Garnaut raps Rudd on knuckles

Matthew Warren and Matthew Franklin | The Australian

KEVIN Rudd’s handpicked climate expert has warned that Australia must make far steeper cuts to carbon emissions than previously thought and demand developing nations follow suit if the world is to avert a climate change catastrophe.

Ross Garnaut has also warned that taxpayers will have to compensate low-income households and industries, such as forestry and agriculture, for income they will lose as part of the fight against climate change.

The findings were released yesterday in an interim report produced by Professor Garnaut discussing the economic implications of Australia setting sharp, short-term targets for the reduction of carbon emissions.

As power generators and businesses warned of adverse effects if the Rudd Government accepted the recommendations, Climate Change Minister Penny Wong refused to commit to the Garnaut prescription.

Senator Wong promised responsible action but said she was also awaiting Treasury modelling, due to be finished in June.

The Greens attacked her position as evidence the new Labor Government was a hostage to the coal industry and had started backsliding on climate change.

Last year, Mr Rudd, in Opposition, commissioned Professor Garnaut, an economist and former colleague, to study the implications of reducing carbon emissions in the wake of the 2006 Stern report to the British Government, which warned of catastrophic consequences if the world did not move decisively to combat climate change.

Mr Rudd had committed Labor to setting a target to reduce carbon emissions by 60 per cent by 2050 but wanted the Garnaut report to provide a basis for establishing a shorter-term target.

Professor Garnaut said Australia must accept deeper cuts of between 70 and 90 per cent of emissions by 2050 to avoid the risk of dangerous climate change.

It should also set a target this year for emissions reduction by 2020 – similar to those accepted by other developed nations. The European Union has a 2020 goal of cutting emissions by 20 per cent. "Australia should be ready to go beyond its stated 60per cent reduction target by 2050 in an effective global agreement that includes developing nations," Professor Garnaut said.

The Prime Minister yesterday told parliament the nation could no longer afford to ignore climate change because, as the driest continent, it stood to suffer the greatest effects of global warming.

"The costs of inaction on climate change are much greater than the costs of action," Mr Rudd said. "Australia must therefore seize the opportunity now to become a leader globally.

"This is where we need to position Australia, not in a state of denial but out there ahead of the pack, because it is in our deep economic interest, our deep national interest, to do so."

The interim report, released in Adelaide yesterday, said the world was moving towards high risks of dangerous climate change more rapidly than had been generally understood.

"This makes mitigation more urgent and more costly," the report said.

"At the same time, it makes the probable effects of unmitigated climate change more costly for Australia and the world."

Blaming much of the growth in emissions to economic growth and the aspirations of developing nations such as China, Professor Garnaut said it was not feasible to expect the developed world to lower its expectations.

"The challenge is to end the linkage between economic growth and emissions of greenhouse gases," he wrote.

He said the nation should also establish an emissions trading scheme as a centrepiece of a domestic mitigation strategy.

This would need to include "measures to correct market failures or weakness" and would have to distribute the costs of the scheme fairly across the community. The report says such an approach would see the nation play a positive role in global talks for a new climate pact to replace the Kyoto agreement on emission reductions, which expires in 2012.

"Australia should formulate a position on the contribution that it would be prepared to make to an effective global agreement, and offer to implement that stronger position if an appropriately structured international agreement were reached," it says.

It added that efforts to include poor countries in a global scheme would enable richer countries such as Australia to buy excess permits from them, rather than trying to deliver deep cuts themselves.

Developing countries refused to be included in a global regime of targets at last December’s UN climate negotiations in Bali.

Professor Garnaut said there was no risk the Government’s target of 60 per cent cuts by 2050 would overshoot Australia’s likely long-term cuts in any global agreement sealed to take effect with the expiry of Kyoto.

"A reduction target of, say, 70per cent does not imply that actual future emissions in Australia would be restricted to the extent suggested by the reduction in emissions rights," the report said.

Professor Garnaut proposed compensation for major energy-intensive industries exposed to losses in international trade, such as aluminium and cement.

The Australian Chamber of Commerce and Industry expressed concern about the cost of emissions reduction in Australia, particularly its impact on small- and medium-sized enterprises if the emissions cap were implemented on a per capita basis.

Power generators say they stand to lose much of the value of Australia’s $50 billion network of power stations if the Government accepts Professor Garnaut’s recommendation not to compensate them in an emissions trading scheme.

A full report on the design of an emissions trading scheme will be delivered next month, but the report excluded a mandatory renewable energy target as part of the ideal greenhouse mitigation strategy and suggested it should be phased out early.

The report said the Government’s 20 per cent renewable target could create most of the incentives to introduce lower emission technologies in the first years of the scheme and duplicate the role of a trading scheme.

Opposition environment spokesman Greg Hunt said the Government had "dropped the ball" on the Howard government’s work in driving the development of clean coal technologies and encouraging developed nations to tackle deforestation.

– Additional reporting: Siobhain Ryan

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