Budget 2017: What does it mean for Climate Change?

On Tuesday night, Scott Morrison delivered his budget speech without a single mention of climate change. In another record-breaking year for extreme heat, severe weather events, the second mass coral bleaching of the Great Barrier Reef in as many years, along with rising emissions in Australia, this Federal Budget has largely turned a blind eye to our intensifying climate change situation.

So what does the budget's $265 million energy packet reveal?

1. Gas: a focus on more fossil fuels.

There’s a substantial focus on gas resources in this budget with $86.3 million allocated to gas expansion, market reform and studies into gas pipelines.

Investing in more gas, particularly unconventional gas, will lock in high electricity prices and pollution for decades to come. Our recent report, ‘Pollution and Price: The cost of investing in gas,’ shows tackling climate change and protecting Australians from worsening extreme weather requires our electricity system to produce zero emissions well before 2050. It also finds that:

  • Gas is not sufficiently less polluting than coal to garner any climate benefit.
  • To have a 75% chance of meeting the 2°C warming limit, at least 71% of known global reserves of gas are unburnable.
  • Greater reliance on gas will drive higher power prices.
  • Investment in new gas power plants is financially risky. In contrast, new renewable energy is cost competitive with new gas.

2 . Snowy Hydro 2.0

The Federal government has reiterated its support for expanding the Snowy Hydro Scheme to provide more pumped hydro energy storage and announced in the budget its plans to buyout the shares in Snowy Hydro which are owned by New South Wales and Victorian state governments. However, no money appears to have been put aside for this buyout or the proposed pumped hydro expansion in the budget.

Pumped hydro works by using electricity from other sources to pump water uphill, for example to the top of a dam. The water can then be released later like a battery. However, without increasing renewable energy sources, any pumped hydro expansion would likely rely on fossil fuel based power and potentially increase emissions (for our explainer on pumped hydro, read here).

Investment into pumped-hydro is welcome, provided it is funded, and accompanied by a national plan to rapidly transition from fossil fuel generation to renewables.

3. Solar Thermal Plant in Port Augusta

The government has used the budget to reiterate its support for building a solar thermal plant in Port Augusta, South Australia, including $110 million in its contingency reserve, “if required”. The government has previously stated it will ask the Clean Energy Finance Corporation and the Australian Renewable Energy Agency to call for solar thermal proposals in Port Augusta, and has offered to provide a top up loan “if required”.

4. Climate Research and Funding

The budget strips the Climate Change Authority, who conduct independent climate research and analysis, of almost two thirds of its funding and reiterates the government's plans to abolish it.

There is also $0.6 million available for the National Climate Change Adaptation Research Facility to work with CSIRO ‘to maintain an online database of specific parts of its research’ with no further funding following.

Summary

Overall, the budget does very little for climate change beyond the government’s existing policies. A breakdown of the figures by the Australian Conservation Foundation shows:

  • 14% cut in environment budget since the Coalition formed government in 2013, projected to be a 27% cut by 2020
  • $1.2 billion for environment budget
  • $7.6 billion for polluting subsidies, more than 6 times the environment budget

So, what does the budget mean for climate change? It demonstrates the government continues to be focused on fossil fuels. The federal government appears to have no new plans for acting on climate change or transitioning to a renewable energy future and is turning a blind eye on the most severe global economic risk we are facing today.

The upcoming report from the Independent Review into the Future Security of the National Electricity Market (known as the Finkel Review), which will set out a blueprint for Australia’s energy future, may yet bring solar, wind, hydro power and energy storage into the forefront of energy policy. Until then, it seems state and local communities will continue to take the lead on climate action.

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