Time to limit hot air debate

If you are like me, you have probably become more uncertain about climate change since our prime ministerial combatants became involved.

Rather than the two of them working together to arrive at sensible policies to respond to the threat, we have contrasting political positions. And there are perplexing issues with both of them.

Kevin Rudd is promoting British economist Sir Nicholas Stern's idea of a 60 per cent reduction in greenhouse gases before an inquiry into the costs has started, let alone reported.

John Howard wants to put a price on carbon (or carbon dioxide emissions) without establishing an overall limit to emissions. And he is outsourcing our problem to the Indonesians.

While any additional aid to the poor countries to help them control illegal logging is welcome, Australia needs to get fair dinkum on foreign aid. Spent sensibly, it does far more good than does military spending. To pull our weight we need to increase our per capita aid funding from $100 to the world leader's (Norway) level at $600.

To Rudd's position, an inquiry is a good idea. It is one thing to have a broad overview of where, and what, climate change is likely to mean at a world scale. However, if we are to plan for feasible and cost-effective responses we need good estimates of possible extreme weather events at regional level in Australia. This will not be an easy job.

It is 15 years since the Federal Government held an inquiry into The Costs and Benefits of Reducing Greenhouse Gases. I know a little about that inquiry as I was a commissioner on it. Then environment minister Ros Kelly, with treasurer Paul Keating, needed sound advice before taking an Australian view to the Earth Summit at Rio in 1992.

That inquiry's report was also of use to Robert Hill when, as Howard's first environment minister, he went in to bat for Australia at the Kyoto Protocol meetings in 1997. At that time Australia was going to sign on to the protocol. If a week is a long time in politics, what is 10 wasted years?

I should not make too much of that old report. The science in 1992 was nowhere near as robust as it is now. Hence, what Stern did last year was far more substantial in terms of the economics than we could do.

Of course, the economics is only as good as the scientific input by the climatologists. However, we don't need to resolve whether or not the build-up of carbon dioxide is purely human-induced to take "no regrets" actions. These are things like promoting energy-efficient fridges, stoves, water-heaters and so on, as well as buying fuel-efficient cars, investing in coal gasification and the hydrogen economy.

Some of these will save dollars immediately, some will be needed when we experiencing ever-increasing fossil fuel prices in the not too distant future. And all will play a role in reducing the amount of carbon dioxide each of us emits. The other thing we know with a fair degree of certainty is even if at a global scale we stabilised emissions today, there will be an increase in average temperature worldwide for decades into the future. We will need to respond to this regardless of its cause.

The other thing Rudd's inquiry could do is tackle two issues that are germane to the amount of greenhouse gases we emit. Population, obviously at a global level, but also in Australia, will eventually need to be limited.

And given we have overcome scarcity - our obesity rate is one index, another is our high per capita ownership of DVDs, mobile phones etc - we could investigate the relationship between GDP and genuine wellbeing and happiness.

Economists in other countries are starting to publish fascinating results on this subject. To come to the real puzzle with Howard's proposal to price carbon, the question is how do you get a market to operate if there is not a scarce commodity to sell. Until you and I face a limit to the amount of carbon dioxide we can emit each year, and have to buy permits from our mates or others who happen to emit less, there will be no price.

Of course, setting an overall limit for the country and then dividing up parcels of it to all and sundry (or simply all major carbon-intensive industries) is not a task you would contemplate in an election year.

What is interesting to recall is that Australia was the first country in the world to apply a "cap and trade" policy - in tuna fishery. An overall limit was set on scientific grounds and this was then divided into small lots which could be sold.

The efficient operators bought permits from the less efficient and both the environmental goal of protecting the fish stocks and the economic goal of doing it profitably were met.