Giving up on climate change?

Scientists warn that unless greenhouse gas emissions are significantly and rapidly reduced by 2020, by at least 25 per cent below 1990 levels, global warming and climate change will become irreversible and uncontrollable. As a consequence, large areas of the planet may be unable to sustain their present population or become uninhabitable. Massive population movements will be caused by an increasingly severe climate producing flooding, draughts and crop failures, compounded by hunger and disease on a massive scale.

We know from recent experience that failure of a single sector of the economy - US home loans - can lead to recession from which no country is immune. Recession gives rise to business failures, unemployment and falling demand which can rapidly wash away accumulated prosperity.

Imagine then the effects on businesses and the economy of repeated and prolonged failures in Australia of agriculture, fisheries and tourism and associated industries. These would include falling exports, contraction of the manufacturing sector, a shrinking economy and all that goes with it. Add to this climate change producing tidal surges and coastal flooding with property losses and our present economic woes will pale into insignificance.

These are the very real threats to the Australian economy posed by climate change. Knowing this, government response has been to set an Australian emissions target at a mere 5 per cent below 1990 levels, encouraging the worlds’ major emitters to do no more than this, thereby increasing the risk of long lasting economic damage.

The Rudd Government justifies its 5 per cent target on the grounds that it represents a significant emissions reduction of almost 25 per cent per capita. This is based on the assumption that Australia will have a population of more than 31 million by 2020, an increase of 45 per cent above the present population level. This assumption sits oddly with a government which, as part of its election campaign promised us a well reasoned population policy - a policy it has yet to publish or deliver.

It is difficult to believe that this massive population increase will occur within the next 12 years or that it is desirable. If it did, how would we cope with it? Commonwealth and State governments have not indicated planning for provision of additional housing, employment or public infrastructure required to service this increase. But it does make Rudd’s 5 per cent target look slightly more respectable, assuming of course that population growth is not accompanied by a commensurate increased CO2 emissions.

Government further justifies its paltry target with the dangerous, fallacious claim that a fairer method of calculating emissions is tonnes/capita rather than tonnes/country of CO2 emissions. On this basis the world’s largest emitter, China, with the lowest per capita emissions is entitled to increase its emissions provided they do not exceed global average per capita emissions.

China, now responsible for more than 26 per cent of global emissions, is rapidly increasing its carbon footprint. It is no doubt satisfied that its per capita emissions remain “low”, a position supported by Rudd and his economic adviser on carbon emissions, Ross Garnaut. Both argue that it is “developed” economies which must reduce their per capita emissions rather than expect national reductions by developing countries such as China, India and Indonesia, among the world’s largest and fastest growing emitters.

“Irresponsible and foolhardy”, are epithets which spring to mind, but are they fair? Or is Rudd merely protecting our coal exports while recognising the realpolitik of a hostile Senate. There, the National Party has declared itself the party of denial where climate change is concerned. It has vowed opposition to even the weakest government proposals being applied to primary industry. They are supported by equally sceptical Liberal Senators, at least one independent and (surprise, surprise) the largest emitters in the private sector.

Some major businesses have voiced opposition to introduction of the proposed Emissions Trading Scheme (ETS) in 2010 on the grounds that it is nothing more than an unjustified new tax. This contention fails to recognise that the purpose of the scheme is to introduce price signals encouraging reduction of CO2 emissions.

Others argue that imposing carbon emission licenses would make them uncompetitive and rumble dire warnings of closure or moving to a country without such licensing. They warn of major unemployment which would result and the effects this would have on the Australian economy at a time when it is struggling to avoid recession.

This fear campaign ignores several important considerations including the fact that emitters who show that they can no longer operate due to an ETS, will be compensated with subsidies. A few businesses have welcomed this. Others have demanded the same treatment even though they are reliant on mineral deposits which they can not take overseas or it would be less profitable to move off shore.

In the present economic climate, these are matters of concern. Government appears to have responded to these blandishments, as though these warnings were an imminent threat, by adopting the 2020 carbon reduction target of 5 per cent, first mooted by the Opposition and various business organisations in 2008 as acceptable.

Has Rudd done this hoping to get his measures through a hostile Senate? Is his offer to overcompensate domestic consumers and compensate the largest Australian emitters with massive subsidies ($3.9 billion for coal-fired power generators) which even made Garnaut blanche, part of the same forlorn hope or just a sign of weakness?

His decision to offer compensation to businesses and households at levels which blunt the price signal needed to discourage use of electricity generated from polluting coal, suggests the former. His warning that we must learn to live with, rather than attempt to control climate change suggests the latter. Has Rudd thrown in the towel on climate control when it comes to displaying leadership to the international community?

Without a strong and clear price signal, there is little chance that consumers will change their habit of using electricity the way they currently do, often in a profligate way. This is often characteristic of the public sector which, being monopolistic, simply passes on the cost of its inefficiencies to households and businesses.

Improved efficiency in the use of electricity generated from fossil fuels has the potential to substantially contribute to the 5 per cent reduction target proposed by government. That incentive is blunted.

Research and development of technology to improve and extend electricity generation from renewable sources with funding from the proceeds of emission licence sales was recommended by Garnaut. It has been totally rejected by Rudd who insists that such funding be included at the whim of government as a specific budget item.

Popular use of photovoltaic cells (PVC’s) to generate electricity for sale to the National Grid has similarly been dealt a retarding blow by the decision of government to refer the matter of a feed-in tariff to COAG for its consideration.

The effect has been to put in limbo the ability of households and business to purchase and install PVC’s or produce and sell solar energy. This could have been avoided by Commonwealth legislation establishing a national gross feed-in tariff for electricity generated from sunlight.

In summary, the kindest thing that can be said for the Rudd proposals on climate change is that they will fail to achieve the central goal of bringing about meaningful reduction in carbon emissions. They fail to adequately fund and promote the development and use of electricity generated from renewable sources or prompt behavioural change resulting in more frugal use of electricity produced from coal.

What will they achieve? They will establish an ETS in Australia and do so in a way which protects existing jobs and industries producing and using fossil fuels, particularly coal. In this, they accord with Liberal Party views. Unfortunately, opportunities to do very much more to reduce our carbon footprint, influence others to do likewise and create new jobs in the clean energy sector miss out. Government must review its position.