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India rescues Australia’s fossil fuels

27 November 2021

9:00 AM

27 November 2021

9:00 AM

It was India, our new Comprehensive Strategic Partner, whose last-minute  intervention in Glasgow blocked the US/UK/Europe-led attempt to set Australia’s vital fossil fuel industries, particularly coal and gas, on what they hoped to be the road to extinction. Prompted by self-interest, which fortuitously we share, India’s addition of a few key words to one resolution determined perceptions of the success or failure of the Cop 26 climate conference, turning it into an over-hyped fiasco.

The ultimate reality of such international talkfests was summed up on this page by Angus Taylor’s comment that, ‘The people who will solve the energy problem will be the entrepreneurs and innovators not the activists, bureaucrats and politicians at Cop 26 – or the 25 climate conferences that preceded it’. Taylor’s words have been echoed by the right-wing American Enterprise Institute: ‘Carbon emissions are not going to fall in a sustainable fashion simply because politicians sign pledges to cut them. They will decline only as a side product of an availability of energy alternatives that are cheaper and more reliable than fossil fuels. The bulk of “climate policy” in the West, therefore, should be geared toward the development and deployment of better energy sources, which through market forces (and maybe with the help of a carbon tax) will replace the carbon-intensive sources of energy we are relying on today’.

Considering such gatherings of global leaders and celebrities as worse than a sideshow, the AEI dismissed Glasgow as ‘a tool that geopolitical competitors and bad faith actors can use to extract concessions from Western democracies’ and at best it regards ‘climate summitry, painstakingly negotiated multilateral agreements and protocols, and pledges to meet specific emissions targets as only tangential to the (very much worthwhile) aim of ending humankind’s dependence on fossil fuels and shielding the vulnerable from climate change’s adverse effects. To the extent to which such summits are seen by Western policymakers as a sine qua non of successfully addressing the issue of climate change, they can lead to concessions to revisionist powers and rogue regimes (think China) to keep them at the negotiating table or to make more ambitious though unenforceable pledges’.

The reality of the Glasgow failure is evident not only from climate activists’ angry responses but also from leading players like US Special Climate Envoy John Kerry’s rebranding of major defeats on coal and fossil fuels into phoney claims of significant progress. Pre-conference, Kerry had mounted a campaign against what are claimed (on dodgy criteria) to be huge subsidies paid to fossil fuels, declaring it to be ‘the definition of insanity that close to $2.5 trillion went to lowering the cost of oil, gas and coal over the past five years’. But Kerry’s draft resolution calling for countries ‘to accelerate the phasing out of coal and of subsidies for fossil fuels’ was emasculated. Replacing ‘phasing out’ with ‘phasing down’ and inserting the word ‘unabated’ before coal and ‘power’ after it, represented a major defeat, as did adding the word ‘inefficient’ before subsidies for fossil fuels. Environmentalists attacked this ‘watering down’ that ‘significantly  weakened’ the proposal by creating ‘huge new loopholes’ and ‘begs the question of what an efficient use of public money to bankroll the fossil fuel industry could possibly be; any government can argue that its handouts are acceptable because they are efficient’. Worse, there is no deadline for removing fossil fuel subsidies and in any event, the decision is non-binding so there is no recourse if governments simply ignore Cop 26’s request by continuing to subsidise fossil fuels.

On coal, the watering down ‘leaves the door open to keep running climate-wrecking coal-fired power stations on the future promise of carbon capture and storage offsetting their emissions…. The fossil fuel industry has always promised that CCS has been just over the horizon, but it has never materialised at scale. The false promise of CCS should not be used as an excuse to keep the coal industry alive’. And Kerry clutched at the straw that, as this diluted version (so disappointing that the Cop 26 chairman, the UK’s Alok Sharma, wept when announcing it) involved the first mention of fossil fuels in 26 international agreements, it therefore provided ‘a clear path to achieve our 2030 goals’. Strange how the rejection of his deeply committed coal and fossil fuel objectives could be seen as bringing the world ‘closer than ever before to avoiding climate chaos, and securing cleaner air, safer water, and a healthier planet for us all’. But while Kerry was leading the push to save the world from climate change in Glasgow and predicting the end of coal production by 2030, the US Energy Information Agency has projected US coal production would still be as high as 75 per cent of current levels by 2050. And in the meantime, the green-tinted Biden administration faces a Senate battle over a committee proposal to increase production of coal, oil and gas to resolve high gasoline and other energy costs.

But the whole issue of fossil fuel subsidies is a nonsense, with huge variations in alleged costs depending on the different – and sometimes ludicrous – definitions used. According to the leading activist in this area, the International Monetary Fund, ‘Globally, fossil fuel subsidies were US$5.9 trillion in 2020 or about 6.8 percent of GDP and are expected to rise to 7.4 percent of GDP in 2025’, with the biggest subsidiser being China, followed by the US, Russia, India, and the EU. But all this is an invention; almost half is hypothetically assigned to countries not imposing taxes on emissions at what the IMF reckons is an appropriate rate – ‘under-pricing for local air pollution costs’. Attributing costs of the climate crisis added about 30 per cent and other add-ons as so-called subsidies include such wacky items as imputing the cost of traffic congestion and road accidents, some explicit subsidies and a mysterious ‘lost consumption taxes’.

By contrast, the OECD estimates that the world spends US$423 billion each year on fossil fuel subsidies – only eight percent of the IMF’s outrageous guess that activists have embraced. IMF and other imaginative claims that Australia heavily subsidises fossil fuels have been effectively debunked. To add to the confusion, the  G7 governments’ commitment to phase out ‘inefficient’ fossil fuel subsidies by 2025 does not define what this phrase means, with the result that the UK government argues that it has no fossil fuel subsidies to remove despite research groups and the EU calculations that the UK has given US$16 billion a year on average. And while the UK is a leader of the pack for tougher emissions rules for the rest of the world, Bloomberg reports that its refusal to join an alliance of countries fixing a date to phase out fossil fuel production is because doing so ‘could force it to face a cliff edge in energy supply’. Hypocrisy? The US and UK, our Aukus partners, make a lovely couple.

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