Australia ends the year as one of the only developed countries not committed to net zero emissions by 2050.
To this, prime minister Scott Morrison is adding another distinction. Australia is about to become the only developed country with a parliamentary committee charged with persuading corporates not to move beyond carbon.
The work will be steady, not to say unrelenting. The committee may need to be in permanent session, like the National Assembly during the most exciting phases of the French Revolution.
With a flow of decisions from corporates this year, beginning with BlackRock’s in January, major global investors are signing up to net zero emissions by 2050 – or sooner. At last count 100 of the world’s reserve banks can be added to this list.
But Australia is now saying investors and regulators will be held to account in the parliament and forced to justify decisions on carbon exposure. This is a major statement of Australian climate policy and will have to be regarded as such by the world community.
Why on earth – and with what level of consideration – did the prime minister and treasurer sign up to Nationals MP George Christensen’s agenda? In a long career of opposing climate policy, Christensen has spoken at a Las Vegas conference of US climate deniers mocking climate science as comparable to disaster horror movies. He has just been licensed to have his way with banks and insurers, foreign and domestic alike.
This week I publicised Australia’s last ditch stand to roll back private sector climate initiatives. Writing to Pacific Island states, Western Europe and the UK, and advisers to the incoming Biden administration, I pointed out Australia will become the only developed country in which corporations cleaving to the international consensus on climate will be challenged to justify their actions in the national parliament.
They deserve to know that Australia’s leaders are playing with climate policy, pitching a nationalist and populist message to their base. I concluded my letter by inviting them to mark down our effort accordingly. We deserve it. If they mark us down they might educate us.
Our partners have moved beyond these political games. Boris Johnson is redesigning the UK’s international character around climate. Japan and South Korea announced two months back their commitment to net zero emissions by 2050. China in September committed to 2060, which would appear to mandate abandonment of plans for more coal fired power when the 14th five year plan comes out next March. India is wildly embracing renewables.
At midday on 20 January the US gets a new president committed to reentering the Paris agreement on his first day in office, hitting the carbon sector with new regulations, no carbon at all in the power network by 2035 – phasing coal and gas out of the system rapidly – and net zero emissions by 2050.
What investor is going to hold out against a trend line as unambiguous? And because of pressure from climate sceptic MPs in the Australian parliament?
Any merchant bank is still going to be obliged to anticipate a post-carbon world – an Australian entity like Macquarie, for example, the wold’s biggest investor in renewables, committed two weeks ago to net zero emissions by 2040. A huge investor in the US, it might see itself moving in happy accordance, as it happens, with Biden’s policies.
So would the New York State Retirement Fund with funds of $260bn which also adopted the 2040 target two weeks ago, and which any Australian state might reasonably seek to recruit as an investor.
But not so fast! Their executives must now anticipate being summoned to explain themselves in Canberra before Queensland Nationals breathing hot indignation on behalf of mines in the Galilee Basin.
The heads of the big four banks might be marshalled to appear, huddled like the Hollywood 10 before the House Un-American Activities Committee, facing the quaking jowls of climate denialists. In vain might they plead that their policies have been shaped with reference to statements by the country’s own regulators – Apra, Asic, ASX and the Reserve Bank – about the desirability of weighing the financial risk of climate change. Or that their shareholders on sound commercial grounds insist on reduced exposure to thermal coal.
Expect their adversaries to be implacable and unmoved as they seek to dictate the tidal force of market flows.
BHP surely deserves a roughing up by Christensen for stating this year that the Paris trajectory is good for business because in a Paris-compliant world there are bigger profits in minerals other than coal. And while BHP is down in Canberra how could the committee not grill them on its decision to sell the biggest single coal mine in Australia, Mount Arthur at Muswellbrook?
If the Christensen committee goes after the Big Australian then Anglo American can’t be neglected, with a decision only three days ago to exit thermal coal by 2023 to concentrate on copper.
And Morrison can really lob a populist rocket at big investors by having his committee haul in the leadership of asset manager BlackRock.
Christensen can nag them for a morning at least about BlackRock becoming signatory to Climate Action 100+, an alliance of 545 investors with 52 trillion in assets under management.
BlackRock’s chair Laurence D Fink might soon notice the economic nationalism taking off in the Great South Land and let Wall Street colleagues know Australia seemed to be taking a curiously contrarian path, measured against the policies of Biden and Johnson, Brussels and Tokyo.
Weaponising a committee to pursue companies that embrace decarbonisation contradicts recent attempts by Morrison to soften the government’s opposition to a 2050 pledge. Morrison appeared to be taking account of the decision by Johnson not to award Australia a speaking slot at last weekend’s summit. He would also be conscious of the importance of climate policy in the campaign to have Mathias Cormann selected as secretary general of the OECD.
Obeying this spirit, Frydenberg might have talked the inquiry down and talked up the boldness with which Australian capitalism and the market system were generating jobs in new sectors. A prime minister Bob Hawke would have told insurance companies to quickly solve any unintended effects on small businesses of their climate policies, a Paul Keating would have blasted them into doing it – but in private calls or one-on-one chats.
Instead, Frydenberg publicly backed the inquiry, and without caveats.
It raises the question whether the Department of Prime Minister and Cabinet is up to the job of policy traffic cop which is, after all, its fundamental function.
One part of the government seems to want to shift towards the consensus on climate of the developed world. I’m sure that Cormann wants that as he struggles to live down a 12-year history as whip for the Coalition’s most obdurate climate resistors.
But the bet our partners should make – the Pacific island states seeing their villages and reefs threatened or the Europeans embarked on green recoveries or the US organising summits to push beyond Paris – is that Canberra is doubling down, running a populist, nationalist agenda on climate aimed at central Queensland seats in an early election next year.
In Australia, domestic politics trumps all.
In my letter I quoted Morrison saying, “Our policies won’t be set in the United Kingdom. They won’t be set in Brussels. They won’t be set in any part of the world other than here.”
Our partners deserve to have this contempt for the world’s opinion brought to their attention.
In the end, it’s their pressure that might save us from our government’s most retrograde and unworthy instincts.
o Bob Carr is a former premier of New South Wales and foreign affairs minister of Australia. He is professor of business and climate change at University of Technology, Sydney