September 30, 2008 / 3:50 AM / 11 years ago

Australia economy can afford emissions trading: expert

CANBERRA (Reuters) - Australia’s coal-powered economy can afford to cut greenhouse gas output by 5 to 10 percent by 2020 through carbon trading, even if global warming will hit it hardest, the nation’s chief climate adviser said.

In his final advice to government on a “practical” emissions regime scheme planned for mid-2010, Ross Garnaut said if Australia cut emissions by 10 percent by 2020, it would cost only 0.1-0.2 percent of yearly GDP growth over the period.

“We have a chance, just a chance, to deal with this in a way future generations judge to be satisfactory,” he told reporters. “If we fail ... the failure of our generation will haunt humanity until the end of time,” said Garnaut, dubbed Australia’s answer to British climate economist Nicholas Stern.

Garnaut, an academic economist and former diplomat, was appointed by the center-left government last year to design an emissions regime to curb Australia’s greenhouse outputs, which are the world’s fourth-highest in per person terms.

Prime Minister Kevin Rudd, who made Kyoto climate pact ratification his first official act, has been under voter pressure to address global warming amid fears it will hit the driest populated continent and its $1 trillion economy hardest.

But with international markets in turmoil and polls this week showing Australians now care more for their jobs than the climate fight, Rudd’s government has retreated, promising only to consider Garnaut’s plan when drawing up an emissions strategy.

Garnaut said the regime he envisaged would not be inflationary if money raised from pollution permits purchased by big companies were used to offset the cost of the scheme to households at a time when inflation was already at 12-year highs.

He also stood firm on an earlier recommendation that no free trading permits be issued to industry, calling for the government to inject A$1 billion ($800 million) into the power industry to help it adjust to the scheme.


Green groups said Garnaut had wilted in the political heat on his alternative and more courageous target to cut emissions by at least 25 percent by 2020 to set an example to other nations such as China and India, and help stave off catastrophic global climate change.

“A decision by the government ... or business to support the weak 10 percent target is a decision to support the devastation of our natural icons, the Great Barrier Reef, Kakadu,” said Australian Conservation Foundation spokesman Tony Mohr.

Australia is the world’s biggest coal exporter, with coal used to generate about 77 percent of Australia’s electricity.

While the country’s net emissions total 576 million tonnes of carbon dioxide equivalent, or only about 1.5 percent of world emissions, Australia emits 28.1 tonnes of carbon per person, one of the highest levels in the developed world.

Australia’s top industry group has said emissions trading could be a “company killer,” driving big polluting power generators and cement manufacturers out of business or offshore to bases in Asia unburdened by an emissions regime.

But Garnaut did not expect unemployment problems in coal mining regions in the early years of emissions trade. Australia was also well positioned to change its energy base, with an abundance of clean options like solar, wind and nuclear, he said.

He also shook off concerns financial unrest could hobble investment in the scheme and wider talks on a global post-Kyoto Protocol climate deal next year in Copenhagen.

“Climate change is a long-term structural issue. By the time the world is addressing these issues in Copenhagen, the financial crisis will have resolved itself,” he said.

Scientists were divided over his report, the last of three he has delivered to the government this year.

“The lion, whose February report shook the walls with its roar, has turned into a mouse, whose September and October reports whimper that we must set weak targets that are politically expedient,” said Mark Diesendorf, deputy director, of the Institute of Environmental Studies at the University of New South Wales.

But Barry Brook, from the Adelaide-based Institute for Climate Change and Sustainability, said Garnaut’s approximately 700-page report had laid crucial groundwork for Copenhagen.

Editing by Michael Perry and David Fogarty

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