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The draft report puts forward an Australian ETS that incorporates most heavy emitting sectors, including transport fuel. In his reasoning for including fuel in the ETS, without any compensation at the petrol pump, Professor Garnaut explained that reducing the petrol excise, “would send some funny sort of signal because what this is all about is encouraging people to economise on activities that are intensive in emissions.” In contrast, Federal Opposition Leader, Brendan Nelson believes, “with petrol now at a $1.70 a litre, Australians have already received a significant price signal on petrol.” Business Council of Australia President Greg Gailey sees the inclusion of petrol as necessary to achieve long term reductions in emissions, despite the risk of a price rise.
Compensation for households and the trade exposed
The report recommends that all revenue from an AETS should be returned to households and businesses, with low income households to receive about half the money raised from emission permits. According to the report, low income households spend about 9.5 percent of their income on transport fuel, gas and electricity when compared to the 4.5 percent for higher income households. Climate Change Minister Penny Wong has said, “every cent received from the emissions trading scheme will be used to help Australian families, pensioners, carers and businesses to... cope with costs and invest in clean energy choices.” The Garnaut Report suggests a 50:30:20 split in compensation going to households, trade-exposed sectors and research and development into clean energy.
Arbitrary decisions risky
With Australia in a period of economic prosperity driven largely by the Asian economic boom, and the impact this is having on the climate, Professor Garnaut believes that we have a special responsibility to act on climate change. He also warns that if no efforts are made to reduce greenhouse gas emissions now, Australia’s economy risks a loss $425 billion by 2100, about half the country’s current annual output. Garnaut also criticised Brendan Nelson’s decision to walk away from a bipartisan approach to tackling climate change saying, “if you don’t have political bipartisanship then there’s more risk you’ll make arbitrary adjustments for political reasons. Once you start making arbitrary adjustments it’s not very easy to hold the line against making more, and you could end up with a bit of a mess of a scheme.” WWF Chief Executive Greg Bourne believes that the opposition should agree to take a bipartisan approach in tackling climate change and, “end the cheap political point scoring.”
In support of the report’s recommendations, John Connor, Chief Executive of the Climate Institute said, “if the Government responds with the right policies, today, the fourth of July, would mark an important step towards carbon independence day.”
Summary points from Professor Ross Garnaut’s draft report:
- An Emissions Trading Scheme to be introduced without delay in 2010
- The ETS should be as broad as possible in its coverage, and include petrol
- A 50:30:20 ratio in compensation to households and trade-exposed industries such as steel and aluminium and research and development
- Big polluters such as coal fired power plants should not receive compensation
- A bipartisan approach is required to successfully tackle climate change
Garnaut says that by 2100 the impacts of unmitigated climate change include:
- A 92 percent decline in irrigated agricultural production in the Murray-Darling Basin, affecting dairy, fruit, vegetables, grains.
- Up to a 35 percent increase in the cost of supplying urban water, due largely to extensive supplementation of urban water systems with alternative water sources.
- Significant risk to coastal buildings from storms and sea-level rise, leading to localised coastal and flash flooding and extreme wind damage.
- Catastrophic destruction of the Great Barrier Reef, with the reef no longer dominated by corals and the disappearance of Kakadu wetlands.
- An increase in heat-related deaths in Queensland each year and a rise in the number of Australians exposed to Dengue virus.
References
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Garnaut Climate Change, Review, Draft Report, 2008
- Crowe, D. 'It’s the Right way or the Highway,' The Weekend Australian Financial Review, July 5-6, 2008
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Breusch, J. 'Power to the people assured,' The Weekend Australian Financial Review, July 5-6, 2008
- Morris, S. 'All revved up to include fuel,' The Weekend Australian Financial Review, July 5-6, 2008
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Breusch, J. 'Resources sector must pay for boom: Garnaut,' The Weekend Australian Financial Review, July 5-6, 2008
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Hammer, C. 'Act now or face disaster,' The Age, July 5, 2008
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Murphy, K. & Murphy, M. 'Tough love "vital" for polluters,' The Age, July 5, 2008
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Wright, T. 'Expert flags death of a river in call to action,' The Age, July 5, 2008
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Murphy, K. 'Compensation greatest for low-income earners,' The Age, July 5, 2008
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Morton, A. 'Environment lobby warms to ideas,' The Age, July 5, 2008
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