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Transcript of interview with Fran Kelly: ABC Radio National Breakfast: 4 September 2015: safeguard mechanism; Emissions Reduction Fund; post-2020 target; timing of federal election

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The Hon. Greg Hunt MP Minister for the Environment


4 September 2015



Topics: Safeguard mechanism, Emissions Reduction Fund, post-2020 target, timing of federal election

FRAN KELLY: Minister good morning, welcome to Breakfast.

GREG HUNT: Good morning Fran.

FRAN KELLY: Where is the incentive in this safeguard regime for the heaviest emitting industries to lower their emissions?

GREG HUNT: Well there are two fronts in relation to reducing emissions. Firstly we have the Emissions Reduction Fund, which was always designed to be the incentive scheme. The way that works is that is an auction process - so a market based process - where we buy the lowest costs emissions reduction.

And what we see is that the first auction produced 47 million tonnes of emissions reduction at approximately one per cent of the cost per tonne of abatement that occurred during the carbon tax.

So dramatically more successful that any of the critics had ever proposed or believed would be the case at a far lower cost. And then that's backed up and twinned with the safeguard mechanism, which provides a limit on the emissions that individual firms can have.

So together they work over the course of the next decade with the other range of activities and initiatives that we have in relation to energy productivity, vehicle efficiency, ozone reduction - which has a huge CO2 benefit...

FRAN KELLY: ...but the...

GREG HUNT: you bring those all together. And over the course of the decade, we'll see a reduction in Australia's emissions of about 900 million tonnes collectively.

FRAN KELLY: It's the limit that the argument is about now. Your own press release announcing this says the mechanism's been designed - and I'm quoting here - to ensure that emissions reductions purchased by the Government aren't displaced by significant increases in emissions above business as usual levels elsewhere in the economy.

GREG HUNT: That’s correct.

FRAN KELLY: Isn't the point though Minister, that business as usual levels of emissions aren't going to get us to our post-2020 targets, that's the whole point. We need to change business as usual, don't we?

GREG HUNT: Well this is a package that is going to achieve that. And what we see now is that we not only met our first round of Kyoto targets, which was 2008 to 2012. We will meet and beat our 2012 to 2020 targets, which the same people who are critical of this said we would never do.

They made the points that we would never do this under the Emissions Reduction Fund and we’re going to deliver and achieve it, and do it extremely well.

FRAN KELLY: With respect Minister, and I hate to interrupt, but - and we have had this conversation a number of times on the programme, and we understand that. But things are only going to get harder, we know that.

That's why the Government set 26 to 28 per cent cut by 2030. So that's another steep increase in the sort of cuts we're talking about.

GREG HUNT: It is a significant increase, and it’s a level again which is far in excess of what others thought

FRAN KELLY: And how are you going to do that with business as usual emissions?

GREG HUNT: Well we aren't having business as usual emissions. What we're seeing is a combination of things occurring. Already there's been a significant transition in the electricity sector, and that is continuing on.

I was looking at figures just the other day about the changes in electricity - the combination of coal fired power stations dropping out of the grid because we have an oversupply of electricity as renewables come on.

We're going to see a doubling of renewable capacity over the course of the next five years. That has a significant impact.

Again, you have the Renewable Energy Target on the one hand, you add to that the incentives of the Emissions Reduction Fund, and then you add to that the limits of the safeguards fund, plus energy productivity, plus vehicle efficiency, plus what we're doing with the ozone protection and the CO2 benefit. Together, those will see us achieve our targets.

Everything that we have set out to do we have done, and we've done it without increasing electricity prices. It's the right balance, and that's exactly what we're doing.

And in the physical world, in the real world, there are projects that are being commissioned to decrease landfill gas, to decrease gas from coal fired power stations, to - well, what we will see there I think is a dramatic change in coal fired power which is already occurring from coal mines, waste coal mine gas - and then an extraordinary process of land sector changes with regards to soil carbons, reforestation, avoided deforestation.

The real physical world is producing the outcomes through the policies that we're putting in place.

FRAN KELLY: But with respect Minister, you make it sound like it's, sort of, all happening and it's all easy. And I don't think many people think that that is true and under these...

GREG HUNT: ...well we've just had the lowest quarterly emission in trend terms since 2004. And that was for the January to March quarter of this year. So that's what's actually occurring.

We're beating our targets again and again, and reducing our emissions compared with what was projected. And what we see was the lowest quarterly emissions since 2004 on trend terms.

FRAN KELLY: Under your plan - under the safeguard mechanism plan, brown coal generators - that's the dirtiest of all power generators - they won't have to reduce their pollution under this plan, will they?

GREG HUNT: Well I think you'll find that because of the oversupply in the electricity market, there has been a significant reduction in generation capacity through coal, both brown and black, and...

FRAN KELLY: ...but the brown coal generators are the cheapest generators and they're still operating. And they don't have to reduce their emissions under your baseline do they?

GREG HUNT: Well we have taken away a $5.5 billion gift that the ALP gave. So there is nothing, there is no gift from us...

FRAN KELLY: ...yeah but I'm talking about the effectiveness of your mechanism now.

GREG HUNT: No, with respect, if that's the term of art for today, what we see is that the ALP...

FRAN KELLY: That's always the term Minister.

GREG HUNT: ...exactly, we share that mutual approach.

$5.5 billion was given by the ALP to brown coal generators. We terminated that gift to the brown coal generators from the ALP.

Instead, we have a doubling of renewable energy in a period of oversupply which is seeing consolidation in the coal sector. That is the physical reality.

We've had announcements in South Australia. We've had black coal announcements in other parts of the country. And I suspect that this will continue to occur.

So what will actually occur in Australia is that instead of an expansion of brown coal and black coal generation, there is likely to be a continuation of the current trajectory where there is less coal fired electricity.

There will certainly be more renewable electricity and Australia's emissions intensity and absolute emissions have been going down in the electricity sector.

FRAN KELLY: Greg Hunt can I just ask you finally about a tweet from Rupert Murdoch overnight? He's tweeted his 600,000 followers basically calling for an urgent election - a snap election. He says Australia is almost ungovernable. The only hope is a new poll. Do you think he's right - we should have a new poll soon?

GREG HUNT: Well look our plan is to run a full term. I would imagine that the time for an election will be a year from now, plus or minus a couple of weeks. Our plan - our intention, our practice, the way we work in Cabinet, the way we work across the Government - is to run a full term, to be stable.

Yes it is difficult to work with the Senate from time to time and the ALP has reached a point of absolute obstructionism.

But we've been successful in repealing the tax in our own portfolio through the Senate, that's worked well. Putting in place emissions reduction fund, water reform, we've put in place EPBC reforms which have protected threatened species. We've put through a lot of controversial legislation. So, difficult but achievable.

FRAN KELLY: Alright.

GREG HUNT: So no plans from my end and no plans from our end.

FRAN KELLY: Greg Hunt thank you very much for joining us.

GREG HUNT: Thanks very much.