MELBOURNE, Sept 27 (Reuters Breakingviews) - It’s tempting to hope the Australian government led by Prime Minister Scott Morrison is starting to see the light on climate change. In a speech on Friday, Treasurer Josh Frydenberg called it a “structural and seismic shift” for the country’s financial system, which relies heavily on overseas investors increasingly cognisant of the impact of rising temperatures. Morrison on Sunday confirmed he’s working on a national net-zero policy. Trouble is, there’s a big risk of greenwashing. Breakingviews drills into the administration’s reluctance to tackle global warming, and how to scrutinise whatever plan emerges. WHY DOESN’T AUSTRALIA HAVE A NET-ZERO PLAN ALREADY? In short, politics. Climate change has played a significant role in the defeat of at least four, if not five, of the country’s six prime ministers since 2007, and usually by party coup rather than at the ballot box. The current administration is a coalition government in which Morrison’s Liberal Party relies on the support of the smaller National Party for its one-seat majority. The National Party traditionally represents rural Australia, home to farmers and coal miners. One of their more outspoken members, Matt Canavan, declared on Sunday that he is “dead set” against net-zero. WITH ONLY 26 MILLION PEOPLE, JUST HOW IMPORTANT IS AUSTRALIA IN THE CLIMATE DEBATE? The country may rank 55th or so in the world by population, but it’s a top-15 producer of greenhouse gases and the most emission-intensive developed country. WOW. HOW IS THAT? Australia relies on coal for some 70% of its power generation. It’s the second-largest exporter of thermal coal used in power stations and, at 55% of global supply, the largest provider of metallurgical, or coking, coal used to make steel. It’s also the world’s largest exporter of liquified fossil gas. SO COAL IS A HUGE PART OF THE COUNTRY’S ECONOMY? Actually, no. In a good year, the value of exports approaches A$70 billion ($51 billion). Nice to have, but it’s 13% of exports and around 3% of GDP. Overall, the industry supports some 40,000 jobs, or one-third of 1% of the workforce. FRYDENBERG SAID AUSTRALIA IS CUTTING EMISSIONS FASTER THAN MANY OTHER COUNTRIES, THOUGH. ISN’T THAT GOOD? He’s playing loose with statistics. Australia’s emissions have come down around 20% since 2005, when the country hit peak acreage destroyed by deforestation and the like. The Liberal-led administration chose that year rather than 2000 when setting its Paris targets in 2015. Frydenberg’s data also includes the effects of the pandemic and intense water shortages between 2017 and 2019 when cattle numbers and their related emissions dropped. If they’re excluded, Australia’s emissions have increased 7% since 2005, according to the Australia Institute think tank. REDUCTIONS ARE REDUCTIONS, THOUGH, AREN’T THEY? Chances are that pandemic- and aridification-driven falls will reverse. Cattle farmers are already having a good 2021 and increasing their stock after more than a year of plentiful rain. Moreover, the statistic implies the government is actively doing something when it isn’t. AREN’T COAL PLANTS CLOSING DOWN UNDER? They are, but because they’re old. AGL Energy’s (AGL.AX) Liddell complex will be shut by 2023 and one of EnergyAustralia’s will be out of commission by 2028. Each accounts for about 3% of national emissions. When AGL announced in 2018 it would close Liddell, however, a government minister lobbied the board to sell rather than close it. Guess who the minister was read more . FRYDENBERG? Spot-on. When he was energy minister. SO THEN, WHAT HAS THE MORRISON GOVERNMENT DONE ABOUT CLIMATE CHANGE? There has been some patchy help for renewables, but most of the administration’s attention has been focused on a “gas-fired recovery” from Covid-19, and “technology not taxes”. THE FIRST ONE SOUNDS STRAIGHTFORWARD ENOUGH. Yes, the “gas-fired recovery” promotes fossil gas. That’s good news for Woodside Petroleum (WPL.AX), which is bulking up by buying BHP’s (BHP.AX), (BHPB.L) oil and gas business, and Santos (STO.AX), which is buying rival Oil Search (OSH.AX). They’re both frantically pushing new projects. Gas drilling on average produces half the carbon-equivalent emissions of coal. Santos’s big Barossa field in the Timor Sea, though, is described as a “carbon bomb” by the Australian Centre for Corporate Responsibility, which is challenging the company’s net-zero policy in federal court read more . WHAT DOES “TECHNOLOGY NOT TAXES” MEAN? That’s the federal government saying it won’t provide incentives to install solar panels or buy electric vehicles, even though electricity and transport account for more than half of national emissions. State governments, including the Liberal administration in New South Wales, are offering tax breaks, however. THERE’S NO TAX RELIEF FOR ANY TECHNOLOGY? There’s plenty of support for tech that helps fossil-fuel companies. One is carbon capture and storage, or hoovering up emissions and putting them back in the ground so the oil, gas and coal industries can keep churning. Trouble is, CCS, as it’s known, is expensive, doesn’t work at scale and might never do. Hydrogen is another being supported. WHAT WOULD A CREDIBLE NET-ZERO POLICY FROM AUSTRALIA LOOK LIKE? Frydenberg has taken one of the first steps: acknowledging that climate change is a structural shift and one that will affect the country’s economy and ability to attract all-important foreign capital read more . More broadly, however, the Morrison government is clinging to factors over which it has little to no control. Australia has no domestic car industry, for example, so has no choice but to shift to whatever electric vehicles major manufacturers develop. Why not support it? Similarly, two of its biggest overseas coal markets – Japan and South Korea – are planning to reduce their dependence over time. China has already banned Aussie coal for unrelated political reasons and intends to stop financing coal plants abroad. Meanwhile, the Asian Development Bank is raising a fund to buy and close regional coal plants already in operation. WHAT ELSE? Any reasonable plan should include targets to reduce gross – not just net - emissions in each major sector of the economy: agriculture, energy production, energy usage, transportation, and industry. An ambitious timeframe also would help. Yearly goals would really focus the mind, but at the very least peg them to the three-year election cycle. Bonus points for linking ministers’ and civil servants’ pay to targets. Next, commit resources, financial and otherwise, to manage the societal impacts of the transition. Up to 1.8 million new jobs could be created by embracing low emissions, from retrofitting buildings to expanding renewable energy to regenerating land, estimates think tank Beyond Zero Emissions. There’s no guarantee those will come in areas where coal, gas and agriculture have dominated; they’ll need support. Finally, establish an independent commission to oversee the process. The danger is that the Morrison government ignores all that and sets a nebulous 2050 goal overly reliant on unproven technology like carbon capture. If that happens, it’ll just be a pre-COP26 PR stunt. Follow @AntonyMCurrie on Twitter CONTEXT NEWS - Australian Prime Minister Scott Morrison on Sept. 26 confirmed that his government is developing a net-zero emissions plan, following comments on Sept. 24 by Treasurer Josh Frydenberg that the country “cannot run the risk that markets falsely assume we are not transitioning [to reduce greenhouse-gas emissions] in line with the rest of the world”. - In a speech to the Australian Industry Group, Frydenberg said climate change is something that “presents risks we must manage and opportunities we must seize”. He noted that Australia’s carbon-dioxide-equivalent emissions have fallen more than 20% since 2005, “putting our 2030 target of a 26 to 28 per cent reduction clearly in sight”. - Frydenberg also said that Australia has historically relied on overseas capital, with the stock of foreign investment currently at A$4 trillion ($2.9 trillion). He added that almost half of the country’s government bonds are held by overseas investors and that around a fifth of wholesale funding for the country’s banks comes from offshore. Editing by Jeffrey Goldfarb and Katrina Hamlin