Garnaut hands down draft carbon report

THE handing down of the draft Garnaut report into climate change signals the beginning of serious efforts by Australia to curb carbon emissions, which has recommended a broad emissions trading scheme across industries.
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Ross Garnaut

Kate Haycock

In the report, Ross Garnaut – economist and chairman of major mining company Lihir Gold – called for Australia to introduce a carbon trading scheme as soon as possible.

However, the report did not place any hard prices on carbon emissions, meaning the true economic impact is still unknown.

Beyond this, key points from Garnaut’s 600-page report into the impacts of climate change and potential ways of mitigating those effects noted that transport should be included in an emissions trading scheme, energy costs will rise and coal-powered generation would not be given any compensation for having to foot a carbon tax.

However, the report also said it would be “in Australia’s interest to find out as soon as possible whether there can be a low-emissions future for coal, and to support rapid deployment of commercially promising technologies”, especially given Australia’s status as the world’s largest coal exporting nation.

Garnaut’s report also suggested $A3 billion be spent, per year, on developing low emissions technology with Australia to become a market leader in the technology, especially in Asia.

The report is, at this stage, only one input into the Federal Labor Government’s response to climate change and firm policy decisions on the size and shape of Australia’s emissions trading scheme have yet to made.

“The review’s first aim is to lay out the issues for policy choice in a transparent way. We will have done our job if Australian governments and the community make their choices in full knowledge of the consequences of their decisions,” Garnaut said.

Industry response has been low-key so far, with several groups welcoming Garnaut’s statement that he supported the phase out of mandatory emissions targets once a trading scheme was put into place.

The Queensland Resources Council said it favoured Garnaut’s endorsement of research, development and commercialisation program into low-emission energy generation technologies.

However, the council’s chief executive Michael Roche said that while the minerals and energy sector considered an emissions trading scheme the best way to price carbon, “trade-exposed emission intensive industries” such as coal mining and coal-fired power stations were also a “fundamental component” of the state’s economy.

“An effective emissions trading scheme is the first step towards identifying how Australia can make the change from a carbon-intensive economy to a low-emissions economy without sacrificing the economic growth that will pay for these reforms,” Roche said in a statement.

“Professor Garnaut’s recommendation that additional mitigation policies should only be undertaken where they lower the overall cost to the economy is a strong acknowledgment that a mandatory renewable energy target is not in the country’s long-term interests alongside an effective emissions trading scheme.”

Australian Industry Group chief executive Heather Ridout said the group was in favour of emissions trading but the focus needed to be on achieving “least cost abatement”

“We also agree with the argument in the report that, until other countries impose equivalent costs on greenhouse gas emissions, Australia should adopt measures to ensure there is no loss of competitiveness on the part of Australia’s trade exposed emissions intensive businesses,” she said.

Ridout also said a gradual phasing in of emissions trading would be vital to giving business “breathing room” to adjust to new compliance regulations and additional costs.

The Minerals Council of Australia said while the report highlighted the economic and environmental risks of climate change, it also emphasised that Australia could not act alone in reducing emissions.

“The report also underlines the critical role of low emissions technologies, especially carbon capture and storage,” MCA acting chief executive Brendan Pearson said.

However, the MCA was disappointed by the continued support for “per capita” emissions targets as the basis for future international climate change agreements and also said the review failed to “critically examine the interaction between the emissions trading scheme and the proposed Renewable Energy Target”.

The MCA said it was also disappointed that the review continued to support full auctioning of emissions permits from 2010, adding the need to generate revenues from the emissions trading scheme should be “a secondary consideration of scheme design rather than the defining principle”

Meanwhile, the leader of the opposition Dr Brendan Nelson said 2010 was too early for the introduction of an emissions trading scheme and could be economically dangerous.

"We think that it is most important that we get it right, that we protect Australian jobs, Australian industries … in the process of developing this brand new system for our economy in dealing with climate change," Nelson told media in Sydney today.

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