The Chilling Effect Of Net Zero Dreams

The push towards a Net Zero climate policy for Australia jeopardises investment of $200 billion in coal, gas and oil projects currently in development in Australia, with tens of thousands of jobs on the line.

The Australian Greens have sent a dangerous signal to investors by making clear their Net Zero policies involving a moratorium on new coal, gas and oil projects will be the price of any support they provide to a future ALP Government. The Coalition is meanwhile struggling to hit back at the Greens’ radical approach, as they too have committed to Net Zero (albeit a few years later).

The ALP denies it will do any deals with the Greens, but it has some form in this regard. In 2010, five days before the election, then ALP Prime Minister Julia Gillard promised ‘there will be no carbon tax under a government I lead’. After signing an agreement with the Greens to support her minority government, Gillard changed course and implemented the Carbon Pollution Reduction Scheme. A similar scenario could unfold in 2022 regarding resources investment (as well as carbon taxes).

On Monday, Greens Leader Adam Bandt announced that 114 coal, gas and oil projects at various stages of development would be subject to the moratorium should an ALP/Green alliance be forged after the next federal election. In a leaked story the day before, Nine Entertainment newspapers reported:

The Greens will demand a halt to new coal, gas and oil projects for at least six months in a blanket ban while they negotiate climate change policies if there’s a hung Parliament.’

Bandt linked the moratorium to the negotiation of support for a minority ALP government saying, ‘We want a pause on coal and gas while talking. It’s a pretty reasonable position. It’s not even about existing coal and gas projects, we’re just saying don’t open up new ones.’

The quoted number of 114 projects corresponds exactly to the number of coal, gas and petroleum projects in the list recently published by the Department of Industry, in which the backers estimated the investment required being at least $187 billion and possibly more than $200 billion. While not all projects currently in their development stages will proceed to completion, the Department’s Chief Economist has advised that the pipeline of potential projects has recently been expanding.

A moratorium would have a chilling effect on investment, as it would cover projects currently undergoing the processes of environmental approval mandated by state and federal government. The Net Zero sledgehammer will override those processes and also, incredibly, apply the moratorium even to those projects on the list which have completed their construction phase. There is also every prospect that the moratorium would become a permanent ban on some if not all of the projects targeted by the Greens. At the election approaches, and the prospect of a minority ALP Government reliant upon support from the Greens becomes more real, expect investors to defer if not cancel commitment to their projects.

Green policies imperil both the security and affordability of our domestic energy system, as well as the energy exports which have – ironically – underwritten state and federal governments’ ability to throw massive subsidies at mostly imported solar and wind generation technologies.

The Greens’ policy reflects their commitment to achieving Net Zero emissions by 2035, only 13 years away. The Morrison government, meanwhile, has made the same commitment but with a deadline of 2050.

By capitulating to those promoting destructive and unnecessary Net Zero policies, the Prime Minister has rendered the Coalition unable to mount any consistent criticism of the Greens policy. On Monday, the Minister for Resources, Angus Taylor, told Newcastle’s 2HD:

‘We know the Greens today are out saying they’re going to stop every oil, gas and coal project if they end up in coalition with Labor. So we’re starting to understand what that coalition would look like.’

Such criticisms ring hollow when the Morrison government has committed to achieving Net Zero by 2050. Investors developing projects will be concerned that projects will be strangled in further red and green tape.

Instead of engaging in a genuine contest of ideas about climate change and climate policy, the Morrison government capitulated to the Net Zero idea originally developed behind closed doors in 2013 by a group of 30 women at a country house in England, and then weaponised by the UN (as detailed in IPA research here). It ceded the high moral ground to climate activists, reducing the scope of debate merely to how quickly and by what means the goal can be reached.

In the UK, where Prime Minister Boris Johnson embraced Net Zero and lobbied Scott Morrison to do the same, his utopian visions are unravelling as energy costs increase and energy security decreases in the wake of a renewables frenzy and the move away from fossil fuels.

Meanwhile, in Australia, Bandt can harvest many votes from credulous voters who will not be told – at least not by the Morrison government – why the Net Zero goal is unnecessary and harmful.

Scott Hargreaves is the Executive General Manager at the Institute of Public Affairs.