[Oz-envirolink] Warm-up act in climate war Garnaut slams climate plan

[hugh spencer]

Quote  "  The review proposes a formula for assessing comparability of
effort of various countries  towards effective global efforts embodying
various degrees of ambition. Within a global effort  to hold concentrations
at 450 parts per million (ppm), Australia's proportionate share of the
effort would reduce emissions entitlements to 25 per cent of 2000 emissions
by 2020, and 90  per cent by 2050. Within a global effort to hold
concentrations at 550 ppm, Australia's  proportionate share would be to
reduce entitlements for 2020 by 10 per cent from 2000  levels, and
entitlements for 2050 by 80 per cent."


550 ppm???

Jasus!!

but relax... they are only numbers ... global warming is just a big hoax -
aimed at letting the greens control the world..(:-o)

still basically BAU (and population growthAU)

H

http://www.theage.com.au/national/australia-counts-itself-out-20081219-72ei.html
?page=-1

 Australia counts itself out

Ross Garnaut
Opinion
The Age
December 20, 2008

  IN THE course of the work on climate change, members of the Garnaut
Climate Change  Review team would sometimes ask how, when the work and the
responses to it were all  over, we would judge whether our efforts had been
successful. Would the main indicator be  the extent to which the Australian
Government accepted the final report's main  recommendations?

  "No," I would respond. "Policy decisions will reflect a range of
pressures and constraints  about which we are not now in a position to
assess, and about which the Government is  elected to form judgements. We
will have done our job if the Australian community and  Australian
governments understand the implications of decisions that are taken."

  Whatever the pressures and constraints that have shaped the white paper,
the policy  decisions embodied in it have implications for the environment
and the economy.

  The policy proposals in this week's white paper, should they become law,
will be historic. The  embodiment of the white paper proposals in law would
mark the beginning of comprehensive  action in Australia to mitigate the
growth in Australian greenhouse gas emissions. Australia  would have taken
a step at which several other countries have stumbled. It would have taken
this step in difficult times for the domestic and international economy. It
would have taken this  step in the context of the most pervasive pressure
on the policy process from vested  interests since the Scullin government,
and of the most expensive, elaborate and  sophisticated lobbying pressure
on the policy process ever in this country. It will have taken  this step
in the face of resistance from Her Majesty's Opposition.

  The white paper has been greatly criticised by environmental groups for
its "soft targets".

  The review recommended, and I support, the most widely and strongly
condemned of the  "soft targets"the commitment unconditionally to reduce
greenhouse gas emissions by 5 per  cent from 2000 levels by 2020.

  It costs much more to reduce emissions in isolation than in the context
of global action.  Action in isolation does almost nothing in itself to
solve the environmental problem. The  purpose of acting at all in the
absence of comprehensive global agreement is to keep alive  the hopes of
eventual effective global agreement. Australian emissions are currently
significantly above 1990 levels. 2020 is not far away. Our population grows
strongly, because  we, for good reasons, have chosen to keep our doors open
to people from many lands. Our  new citizens need transport, a home with
the Australian accompaniments, and access to  income from employment, all
of which generate greenhouse gas emissions. The white  paper's
unconditional target is a challenging one in the absence of an
international  agreement. To go further would run the risk that Australia's
example of early action would be  negative rather than positive in its
influence on others.

  The white paper's proposed conditional targets are more problematic.

  The review proposes a formula for assessing comparability of effort of
various countries  towards effective global efforts embodying various
degrees of ambition. Within a global effort  to hold concentrations at 450
parts per million (ppm), Australia's proportionate share of the  effort
would reduce emissions entitlements to 25 per cent of 2000 emissions by
2020, and 90  per cent by 2050. Within a global effort to hold
concentrations at 550 ppm, Australia's  proportionate share would be to
reduce entitlements for 2020 by 10 per cent from 2000  levels, and
entitlements for 2050 by 80 per cent.

  The review analyses the economic and environmental costs of global action
to mitigate  climate change, with Australia playing its full, proportionate
part. It concludes that it is in  Australia's interests to seek the
strongest possible global mitigation outcome.

  Australia should indicate its willingness to play its proportionate part
in a global agreement to  bring greenhouse gas concentrations back to 450
ppm, or eventually to lower levels. Should  this not be possible, Australia
should play its proportionate part in the best possible outcome.  This may
turn out to be an effective agreement on 550 ppm in the first instance.
International  success at this level of ambition would strengthen
confidence in and support for stronger  outcomes in subsequent
negotiations.

  The white paper proposes a variation on this theme. It proposes emissions
reductions for  Australia up to 15 per cent from 2000 levels, "in the
context of global agreement under which  all major economies commit to
substantially restrain emissions and advanced economies  take on reductions
comparable to Australia". It proposes that, "in the event that a
comprehensive global agreement were to emerge over time, involving
emissions  commitments by both developed and developing countries that are
consistent with long-term  stabilisation of atmospheric concentrations of
greenhouse gases at 450 ppm or lower,  Australia is prepared to establish
its post-2020 targets so as to ensure it plays its full role in  achieving
the agreed goal".

  The Prime Minister's speech to the National Press Club notes that
Australia would have to  reduce its emissions by more than 60 per cent by
2050 within a 450 ppm global agreement,  and that he would seek a mandate
at a general election to amend current policy as required.

  The white paper refers extensively to the review on these matters. Policy
Position 1.1 says:  "The Government accepts the key findings of the Garnaut
Climate Change Review, that  effective global agreement delivering
concentrations of greenhouse gases at around 450  parts per million or
lower would be in Australia's interests"; that "achieving global commitment
to emissions reductions of this order appears unlikely in the next
commitment period"; and  that "the most prospective pathway to this goal is
to embark on global action " that "builds  confidence". These sentences are
repeated exactly as Policy Proposition 4.1, and twice  elsewhere.

  I did not actually use all of these words. However, pursuit of the
approach proposed in the  review may lead to the same end point as the
white paper: Australia playing its full part in a  global agreement to hold
concentrations at 550 ppm or, say, 520 ppm, following  Copenhagen, and its
full part in a more ambitious agreement as that becomes possible after
2020.

  And yet the white paper's variations on the review's themes matter.

  The white paper rules out Australia contributing to a global effort to
achieve ambitious  mitigation targets prior to 2020. That is a pity. There
is a chance, just a chance, that with  Barack Obama as president of the
United States, high ambition at Copenhagen will turn out  to be feasible.
In the meantime, Australia cannot play a strongly positive role in
encouraging  the global community towards the best possible outcomes if it
has ruled out in advance its  own participation in strong outcomes.

  This weakness of the white paper could be corrected without substantial
unpicking of the  policy package.

  The review argued that an effective global agreement including developing
countries would  need to allocate emissions entitlements on a per capita
basis, converging to equal per capita  entitlements at some time around the
middle of next century. This in itself would be  favourable to Australia in
comparison with the developed and transitional countries with low
immigration and slow or negative population growth.

  But we cannot expect our advocacy of a new and superior approach to
allocating emissions  entitlements across countries to be effective in the
international community, if we accept only  implications that favour us
(taking population growth into account), but not other implications
(converging towards equal per capita entitlements).

  Three elements of the white paper proposals lead towards large transfers
from the general  community to particular interests, and to fiscal and
environmental risks.

  There is no public policy justification for $3.9 billion in unconditional
payments to generators  in relation to hypothetical future "loss of asset
value".

  Never in the history of Australian public finance has so much been given
without public policy  purpose, by so many, to so few. The best that can be
said is that these are once-and-for-all  payments  unless the spectacular
success of investment in lobbying inspires repetition and  emulation.

  There is large risk to the public finances in the five-year price cap for
emissions permits. The  cap is to be set at an Australian dollar price that
is likely to be exceeded by international  prices at some point in the
first five years of the scheme. When that point is reached, the  Australian
taxpayer will have to fund the purchase of permits from other countries at
international prices, and to underwrite the difference between the cap and
international  prices. At that point, there will be powerful commercial
incentives for market participants to  buy at capped prices and to hoard
standard permits for future use or sale. This increases the  fiscal risk.

  The proposed issue of free permits to trade-exposed emissions-intensive
industries raises  different issues. Like free permits to generators and
the price cap, it carries risks to the public  finances  in this case, of
much greater dimension. Unlike the other instruments of transfer  from the
general community to particular instruments, it is based on a sound public
policy  objective.

  The problems arise from the absence from the white paper of a sound
conceptual basis for  payments. Section 14.5 of the final report sets out
the principle upon which payments should  be made to trade-exposed
industries: compensating firms for the effect that the absence of
comparable carbon constraints in other countries has on sales prices. The
white paper  acknowledges that this is the correct principle, but does not
seek to apply it.

  The consequences of not having a principled basis for the issue of
payments are profound.

  Wherever the partial application of a carbon constraint in other
countries is having an effect  on international prices, there can be
overcompensation of Australian producers. Carbon  constraints are now being
applied in many developed countries, including most states in the  US, and
in major developing countries including South Africa and China. They will
increase in  importance.

  Sound principles would result in the automatic withdrawal of payments as
carbon constraints  emerge in other countries. With political bargaining
determining payments, as in the white  paper, there is no obvious point at
which payments would be partially or completely  withdrawn. Further, even
if there were a comprehensive international agreement that  removed the
case for payments, five years' notice would need to be given for
withdrawal.

  The July green paper proposed placing a cap of 20 per cent on value of
permits issued to  trade-exposed enterprises outside agriculture, or 35 per
cent including agriculture. As  indicated in the final report, these are
reasonable upper limits to principled initial claims.

  A principled approach to payments to trade-exposed industries would
generate an early and  continuing decline in the proportion of payments to
trade-exposed industries as carbon  constraints were extended elsewhere. By
contrast, the white paper's approach would result in  the proportion of
permit value given free to trade-exposed industries rising to 45 per cent
in  2020 on restrictive assumptions.

  The ratio would rise well beyond 45 per cent if trade-exposed sectors
grew more rapidly than  the rest of the economy, or if reductions in
emissions were greater than 5 per cent.

  The ratio could rise to 65 per cent with an emissions reduction target of
15 per cent and with  trade-exposed industries growing twice as rapidly as
the rest of the world. With similar  relative growth rates and an emissions
reductions target of 25 per cent, three-quarters of  permit value would be
transferred to trade-exposed industries.

  And yet the revenue pool from sale of permits is exhausted at 45 per cent
by the household  compensation arrangements proposed in the white paper.
Already there is nothing left for  increases in payments to households as
the carbon price rises over time. Little is left for  incentives for
research, development and commercialisation of low-emissions technologies,
which are essential components of the domestic and international mitigation
efforts. Nothing  is left for systematic support for overcoming information
and contractual market failures  inhibiting energy-saving in low-income
households.

  WHAT happens as the claims of the trade-exposed industries rise above 45
per cent? To the  extent payments to trade-exposed industries deviate from
those that are necessary to  compensate for the absence of carbon
constraints in other countries, they introduce  distortions into
international trade.

  One justification for unexpectedly high payments to trade-exposed
industries in both Europe  and Australia  and presumably other countries
one by one  is the global recession.

  The Smoot-Hawley tariff in the US in the 1930s, and the competitive
increases in protection  in other countries that it inspired, made the
Great Depression much deeper than it would  otherwise have been. Will the
treatment of trade-exposed industries become the Smoot-Hawley tariff
following the Great Crash of 2008?

  The introduction of a sound basis in principle for trade-exposed
industries is an urgent matter  for the restoration of global prosperity,
as well as for Australian fiscal integrity, and for the  avoidance of high
risks of dangerous climate change.

  Professor Ross Garnaut is the Federal Government's climate adviser.   __._,


* maybe that should be "Government's Economic climate adviser....."


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