AUSTRALIANS ELECT ANTI-CARBON TAX GOVERNMENT

Fate of Funding for CCS Flagship Projects Still Unclear

Tamar Hallerman
GHG Monitor
9/13/13

Australians decisively elected the anti-carbon tax Liberal Party into office last weekend, handing a swift defeat to the Labor Party-led coalition government that championed the fee’s creation more than a year ago. In his Sept. 7 victory speech, Prime Minister-elect Tony Abbott vowed to quickly repeal the carbon price while also dismantling a 30 percent tax on the country’s mining sector profits established under the Labor government. “From today, I declare that Australia is under new management and that Australia is once more open for business,” Abbott said. He must, though, secure support in both chambers of Australian Parliament in order to repeal both measures.

The carbon tax had been deeply unpopular with Australian voters ever since it was implemented last summer, due in large part to a barrage of negative publicity from the Liberal Party. In a last-ditch bid to hold onto political support ahead of the election, Labor leader Kevin Rudd announced plans earlier this summer to transition from the flat carbon tax of about $24 per tonne to a cap-and-trade scheme in 2014, a year earlier than planned.

CCS Funding Uncertain

While the future of Australia’s carbon tax appears to be set in stone less certain is the fate of CCS funding in Australia, since the fiscally prudent Abbott has not yet made any public comments about the program. The newly elected government was quick to announce plans this week to redirect $350 million in money from the Flagships to other priorities over the next four years, shaving away more funding from the demonstration program, which has been hit hard over the last several months as politicians have looked for savings amid tough fiscal shortfalls.

But in an interview this week, Richard Aldous, CEO of the Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC), a research group currently operating the Otway CCS project in southeastern Australia, said comments from other politicians aligned with Abbott suggests that his government could be supportive of CCS RD&D. “It’s certainly a risk that money could get cut from the Flagships,” he said. “If you’re looking to cover budgets and find a few dollars here and there then it is possible that these projects could come under a bit of threat.” But overall, Aldous said he is optimistic that politicians will see the value in the program. “Call me an optimist, but I think the business case for using CCS will become inevitable at some point.”

For their part, officials from the CarbonNet and the Collie South West Hub CCS projects being funded under the Flagships program have told GHG Monitor in previous interviews that their projects would be largely unaffected by the budget cuts. Dominique Van Gent, carbon strategy coordinator at the Government of Western Australia’s Department of Mines and Petroleum, which is overseeing the South West Hub project, said this week that she does not expect the election result to have a short-term impact on the project. “The phasing out of the carbon tax is not expected to affect our ability to prove up the storage formation,” Van Gent said in an e-mail.

Cautionary Tale?

Meanwhile, some American conservative groups sought to frame the Labor Party’s loss as a cautionary tale for politicians supportive of enacting a carbon tax in the United States. The issue had resurfaced last year as a potential fix for the fiscal cliff but quickly fizzled out after it appeared too politically contentious. In an interview with GHG Monitor, American Energy Alliance President Thomas Pyle said the results of the Australian election should show American politicians that carbon taxes are a “colossal failure.” “This is an instance where a carbon tax has been tried and, at least in the eyes of the public, failed miserably,” he said. “It’s absolutely a lesson learned for U.S. politicians who are thinking about trying to impose a similar scheme here in the United States.”