Can Australia Become a Climate Champion?

In this episode of Energy Insights, Energy Tracker Asia talks to Richie Merzian - the director of climate and energy at the Australia Institute. In today's episode, Energy Tracker Asia and Richie discuss topics around Australia and climate change and its complicated relationship and history with one of the globe's most critical issues. Other topics include the recent federal election in Australia, the role fossil fuels and the fossil fuel industry plays in Australia, holes in Australia's main environmental law, the recent victory seen by indigenous communities vs the Australian gas giant Santos, the outlook for renewable energy and supply chains in Australia with allied countries and Australia's role at COP27.

Richie is a former Australian Government representative to the UNFCCC and worked at the Department of Climate Change and the Department of Foreign Affairs for almost a decade on both domestic and international climate and energy agendas.
While at the Australian Government, he was the lead negotiator on adaptation to the UN Framework Convention on Climate Change and helped coordinate the Green Climate Fund Board during Australia's tenure as Chair. Richie helped co-found the Australian Youth Climate Coalition (AYCC) in 2006 and trained as a Climate Reality Leader in 2007 with former Vice President Al Gore.
Richie is currently on the Advisory Committee for the Climate Change Institute at the Australian National University (ANU). Richie has degrees in Law and Economics from Sydney University.

Twitter: @RichieMerzian | @TheAusInstitute
Facebook: The Australia Institute
LinkedIn: The Australia Institute

Transcript

03. Energy Insights - Richie Merzian

Host: So before we dive into things about Australia and climate change, would you be able to give the listeners a brief background on yourself, what you've done, and what you're doing now?

Richie Merzian: I manage the Climate and the Energy Program at the Australian Institute, which is an independent think tank based in Canberra, Australia's capital. The Climate and Energy Program, which is part of the multidisciplinary work of the institute, covers all things around Australia's domestic emissions. So that's our electricity, our transport industry, agriculture, as well as what we supply to the world - all of Australia's coal and gas - and then the impacts from climate change as well as Australia's role internationally. It's a big program that covers all the bases and I've been doing it for about four years.

Prior to that, I worked for almost a decade for the Australian government, mainly doing international climate negotiations. So all the lead-up negotiations to Paris and then a little bit afterward focusing on climate finance adaptation and a few other issues as well. And then prior to that, I was involved in NGO, civil society stuff and helped set up the Youth Climate Coalition in Australia.

Host: I know it's a complicated story, but I wanted to begin by getting your interpretation on Australia's relationship with climate change, given that a large part of it has been identified as at risk. From your vantage point, how would you describe the country's climate action and climate advocacy over the decades?

Richie Merzian: Australia's relationship to climate change is an unfortunate one. From day one, from the Rio Convention on Climate Change in the early nineties, Australia didn't send its leader, it sent its environment minister with the caveat that Australia would only do things that didn't harm its economy.

There's always been this precious place that Australia's fossil fuels, which back then were coal but now are just as much natural gas, have in how we deal with this issue. Australia's diplomacy on climate change has always made sure that it could protect fossil fuels. There have been some rare moments where Australia has managed to break through and really act as a global citizen, in the global interest, but for the most part, it's been a history of protecting its fossil fuel interests that have only grown over the last 30 years. 

Host: Given that, if we take that history into account, the recent federal election in Australia saw a major shift in how climate change was viewed. Could you give us a breakdown of what we saw and what you think the major catalysts were for such a shift in public conversation and also a shift in the government's perception of climate change?

Richie Merzian: That’s a great question. It's one that many have asked because we all thought that 2019 would be the climate election. We thought that the time had come and there was enough public interest. The Australian Institute does an annual survey of Australian attitudes to climate change. This has been going on since 2007 and we saw an increasing concern for climate and an increasing interest in Australia playing a better role. So we all thought 2019 would be it, but it wasn't. Instead, it was this year, 2022. So what really changed in those three years? I reckon it comes down to four things. 

Firstly, the last three years have been bookended by climate impacts. Australia had those devastating black summer bushfires in 2019 and 2020, over our summer. Then this year, we've had devastating floods. Both of them are supercharged by climate change and recognized as such. 

The second thing is that economics has changed. Renewables are now the cheapest way that we can make power in Australia. Businesses have shifted. Many businesses have taken on net zero pledges, and a great example is the business council, the lobby for big industry in Australia. In 2019, they said a 45% emission reduction target was, I quote, “economy wrecking.” In 2022, they said the government needs to adopt a 50% emission reduction target, 45 to 50 is where it needs to go. So you see how far they've moved themselves.

The third is that we had a number of independent candidates where you had people actually stand up for climate change and integrity in traditionally conservative voting areas because they were so disappointed in what the government had done. That gave a very clean, clear vehicle for people to channel their frustrations in a way we've never seen before and you had seven of these independents elected in the last election. 

The last one is international pressure. Australia was clearly becoming the pariah. You know, the UK was leading on Glasgow, despite it being a conservative government, Biden had gotten back in. Australia was saying, we don't even wanna attend Glasgow, and then being shamed - even the Queen took a pot shot at our leader for not wanting to go there. God rest her soul. So all that culminated in an election where climate change was at the top of the agenda. As a result, we have a government that has already increased our target and you have a super majority of politicians holding the government to account on climate change.

Host: Despite the good news, there is still the inconvenient fact that Australia still relies on fossil fuels domestically and exports them internationally. I wanted to get your reaction on the new approvals that just went through for new oil and gas exploration fields. I think it totaled around 47,000 square kilometers that took place recently. What were the kinds of justifications that were given for this and how does that interact with Australia's new 2030 and 2050 carbon reduction goals? 

Richie Merzian: Look, this is where we have to bring people back down again. It's always the case with Australia's climate work. Australia is a major fossil fuel exporter. It's the third largest fossil fuel exporter in the world after Russia and Saudi Arabia, according to our research. If you look at the emissions embedded in that coal and gas, then it's more than twice the size of what Australia emits domestically. So if you think about its carbon footprint, it has an oversized role in terms of what it deals with the world and it's fantastic at dealing with that problem. That's been baked into how Australia operates.

So despite this newfound shift, it's so entrenched in our system that you have a climate minister,  on one hand saying, “Yeah, we need to go further,” you have a prime minister saying, “We need to build the solutions to be renewable superpower,” and you still have the resources minister of the same political party saying, “Boy, do we need more gas. Let's open up new gas. Let's do it because the world needs our gas and with that situation in Ukraine, we definitely need to be opening up new gas basins even if they will take five to ten years, we'll still need to open that up.” That's the problem. It's still fully entrenched in who we are and we haven't shifted that.

The Labor Party as a whole is hoping that the market deals with that, but it's not going to. That's not where leadership comes from and this is the tension that we're facing right now in Australia. You can't be a renewable energy superpower if you're still a fossil fuel superpower. You can't have your cake and eat too. That's the current intention we have. 

Host: Given that, moving away from the domestic scene, I just wanted to quickly touch on the international stage. Do you think that if Australia keeps exporting fossil fuels, how does this impact global climate-related goals?

Richie Merzian: It's a problem that is cooked into the UNFCCC system, right? Countries and parties to the UNFCCC are only responsible for their territorial and domestic emissions, not for what they export. The legal responsibility, and you'll hear the current Australian government say this, we're only responsible for our emissions here, and they're going take our most high polluting sector, which is electricity - about one-third of our emissions - 60% of it runs on coal and gas, and they're gonna switch that until we have 80% of our system run on renewables. They wanna do that in eight years. So they wanna do great things. With all that more clean electricity, they're gonna plug in more EVs, they're gonna electrify industry, all those good things.

But at the same time, yes, your legal responsibility is what you have at home. Your moral responsibility is what you send to the world and you can't be a credible world leader if you're still exporting the problem and growing that. 

Australia now wants to host a climate conference and they've never done that before. In the 30 year history of the UNFCCC, Australia has never hosted a UN climate conference. So that provides us, those who care about climate and work on it every day here, an opportunity to explain to Australia, you're not gonna be taken credibly if you keep growing the problem. No one's saying stop the coal and gas now, they’re saying stop growing the problem. The Australian government has 114 new coal and gas projects in the pipeline, over 70 coal and 40 gas. That can't continue. We know the IEA pathways. There's no space for that investment if we're gonna keep to 1.5 degrees global warming. That's how we need to focus this conversation, on the moral responsibility that Australia has as a climate leader.

Host: Given the global context right now in terms of energy prices, it's no secret that the entire globe is going through an energy price surge. Australia is not insulated from that, ironically, given the fact that we are very rich in, for example, gas. So what is the public response or the public feeling in Australia regarding the energy price crisis in Australia right now? And how are people reacting to this current circumstance? 

Richie Merzian: It's this really interesting home goal from the gas industry here. Australia doesn't import any gas, right? So really, we should be insulated from whatever's happening from the Russian invasion of Ukraine. We export the majority of our gas.

What happened is, when we opened up gas exporting on the east coast, we've always exported from the west coast and we've reserved a bit of that domestically. So it's kept domestic prices for gas on the west coast of Australia at a stable level. On the east coast, only in the last 10 years did we open up export terminals and that meant that Australians now have to compete on the international market for our own resources. Most Australians live on the east coast or in the south, and they're paying huge prices for gas. 

The manufacturers who are relying on gas are also getting quite frustrated that they're paying these huge prices. So ironically, the largest user of gas in the manufacturing sector is the gas industry because it's so intensive to actually take the gas, process it, and liquefy it. They use more gas than all Australian manufacturers put together. So the gas industry has stitched up this deal where they're making wartime windfall profits for doing the same thing and they're charging Australians the same amount as they're charging people overseas, and we’re rich in gas. 

So right now, no one wants to use gas for energy if they don't have to. You're gonna see this domestic exodus where possible, but at the same time, you've got these big gas companies. They're multinational. They don't employ many Australians - only 0.2% of the workforce work for the gas industry. They don't pay much, if anything, by way of tax. Five of the biggest gas companies here on the east coast made over 130 billion in the last seven years, but zero on income tax. So we tax very poorly and we also subsidize it. There are huge subsidies, especially from the last federal government for the gas industry. 

We even had a gas-fired recovery that was the solution to the pandemic, “Oh, let's get our economy up and running again. Let's fire that up with gas.” So the gas industry had kind of done themselves this disservice by being so self-interested that they're now losing their social license, which I think is providing us with a key moment to hold them to account.

Host: Now speaking of key moments, I think this is a good place to bring up the issue of Australia's main environmental law, which is the Environmental Protection and Biodiversity Conservation Act. There's what some call a major hole in it where new fossil fuel projects don't need to consider climate impacts. What's your view on this and do you think that this law needs some sort of reform? 

Richie Merzian: So there have been calls. There was a big review done, Samuel's review on the EPBC, which found it wanting, doing a poor job in a sense of protecting key areas in Australia. Now it has a number of areas of national significance that it can use to filter projects and to see whether they should be banned or amended. The greenhouse gas emissions involved are not one of the criteria. So the Australian Greens, which is a progressive party that wants climate action in Australia and who grew their party by a number of new politicians at the last election - so in a sense, their support has grown - they're putting forward a proposal where we now have to look at projects and assess them based on their greenhouse gas emissions. If they pollute more than a hundred thousand tons of emissions, basically they don't get the green light. They can't move forward. If they're 25,000 to a hundred thousand tons of emissions, these are scope one emissions, so the emissions involved here in Australia, then basically the panel and the environment minister, who's the ultimate approver, have to take that into consideration in seeing whether it should go ahead.

This is useful because right now there are no climate policies that assess projects based on their emissions and the current government is not doing anything to bring a new one in. So this is a useful piece of the puzzle and I think it's a good idea for us to bring this into force to legislate it.

Host: So with these calls for reform, has there been any backlash or any kind of response from the fossil fuel industry to these recent developments that are taking place? 

Richie Merzian: There's, there's been a few crocodile tears, you know, saying, “Oh no, woe is us. We're only here to help keep the lights on because you can't rely on the sun when it doesn't shine or the wind when it doesn't blow.” 

The fossil fuel industry here in Australia is powerful and its power doesn't just come from donations to political parties. It's just deeply enmeshed in our system. You know, they support numerous national sporting teams, communities, etc. Even though more people in Australia work for McDonald's than work in the coal and gas industry, they make it seem like the entire country runs on fossil fuels. They've made sure that this idea is seen as a fringe idea that doesn't have mainstream support and there's been no indication from the Labor Party, the current government, that they'll entertain this amendment right now. Even though there is a clear gap in our policy landscape. 

Host: Speaking of laws and gaps, there was a recent decision in the Tiwi Islands, off the coast of Australia's mainland. The indigenous community there won a court case against Santos, an Australian gas company, about not being consulted properly and Santos was essentially told to shut down its rig and leave. What kind of impact do you think this decision will have on the future of any kind of fossil fuel or gas proposals? Do you see it slowing them down or is this just more of a one-off event? 

Richie Merzian: I think it's a useful indication that we're not gonna just fast-track these projects as we've done in the past. The previous government was very much in support of expanding our fossil fuel production as much as possible. So the failure to properly consult the indigenous groups, the Tiwi Islands about accessing the Barossa field, I think is a good example of how hard it is as well to push these projects through. A lot of it has been brushed over in the past because they've had the support of state and federal governments and now that climate change is more front and center, now that we know better in terms of how to communicate these problems, I think there's a real opportunity to set what the benchmark should be around how these projects should unfold. 

I think the EPBC amendment that we just talked about, the climate trigger, is a good example of a growing interest more broadly from indigenous groups, environmental groups, and other stakeholders to be a lot more circumspect about how we proceed with fossil fuel production in Australia.

We also recently had two Pacific presidents, former Pacific presidents from Kiribati and Palau in Australia, I think two, three weeks ago. Australia wants to reconnect, firstly, with its indigenous people and that's why it's proceeding with changing the constitution to put that in, and secondly, to connect with our Pacific neighbors better.

You're seeing many indigenous groups and these Pacific leaders say, “Australia, we want to partner with you on these problems, and to do that, we need you to stop opening up new coal and gas.” I think this is a good indication that this is going to come through in a variety of channels. One, through the consultations required under our current system, but then also in just other ways.

Host: I just wanted to plan a flag quickly in regards to the Pacific. Do you feel like this new engagement that Australia is now involved in with Pacific Island nations largely revolving around climate change, do you think that this is more of a part of a strategy in terms of geopolitical goals to dampen China's influence in the region?

Richie Merzian: The Pacific has always said that their number one threat, their number one national security concern, is climate change. It's not China, it's not the geopolitical rivalry that currently exists between China and the west. It's climate change. Australia agreed, it signed a declaration a few years ago along those lines.

So if Australia wants to reconnect with the Pacific in a credible way, then it needs to demonstrate that it's taking climate action seriously. President Tong and President Remengesau from Kiribati and Palau said this in no uncertain terms, please stop opening up new coal and gas. That is what we ultimately want. President Tong wrote to all world leaders ahead of the Paris Agreement in 2015 asking for this, and it's the same ask. They haven't changed what they're asking. What's changed is Australia's interest in actually working with them. 

Australia's bid to host a UN climate conference is done with the condition, self-made by this new government, that it wants to partner with the Pacific countries. And partners work together. Australia says we're part of the Pacific family. We're lucky, we're part of the Pacific Island Forum, the main regional grouping. But to do that, we need to act like a family member that cares, not some sort of distant, weird uncle. 

Host: Well, no one likes a distant weird Uncle. So I wanted to jump over to a recent speech made by the Minister of Climate Change and Energy, Chris Bowen, that he gave at the Center for Strategic and International Studies in the US recently. There was a lot there that seemed as though Australia was playing its hand with climate diplomacy. He mentioned that Australia and the US need to look into strengthening renewable tech, manufacturing, and supply chains. Without mentioning China by name, he warned that the vast majority of renewable tech manufacturing was concentrated there and that that presented a risk, uh, to security and supply. How do you see this playing out and does it make sense for Australia to boost its renewable tech manufacturing base and strengthen its supply chain with allied countries like the US?

Richie Merzian: Yes, this makes total sense. If we had a government that was cognizant of the shifting tides and the ever-growing need for a green revolution, we would've been on this 10 years ago. The majority of tech that goes into solar panels today was derived from research done in Sydney, Australia, at the University of New South Wales, then was taken to China and produced there.

We've missed out on opportunities in the past. Now, Australia has the opportunity to manufacture so many of these solutions to climate because we have all the rare earths and minerals, we have all the ingredients you need to build batteries or to build a number of these solutions. We’ve got ample land to take renewables and turn it into green hydrogen if we really think that's a legitimate tech. There's a project to build a cable connecting the north of Australia to Singapore so we can pump electricity into the Asian mainland. All this is possible. The new US Inflation Reduction Act has within it a requirement that the US source a good chunk of their resources for the production of these green goods from free trade partners like Australia.

All of this is lining up for Australia to potentially build the solutions and to live that mantra put forward by the Prime Minister to be a renewable energy superpower, but it does have to come at the trade-off of being a fossil fuel superpower. We need to shift our energy, diplomacy, and investments from continuing to produce fossil fuels and opening up new fossil fuels into these new techs. Otherwise, we're gonna slip behind. It's all good that the framing is there, but it needs to be backed up by action and that's the opportunity. 

Host: If we look at the timeframe here, we're already seeing pretty drastic climate impacts across the world. Do we have enough time to do this? Does Australia have enough time to get this together? 

Richie Merzian: You have to be an optimist to work on climate policy in this country. I think it's still possible. It is entirely still possible. Fortunately, the state governments in Australia and the subnational governments have already been on this. They were the first to commit to net zero. New South Wales is manufacturing electric buses. South Australia is looking at building up batteries. Western Australia is building one of the world's largest screen hydrogen projects. Queensland announced a massive, the world's largest pumped hydro.

We have all the ingredients we need to do that here and fortunately, there's been a number of actors that have already gotten that started. Hopefully, with the federal government now on the same page, we can actually get there. But what you can't do is still entertain the same kind of conversations that we have around, endlessly opening up new fossil fuels that will just undermine this entire venture.

Host: There's a lot of good news in there and we've got COP27 coming up. We've also got a whole range of issues that are competing with climate action. There are blackouts in a lot of developing countries. There's an energy price crisis facing several countries. There's a resurgence of coal in some nations. How do you see Australia's role at COP27 and do you think it could serve as an example that things can indeed change despite historical challenges? 

Richie Merzian: I think COP27 will be a hard COP. I think this will be my 10th COP and there's always a bit of buyer's remorse after a big political COP, they clenched a big deal. On top of that, you add this energy crisis that most countries are going through, inflation, and the current tensions that have dislocated key dialogues between China and the US. So I think it's gonna be quite a hard COP that'll struggle to have a unified clear message of continued support for the shift this decade, the decisive decade as they put it. On top of that, there are all these other stories coming out of the Egyptian presidency and how that's working as well. 

Within that context, Australia is one of the few good news stories. We've increased our nationally determined contribution to a 43% cut on 2005 levels by 2030. That's a significant jump from 26% where it was but obviously falls short of a more ambitious target in line with 1.5 degrees. Australia's looking at hosting a COP so it'll be negotiating with other countries to get their support. And Australia has increased its climate finance - it still has a fair way to go. Australia hasn't joined the Green Climate Fund. It pulled out in 2018 and it hasn't rejoined, and that's a key gap.

There's still space for Australia to move forward. Australia hasn't joined many of the pledges that Glasgow arranged on the margins of the COP last year, but Australia is ultimately a good news story because it's gone from being perceived as a wrecker to hopefully a broker. In the past, Australia insisted on using dodgy Kyoto credits to avoid having to reduce emissions, a whole variety of things that gave cover to other laggards. 

Now, Australia is in the camp of actually pushing for more, and I think that's a really useful space for Australia to play. They'll have a pavilion there to showcase some constructive stories and good ideas. Whereas last year, the Pavilion that Australia put on showcased more fossil fuel production.

Host: Well, Richie, fingers crossed that there'll be more good news ahead. Before we let you go, could you let listeners know where they can find you or the Australia Institute on social media?

Richie Merzian: You can follow me on Twitter at @RichieMerzian, and the Australia Institute at @TheAusInstitute. Also, check out our website. All the research I was quoting is on there, it's publicly available.

Currently we’re going through a big transition in terms of reforming our climate policy so a lot of our work will go up there. The other conversation that we need to have globally is around carbon credits, because in Australia they've been relatively dodgy and haven't helped reduce our missions. I think there's this broader UN panel that's looking into greenwashing and carbon credits more globally. That's a real area that we need to keep our eye on because if carbon credits continue to be dodgy, they're not gonna help us get to net zero. You can find our work on that issue as well, or on our website.