ABE: The Stupefying Economics Breakfast
An Insight Into A Pleasant Economic And Political Discussion Bound By Tea And Other Beverages.
T. J. Ellis
THE MORNING COMMENCED WITH AN INCREDIBLY EARLY ALARM, followed by an eager congregation of Year 11 Economics students out the front of Shore, for a bright and early departure at 7:00am. A very cramped taxi with arguably some of the most competent economics students in the State, such as William Sutton, Tom George (TEEG) and Michael Kwak (GOAT) took us to what would be the hub of the economic briefing given to us, over some light snacks and hot beverages.
Amidst the assembly of notable economists, such as SMH Economics Editor Ross Gittins, Barrenjoey Chief Economist Jo Masters, and not to mention our very own Mr Fletcher, the majority of the discussion at the Shore table was about who could spark a conversation with one of the economists above. Surprisingly, it was our very own Daniel Kang who had a brief but insightful conversation with the one-and-only Ross Gittins. Additionally, Tom George managed to speak to Wellsy’s favourite economist, Jo Masters.
The main point of discussion at today’s breakfast was the slight pickle that Australia has found themselves in, regarding the Net Zero by 2050 target, labelled as “over-ambitious” by Guy Debelle (will get onto later). Climate Change Minister Chris Bowen delivered a speech (not particularly liked by the senior editor of the SWR) regarding the use of nuclear energy, to ‘get Australia out of this pickle’, neatly put by Mr Wells. Chris Bowen alluded to a strong incongruence of nuclear energy with Australia’s achievement of its climate change initiatives, stating that “Nuclear power for Australia doesn’t stack up…estimates put [The SMR’s]* at AU$5billion for 300 MW… compared to around 2GW for many power stations…”.
Bowen outlined Australia’s current targets, and our somewhat delayed progress despite strong affirmations of sustainable achievement across carbon-intensive industries. In what seems like an eternity away, despite only being a short seven year period, Bowen outlined the 82% renewable energy target by 2030. Despite Australia’s strong reliance on coal-fired power stations accounting for more than 72% of all energy generation within the nation, Bowen displayed a sheer level of optimism, despite more than a 46.1% shift of Australia’s electricity generation in seven years. Michael Kwak had quite the chuckle whilst Bowen was speaking, as if he could manage Australia’s climate change response better than Mr Bowen (he probably could). I’m also sure that you’ve heard of the dreaded Net Zero by 2050 target, which is seeming more unlikely to be achieved, mainly due to supply chain disruptions of global energy as a result of the Russian invasion of Ukraine, increasing global energy prices, inhibiting the development of renewable energy plants. However, Bowen stated that the awesome combination of the CBAM (carbon border adjustment mechanism) and the safeguard mechanism would magically solve our climate problems at once.
The CBAM refers to a measure that (in the EU) is currently placed on companies which requires them to import covered goods from outside the EU to report the volume of emissions generated in their production and buy a corresponding number of CBAM certificates tied to the International Carbon Unit price. Bowen has stated that there is a simplified version of the EU’s CBAM that the Albanese cabinet may pursue to parliament, known as the safeguard mechanism. It would be targeted at 215 facilities, involving steel, cement and aviation, among others. These facilities produce 28% of Australia’s emissions.
It would require them to face a carbon tariff. Giving each facility a cap on emissions per year, reducing by 4.9% each year. This is done to ensure mutual decarbonisation between local and international producers.
The safeguard mechanism has been in place since 1 July 2016, and requires Australia’s highest greenhouse gas emitting facilities (215) to keep their emissions below an emissions limit (baseline). If a safeguard facility exceeds their baseline, they must manage their excess emissions. If you are below baseline, businesses can sell their carbon permits to other businesses that need them due to excess carbon production. If they fail to manage their excess emissions through the use of carbon permits, they face penalty fines.
Now, whether companies will relocate their operations offshore to countries that lack an overtly rigid climate framework, such as Australia, is a different beast that needs to be fully tamed by the federal government. Partial efforts have been made to pre-emptively mitigate this phenomenon, known as carbon leakage, by imposing carbon tariffs on imported goods originating from nations with weak climate improvement frameworks.
After what seemed to be 10 minutes, the hour long breakfast ended, which marked a return from the exclusivity and prestige attached to being in the presence of various economists. Overall, the experience was unforgettable, a true 10/10. For those looking to attend, initiate the Ecos grind, and you’ll get there.
