By Allen Myers
A federal government green paper, "Sustainable Energy Policy for Australia", was released late last year with not much fanfare. It was supposedly intended as the first step towards developing an energy policy with a 25-year perspective. According to the Australian Conservation Foundation, it was "a very limited and faltering step".
Indeed, to judge from the ACF's February submission on the green paper, even that description is generous. The ACF points out: "The Green Paper does not attempt to form a vision of what a sustainable energy sector might be. For a 25 year perspective it offers a single, business-as-usual projection ... Robust energy policy formulation would be expected to employ a range of scenarios which examine the possible impact of various policy levers and unplanned events."
In short, the green paper appears to be nothing but a bureaucratic exercise, an attempt to be seen to be doing something, without any intention of changing anything. Such an approach to energy policy ties in neatly with the Howard government's attempts to secure exemption from any requirements to reduce greenhouse gas emissions.
The ACF submission, "Towards a Sustainable Energy Future for Australia", while it may not have much influence on a government which is simply going through the motions on most environmental issues, is a serious discussion of the issues and therefore worthy of consideration in itself.
Trends and goals
The ACF begins by pointing out that, over the next 25 years, most power generation plant and energy infrastructure will need to be replaced; world oil, gas and coal production will peak or be close to peaking; Australia (on current trends) will emit 10 billion tonnes of greenhouse gases. Clearly, simply to project current trends into the future has nothing to do with sustainability.
The goal, the ACF paper states, should be "to develop an energy sector that is ecologically and socially sustainable in the medium to long term". Within this context, it proposes three objectives:
"1. Protect the environment, including the protection of biological diversity and maintenance of essential ecological processes and life-support systems ...
"2. Develop an energy sector that delivers energy services (as opposed to energy commodities) at least cost to society — in social, environmental and economic terms — over the long run.
"3. Maximise the opportunities created by the transition from the present unsustainable energy sector to a sustainable energy sector."
It would be hard to disagree with these objectives, although number 3 really seems to be little more than a motherhood statement. Objective 2 is a necessary (though not sufficient) means towards achieving objective 1 — the latter requiring as well similar sustainability policies in all other fields of economic activity.
The ACF's proposed second objective is thus central to the entire paper, and it revolves around key questions.
Services and commodities
The counterposing of energy services and energy commodities is useful. What the paper's authors are pointing out is that energy companies (whether public or privatised) are normally oriented towards supplying consumers with an energy commodity at the lowest unit cost and highest profit for the company; this generally involves efforts to produce and sell as much as possible of the commodity and discourages attempts to reduce energy demand.
A gas or electric company, for example, will sell you as much gas or electricity as you think you need to heat or cool your house. An energy services approach would be to recognise that what you are really after is not energy but a comfortable house, and it would therefore examine the possibility of meeting your need through alternative means such as improved insulation.
The ACF submission's perspective appears to be that energy commodity companies could be transformed into energy services companies through some combination of financial rewards and penalties, although this is not spelled out. It seems to be more appropriate, however, to regard this situation as illustrating the truth that market mechanisms are generally not very helpful, and are even destructive, when it comes to protecting the environment.
The position of the ACF paper, however, is that we need the market, plus additional government (non-market) measures: "While truly competitive markets are a necessary condition in the development of a sustainable energy [policy,] they are far from a sufficient condition".
Subsidies
"Truly" is emphasised in the original because the paper contends that one of the reasons for Australia's presently unsustainable energy policy is markets which are distorted by government actions and inaction.
In particular, they cite estimated financial subsidies for production and consumption of fossil fuels of $40 billion over the past 40 years, plus "environmental subsidies" (environmental damage not paid for by those who cause it) of $2.5 billion a year for fossil fuel-fired electricity generation and $1.4 billion for other energy production.
Thus, according to the paper, "If all market failures and government-induced distortions to the energy market were to be removed, Australia would have taken a valuable step towards a sustainable energy sector."
Clearly, it is madness for governments actively to subsidise the use of non-renewable fossil fuels, and if corporate environmental vandals had to pay for the damage they cause, they might well cause less of it. But ending such subsidies would, at best, be a very small step.
Raising the price of fossil fuels — which is all that ending the subsidies would do — would perhaps slow the mad rush towards environmental destruction, but would not change its direction.
Pricing the environment
The problem is not that our society puts too low a dollar value on the environment. The problem is that it inappropriately evaluates non-economic phenomena, such as the environment, in monetary terms. So long as this is the case, economic activity will be allowed to damage the environment whenever the price is right.
For example, the owners of a coal-fired power plant may be able to regard the air as "free" and thus to pollute it with carbon dioxide and other gases. If the government taxes the plant's emissions, or requires the owners first to secure a tradeable emissions permit, the plant will charge proportionally more for its electricity. If the higher charge results in lower use of electricity, there may be somewhat lessened pollution until increases in the number of consumers make up the gap. That's all.
So when the ACF paper asserts, "The reform process needs to be redirected to ensure that the community has access to the full range of energy services at least cost to society, incorporating all environmental, social and economic costs", it's already lost the game. The only way environmental, social and economic costs can be directly compared is by assigning a monetary value to all of them. That's what the system does now.
In the same line, the ACF submission criticises the government green paper in the following terms: "Economic objectives are regarded as primary, and environmental objectives are clearly seen as secondary and to be externalised as soon as any hint of conflict emerges. Such a framework, which creates a false tension between economic and environmental goals, is antithetical to the development of sustainable outcomes."
Yes, it's certainly true that the government ranks economic objectives well above environmental ones. But is this just a matter of ignorance? Is the conflict ("tension") between economy and environment really false?
What's 'economic'?
If, by "economic goals", we mean only the production of the goods and services reasonably required by human beings, then indeed there is no necessary conflict with the environment. Given appropriate social conditions, the technology needed for the non-polluting production of human needs either already exists or is within reach.
The rub, of course, is in the little phrase "appropriate social conditions". Under present social conditions — a society dominated by capitalists — "economic goals" means something quite different from producing what people require. It means creating the greatest possible profits, regardless of other considerations. Between that economic goal and the environment, there is more than tension; there is complete incompatibility.
Why does Australian industry rely on non-renewable and polluting energy sources rather than solar energy? Not because the latter technology is inadequate or could not be made adequate, but because it is "uneconomic". When the capitalists or their government tell us that about some more environmentally friendly method of producing something, they aren't lying; they are merely using the word "economic" in the sense of "profitable" — which is its only real sense in a capitalist economy.
This doesn't mean that we have to "wait" for socialism before trying to reduce environmental destruction. But it does mean that any successes we have are likely to be achieved only in opposition to the market — for example, by insisting that the government agree to compulsory reduction of greenhouse gas emissions, regardless of whether doing so is "economic".
Relying on the market is not only futile, but reinforces the prevailing ideology under which the environment always comes last.