Saturday, 05 July 2008 08:46
The long awaited Garnaut report is now out. For a long time its imminence has been an excuse for the federal government not to act, now it may well be called "one of the inputs" as its recommendations are unlikely to match the preferred action of the government.
Like the Stern report Garnaut makes it clear that the costs of inaction outweigh the costs of taking action. Its main focus is the details of how an Emission Trading Scheme should be setup for Australia.
Early economic modelling results of readily measurable unmitigated climate change for middle of the road outcomes on temperatures and decline in rainfall – indicate that climate change would wipe off around 4.8 per cent of Australia’s projected GDP, around 5.4 per cent of projected household consumption, and 7.8 per cent from real wages by 2100.
A key features from my perspective from the report.
* Include all sources of emissions - including Petrol
* Auction permits for emissions
* Spend 50% of the proceeds on compensating low-income consumers
* Spend 30% on "structural adjustments" in particular on high-energy exporting industries (a poor exception in my opinion).
* Spend the remaining 20% on development and commercialization of Low Energy technologies.
I think these are essentially a good recommendation - we need to see the price of energy intensive products go up, as that is the only thing that will shift consumption to low-energy products. The impact on those least able to handle it can be handled through tax/social-security, which will still incentivise those within lower-income brackets who also take action to reduce their use of energy intensive products.
The one area I would differ is that there is a need to support Renewables that need short-medium term subsidies to get through the cost curve and have promise of low-cost - this particularly applies to Solar, but others also qualify.
Unfortunately most of the 20% is likely to be spent on so-called "Clean Coal" which is not clean, and is unlikely to be cost-effective compared to the cost that renewables will achieve even without the billions that will get thrown at the coal industry.
Garnaut recommends a two-year transition into the scheme, which of course industry will say is too short, while the environment will complain that we've already mucked around for 12 years of climate-deniers at the healm, and now need urgent action.
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