Let's leave the Kyoto Protocol behind and develop a workable plan of our own

Recent calls by Australia's Chief Scientist, Robin Batterham, for Australia to halve its greenhouse gas emissions by 2050 have reignited the debate about what we should do to tackle its high level of carbon emissions. Australia is the largest per capita producer of greenhouse gases in the industrialised world, emitting more than double the average rate for industrialised countries. And Australia's emissions are increasing.

With overwhelming scientific evidence that such emissions are driving an increase in global temperatures that will have a potentially devastating effect on the world, there is no time to waste.

Unfortunately, the debate about carbon emissions has been dominated by whether Australia should sign the Kyoto protocol. It is time to move on.

The Howard government was right not to sign Kyoto. There are fundamental flaws in the "targets and timetable" approach of the proposed international agreement.

Despite suggesting that a better alternative be developed, however, the Government has yet to produce a comprehensive plan to seriously address the nation's emissions problem. The uncertainties associated with climate change should not be an excuse for government inaction.

In a new book, Imagining Australia: Ideas for our Future I, with Macgregor Duncan, Andrew Leigh and Peter Tynan, present several ideas to help Australia meaningfully address this crucial environmental issue.

We propose that the Government implement an alternative to the Kyoto protocol based on a blueprint developed by two leading economists, Warrick McKibbin and Peter J. Wilcoxen. This blueprint would see the establishment of a domestic carbon emissions trading market. The market would consist of a fixed number of long-term emission permits, as well as short-term one-year permits.

The long-term permits would be auctioned off by government. The price of the short-term permits would be set by government based on prevailing information about the costs of climate change. Polluters would be able to buy short-term permits over and above perpetual permits as and when required.

The strength of this model is that allowing the price of the short-term permits to be adjusted enables policy to evolve as more information becomes available about the cost of climate change. It also ensures that firms would have incentives to investigate new technologies to reduce emissions.

We propose that the Government auction off long-term permits equal to 95 per cent of our 1990 emissions. This is less than Australia's specially negotiated Kyoto target, but by conforming to the average emission reduction target for developed countries we would show the world that our alternative plan was developed in good faith.

An emission trading system is an important first step, but to really address this problem we need to advance beyond fossil fuels. The swift development and widespread deployment of renewable energy and energy-efficient technologies requires leadership from the top.

The Government needs to make a national priority of rapid transition to renewable energy. At present the mandatory target for use of renewable energy is just two per cent, which provides little incentive for innovation. We need to be bolder.

The Prime Minister should commit Australia to a renewable energy target of ten per cent by 2010, 20 per cent by 2020 and an energy efficiency target of 50 per cent by 2020. These targets are not so ambitious; many countries have similar or higher targets. With appropriate leadership and resources, they are achievable.

If the Government eliminated subsidies to aluminium smelters and other subsidised users, and committed the $250 million in annual savings to supporting the development of renewable energy and energy-efficient technologies, it would have $2.5 billion over 10 years for a renewable energy development fund. This fund would solicit proposals from around the world for research and development projects to advance renewable energy in Australia.

Companies, universities and individuals could compete for the funds. An independent panel of experts governing the fund could finance part or all of one of many different projects depending on their scale, viability and other relevant characteristics. Through this competitive process appropriate renewable energy solutions for Australia and for the world could be generated.

We believe that addressing Australia's carbon emissions and moving towards clean, renewable sources of energy should be seen as a nation-building opportunity; a chance to develop an important industry, creating hundred of jobs and positioning ourselves as the green-energy powerhouse of South-East Asia.