When faced with change in life we have three choices. Do nothing, mitigate against it, or adapt to it.
Take the Division 296 tax proposal. You can just ignore it and hope it gets repealed. Otherwise deal with it when it comes into force.
Or you can mitigate. Try and prevent the tax, or change the tax by participating in campaigns, petitions, and generally lobbying against the tax. That is, counteract or make it less severe.
Or you can adapt - for example, by restructuring your super to avoid a $3 million balance. That is, enact behavioural change to fit in with a system that you can’t change.
Likewise with climate change. As a country, we have those same three options to deal with the climate issue.
Doing nothing is obviously not an option. At the very least, we must anticipate a changing climate and decide how to deal with it.
We can attempt to mitigate climate change, and the preferred way to do that by governments globally, including our own, is to reduce greenhouse gas emissions.
Or we can adapt. Adaptation would involve adequate preparation for climate change in areas such as infrastructure, housing and planning, roads, energy grids, and water systems including dams, ensuring readiness to combat adverse weather events including bushfires and flooding.
We've opted against adapation
Consider housing. Development has been ever encroaching over the decades into places where it shouldn't. We build in flood and fire prone zones, making it seem like natural disasters are more intensive. This phenomenon has been termed by prominent climate change commentator Bjorn Lomborg as the ‘the expanding bulls-eye effect’. Adaptation to climate change would prevent such development, while every dollar spent on protecting existing homes at risk, would have an immediate and measurable impact.
But to date, adaptation strategies fall way behind in this country. In fact, it’s striking just how little weight is given to adaptation policy. According to a Reuters report, only about $3.6 billion has been committed to adaptation measures by the current Labor government, a fraction of the amount laid out for emissions reduction policies.
Mitigation strategies dominate the policy agenda, and have just gone up a notch with the fanfare surrounding Labor’s new 2035 emissions reduction target. The target, a cut of 62-70% on 2005 levels, is underpinned by a suite of government schemes including: The Future Made in Australia Fund ($22.7 billion commitment to lure investment); The National Reconstruction Fund ($15 billion commitment providing equity and debt finance to support commercial projects); and the Capacity Investment Scheme (where the government underwrites a return for renewable energy investors). There's also the Safeguard Mechanism and New Vehicle Efficiency Standard that limits emissions and sets emissions targets.
These schemes and others could see costs shared between government and industry run into the tens of billions. Which pales against Business Council of Australia modelling suggesting that between $435 billion and $530 billion in investment may be required to meet the ambitious 2035 target range. On revealing the target, Climate Change and Energy Minister, Chris Bowen kicked off proceedings by announcing $8.3 billion of new spending.
Yet with Australia sitting at barely 1% of global emissions in a world where emissions continue to rise, this is a puzzling position to be in. If we can’t influence the global climate mathematically, we should focus as much, if not more, on preparing for climate change compared to attempting to alter its trajectory. This mitigation/adaptation imbalance needs correcting.
Many give the 1% argument short shrift, but it’s entirely valid logic when forces are working against emissions reduction globally. Australia trying to reduce its already small contribution to global emissions is akin to bailing water out of a sinking boat with a teacup.
If an entity has little leverage over the source of a problem, adaptation surely is the rational priority. Scale of influence should determine the extent to which mitigation is realistic. When you lack such scale to meaningfully alter the course of a problem, energy is better spent preparing for its effects than attempting to prevent it.
In Australia’s situation, adaptation to climate change makes more sense than mitigation, because we, a small entity, have next to no influence over the bigger forces at play.
Mitigation and its costs
The obvious question therefore is: why is mitigation the dominant strategy to combat climate change in Australia?
Many see it as symbolic. Our government argues that every country must do its bit, that we must be seen on the international stage to be a ‘team player’. Indeed, Chris Bowen gave the game away when he boasted that the 2035 target will give Australians “pride in its level of ambition”. Proud of a target? A bullish target will not influence global climate if our absolute contribution is negligible.
Which makes one wonder: is this more of a foreign policy strategy than an environmental one? If we cannot move the climate dial, is it a matter of optics over outcomes? If we can’t achieve an outcome, is it pointless?
These are all valid questions. Because the problem is an aggressive mitigation strategy imposes significant economic costs, from energy intensive industries like steel and aluminium, to small business, down to households. And if it forces productivity to be outsourced to less accountable countries, then global emissions could actually rise.
Irrationally, we export our rich reserves of coal, gas, and uranium, while putting a line through them locally. Being green at home but not abroad exposes a clear contradiction between our economic and climate ambitions. Global virtue needs to be balanced against domestic economic resilience.
Equally as troubling, is that Australia’s climate and energy transition policies have seen rising energy costs disproportionally affect low-income people. The emissions reduction policies to date have had a regressive impact. Lower income households spend on average about 6.5% of their income on energy compared to just 1.5% for higher income households. One in four low-income households pay around 9% of income on energy, with worryingly 25% of households reportedly struggling to pay their energy bills. Energy stress is real and is a situation that is untenable in a first-world country.
And if it turns out that a mitigation strategy is not delivering, such that considerable adaptation is actually required, will we have exhausted our capacity to do so?
As a country, it is important to confront climate change and the challenges it may bring. But we should not elevate symbolic mitigation above logical alternatives.. Otherwise, we risk finding ourselves under-prepared for the real effects of a changing climate.
Tony Dillon is a freelance writer and former actuary.