as it was in pre-industrial America when less carbon dioxide warmed the atmosphere, according to a Stanford University study. Last year’s heat wave, which peaked in July — the warmest month on record for the contiguous USA — exacerbated the nation’s drought, ruined crops and contributed to more than 100 deaths.

“It was a very rare event. It’s now less rare given current greenhouse gas emissions,” says lead author Noah Diffenbaugh, a climate scientist at Stanford’s Woods Institute for the Environment.

His research is part of a trove of 19 new peer-reviewed studies by scientists worldwide that look at the possible link between climate change and a dozen extreme weather events across the globe last year. About half of the studies say human-caused climate change — due to the burning of fossil fuels and deforestation — contributed to the event examined.

Climate scientists often caution that no single weather event can be blamed on global warming, but Thomas Peterson of NOAA’s National Climactic Data Center says that advances in climate modeling now allow them to “talk” about individual events.

“The models are improving,” agrees Thomas Knutson of NOAA’s Geophysical Fluid Dynamics Laboratory in Princeton, N.J., adding they’re now able to simulate year-to-year climate patterns such as El Niño and La Niña and thus tease out the role of long-term global warming. The studies, edited by NOAA climate scientists, appear as a special supplement in today’s Bulletin of the American Meteorological Society.

Knutson co-authored a study, based on historical data and 23 models, that estimates human-caused climate change contributed 35% to the extreme warmth that swept over the eastern USA from March through May last year. He says the risk of such an event occurring again is at least 10 times more likely.

Another study, led by NOAA’s William Sweet, finds that coastal communities will see “increased frequency” of flooding akin to that in New Jersey and New York after 2012′s Superstorm Sandy because of climate-induced sea level rise. “Events of less and less severity (from less powerful storms) will produce similar impacts,” the study concludes.

Yet these researchers still say that typical weather and climate patterns played major roles in the extreme weather events studied. Diffenbaugh says lack of rainfall was a prime reason for last year’s heat wave, and Knutson — like two French scientists who authored a similar study — sees natural variability as the main culprit in 2012′s warm spring.

The NOAA-edited studies looked at twice as many extreme weather events worldwide — including Kenya’s drought, southeast Australia’s wetness and the Netherlands’ cold spell — as did last year’s compilation of similar research. Indeed, in the USA alone, 2012 brought 11 such events that each caused at least $1 billion in damage.

Diffenbaugh, whose research was federally funded, says understanding the likelihood that these disasters will reoccur can inform efforts to reduce vulnerability and quantify the true societal cost of greenhouse gas emissions.

Source: www.usatoday.com

Explainer: What election result means for carbon pricing

By Elisa de Wit for RenewEconomy  (9 September 2013):

The Government has stated that its first order of business will be repeal of the Carbon Pricing Mechanism (CPM) (or the so-called ‘carbon tax’). In place of the CPM, the Government will address climate change and carbon emissions through its Direct Action Plan (Direct Action Plan). It is intended that implementation of the Direct Action Plan will provide the mechanism for the Government to achieve its commitment to reduce greenhouse gas emissions by at least 5% on 2000 levels by 2020.

Repealing the Carbon Price Mechanism

Assuming the Government sticks to its previously announced deadlines, the Government will introduce legislation to repeal the CPM (Repeal Bill) on the first sitting day of Parliament. The Honourable Greg Hunt has stated that the CPM will then be repealed by April 2014 or, at the latest, by July 2014.

However, as the Government does not currently have control of the Senate, in order to repeal the CPM before 1 July 2014 it will need Labor to support the passage of the Repeal Bill. It remains uncertain whether Labor will agree that the new Government has a mandate to repeal the CPM and therefore whether it will support the Repeal Bill.  Indications prior to the election were that Labor would not countenance reversing its position on this issue.

If Labor does not support the Repeal Bill, then the Government’s ability to pass the Repeal Bill through Parliament will depend on the final composition of the Senate. At the time of posting this article it remained uncertain whether the Government would have a majority in the Senate in its own right from 1 July 2014. If the Government does not achieve the required numbers it has committed to call a double dissolution election. The fastest possible time frame for repeal via a double dissolution is likely to be approximately 8-9 months from the election, but the repeal could potentially take several months longer than this.

Direct Action Plan

The Government aims to commence its Direct Action Plan by 1 July 2014. The Direct Action Plan is an incentive based policy designed to support emissions reduction activities through:

• a capped government fund which will purchase “lowest cost abatement” from projects that reduce or avoid greenhouse gas emissions (Emissions Reduction Fund), and
• the imposition of financial penalties on businesses which exceed their “business as usual” emissions baselines.

The details of the Direct Action Plan will be developed through a white paper process which the Government proposes to start by 7 October 2013. We note that legislation to introduce the Direct Action Plan will be subject to the same hurdles as discussed above for the Repeal Bill.

Although the exact details of the Emissions Reduction Fund will be finalised during the white paper process, it is proposed that Low Carbon Australia will buy the “lowest cost per tonne abatement” from entities which:

• reduce emissions through a project approved under the existing and/or expanded Carbon Farming Initiative (CFI), or
• create abatement by operating below their “business as usual” baseline.

Low Carbon Australia will purchase abatement through a reverse auction where entities can voluntarily place bids based on the lowest price they are willing to sell their abatement for. Low Carbon Australia will be able to enter into forward contracts with entities to purchase abatement which may be delivered up to 7 years in the future. Funding, however, will only be delivered once abatement is actually achieved. The Government is adamant that it will not pick and choose what types of projects it will purchase abatement from, but rather, will simply purchase the lowest cost abatement.

The exact details of who will be liable to pay financial penalties under the Direct Action Plan and the value of these penalties is expected to be finalised during the white paper process. The Government has, however, announced that the “business as usual” emissions baselines will be calculated on an individual firm basis, will be based on a firm’s average emissions over the past five years using data reported via the National Greenhouse and Energy Reporting Scheme and may potentially be linked to a firm’s emissions intensity.

The Government’s targets and approach to emissions reduction will be re-assessed in 2015 when an eight year plan for post-2020 will be developed.

Carbon Farming Initiative

The CFI will continue under the new Government and will be one of the main platforms for developing abatement under the Direct Action Plan. The Government intends to retain the project types and methodology determinations which have been approved to date under the CFI and also proposes to expand the CFI by:

• expanding the types of projects which are eligible under the CFI (for example, adding types of projects which deliver abatement from energy efficiency, waste coal mine gas, transport, composting/recycling etc)
• expanding the methodology determinations which are available under the CFI and in particular speeding up the process to have a methodology determination approved (for example, methodologies from international schemes such as the Clean Development Mechanism are proposed to be imported into the CFI), and
• providing an option for carbon sequestration projects to be carried out with a shorter permanence period of 25 years (instead of 100 years).

Changes in institutional and governance arrangements

The Government has announced that it intends to merge the Commonwealth Climate Change and Environment Departments.

The Government has also committed to abolish the Climate Commission, the Climate Change Authority, the Clean Energy Finance Corporation (CEFC) and the Energy Security Fund. In particular the Government intends to introduce legislation to Parliament which will shut down the CEFC within the first sitting fortnight of Parliament.

The Government intends to retain the following organisations:

• the Clean Energy Regulator, which will be responsible for administering the expanded CFI (including new powers to approve methodology determinations), Renewable Energy Target and the National Greenhouse and Energy Reporting Scheme
• Low Carbon Australia, which will conduct reverse auctions on behalf of the Emissions Reduction Fund, and
• the Australian Renewable Energy Agency, however, the Government has announced that there will be budget cuts to the agency.

Implications for CPM liable entities and other participants in carbon markets

Assuming the CPM is successfully repealed, the termination date for the CPM will most likely be the first quarterly accounting day after the Repeal Bill is passed. Importantly, the Government has stated that it will not repeal the CPM retrospectively.

If the CPM is successfully repealed part way through the 2013/14 compliance year, the Government has announced that liability under the CPM will be calculated on a pro-rata basis. For example if the CPM is repealed on 1 April 2014, the CPM will have operated for 9 months of the compliance year and liable entities will be required to surrender eligible emissions units to cover three quarters of their greenhouse gas emissions for 2013/14 by 1 February 2015.

Moving forward, although liable entities will no longer be subject to liability under the CPM, it remains uncertain whether the same entities would then be covered by the “business as usual” baseline under the Direct Action Plan. If so, these entities would be able to either sell abatement to the Emissions Reduction Fund if they emit below their baselines or could be subject to financial penalties if they emit above their baselines.

Repealing the CPM will also have implications for the demand for Australian Carbon Credit Units (ACCUs) which are generated under the CFI. In the 2012/13 financial year, 97% of all ACCUs issued were purchased by liable entities under the CPM. The Government, however, is confident that there will be demand for ACCUs through the Emissions Reduction Fund and on international markets.

Elisa de Wit is a partner with Norton Rose Fulbright Australia.

Source: www.reneweconomy.com.au