Monday, July 07, 2008

Climate change: the Garnaut report

Over the Tasman, the Australian government has just released its major review of climate change policy. The Garnaut report [PDF; large] takes a hard look at the impacts of climate change on Australia, and recommends the rapid adoption of a broad-based emissions trading scheme. The alternative is stark: an environmental disaster, including the loss of the Great Barrier Reef, Kakadu, and much of Australia's agricultural production.

The proposed ETS would be introduced by 2010, and would be pretty similar to our own (in the way that all ETS's are similar: the government issues permits, polluters give them back to cover their emissions, and trade among themselves to find the cheapest reductions). One major difference is that it will have from the outset a downward path, a long-term emissions trajectory, or rather a series of trajectories which "should reflect increasing levels of ambition", with governments moving from the initial Kyoto trajectory to another in response to international negotiations. A second is that the government should not hand out free permits to pollute to businesses - so no corporate welfare. A third is the order of implementation - New Zealand has led with forestry, to be followed by the electricity and industrial sectors, (eventually) petrol, and then finally agriculture and waste. But forestry and agriculture are much less important sources of emissions in Australia (forestry is in fact a net sink), so they're coming last, with electricity, industrial and transport fuels included in one go from 2010. Finally, there's a commitment to revenue recycling from the outset, with a recommendation that 50% of ETS revenue going to low-income households as compensation for higher energy bills, 30% to help trade-exposed and disadvantaged industries adapt, and 20% on research. If only our government had done the same...

(As an aside, none of these differences pose any barrier to interconnecting our carbon market with Australia's: a ton of carbon is a ton of carbon. The important thing is the political agreement to accept other countries' credits or to back them with AAU, and that's not something that requires any delay in implementing a domestic policy)

Finally, Garnaut has harsh words for the "sceptics", calling it "a misnomer for their position, because these dissenters hold strongly to the belief that the mainstream science is wrong", and stating clearly that

We will delude ourselves if we think that scientific uncertainties are cause for delay. Delaying now will eliminate attractive lower-cost options. Delaying now is not postponing a decision. To delay is to deliberately choose to avoid effective steps to reduce the risks of climate change to acceptable levels.
Over the Tasman, this seems to be producing action. And it may have the ironic effect that Australia - which dragged its feet on joining Kyoto - will have more of its emissions subject to controls than "clean and green" New Zealand will in 2010. And that's something we should all feel deeply embarrassed about.