The cutting edge: Victoria’s emissions reduction strategy

With great fanfare the Victorian government has launched its Climate Change Strategy, a year later than required by legislation (the government granted itself a sick-note as a result of the COVID-19 pandemic last year).

The strategy confirmed Victoria’s interim targets for 2025 (28-33 per cent below 2005 levels) and 2030 (45-50 per cent) on the way to its eventual 2050 target of net zero. While Victoria is keen to show that this is at the vanguard of climate ambitions (and conversely, the Federal Government is predicting dire consequences), the 2025 target at least may not be that stretching. As figure 1 shows, a 4 per cent reduction from 2019 would get Victoria to the 28 per cent target (projected reductions are based on the policies set out in the strategy and business-as-usual reductions).

Figure 1 Progress towards the targets

Source: Victorian climate change strategy

Perhaps this means Victoria isn’t ambitious enough? That’s what the agitprop activists at the Environment Victoria say. The problem is that unilateral pledges, especially at a subnational level, don’t really move the dial unless they somehow spur a whole lot of copycat pledges. There’s no sign even of neighbouring states upping the ante just yet.

In any case, whatever one thinks of the outcomes, the strategy is the result of a reasonably transparent process, including the establishment of an independent panel led by Greg Combet, the architect of the Gillard government’s emissions reduction plan, and public consultation. The targets fall within the bounds recommended by the Panel.

So, where are the emissions savings going to come from? Figure 2 shows the breakdown of Victoria’s emissions in 2019:

Figure 2 emissions by sector

Source: DELWP

Unsurprisingly, given Victoria’s reliance on brown coal for energy generation, energy is the largest component of the emissions. This is also the area in which most progress has been made on the emissions front, with the government progressively taking effective control of the electricity sector through its renewable energy auctions, its sponsoring of the Big Battery at Geelong, subsidies for distributed energy resources and tightening its grip on the transmission investment process.

The government’s white-anting of natural gas continues, with a promise to help homes and businesses to fuel-switch to electricity. If this takes off, it will start the clock ticking on the gas distributors’ efforts to set themselves up as future hydrogen carriers before their assets are stranded by the move away from natural gas. It follows on from the existing position of blocking new gas whether by local development or import.

The next largest is transport, which is also the most material sector whose emissions are growing. Unsurprisingly, this is an area of focus in the strategy, which is accompanied by a zero emissions vehicle roadmap. Conscious of the negative reaction from the industry to its proposed road user charge for EVs, Victoria is sweetening the deal by offering a $3,000 discount to the purchase price of EVs. This is accompanied by money for charging stations, electric buses and a promise to upgrade the government fleet to zero emissions vehicles. Whether this will all be enough to reach the target of 50 per cent of new light vehicle sales being zero emissions by 2030 remains to be seen. The Nissan LEAF, one of the first fully electric models to be developed retails for around $53,000 on road, while its closest combustion engine equivalent, the Juke is around $30,000.

Next largest is agriculture. This politically sensitive industry is more likely to get some money thrown at it to reduce emissions than to be put under pressure to do the heavy lifting itself. Grants for developing and implementing farm climate action plans, a farming innovation centre that aims to have the world’s first net zero dairy farm by 2026, money for tree planting and energy efficiency on farms are the main policy announcements.

There are a range of other initiatives. Taken in the round, the strategy is the expected mix of government largesse, micromanagement and virtue-signalling. If that seems like a fairly negative assessment, it must also be recognised as the inevitable result of state governments like Victoria finding ways to fill the climate policy vacuum created by the Coalition Federal Government. This is what you get when you don’t have an economically rational, whole-of-economy carbon policy framework.