Ross Garnaut has made a stellar contribution to raising public understanding about the threat posed to Australia by climate change. He deserves genuine praise for that. However, most of the ingredients for another failed Australian response to climate change can be found in the pages of his draft report.
On the surface Garnaut’s prescription is positive: he’s laid out the case for urgent action and dispelled the mythology that Australia needs to choose between greenhouse emission cuts and economic prosperity; he’s adamant that cutting emissions sooner rather than later is in the national interest; he supports a broadly based emissions trading scheme along with a range of other complimentary measures; he’s eschewing purpose-defeating welfare in favour of measures that are efficiency raising; and he is emphasizing the importance of adaptation — so often overlooked in the greenhouse debate. It was also very welcome to hear him repudiate politically motivated and counterproductive price controls on transport fuels.
Beneath the surface, however, in the specifics and the fine print the same serious flaws that were evident in Garnaut’s emissions trading discussion paper remain—along with a couple of new ones. Garnaut continues to suggest that deep cuts in Australian emissions should be conditional upon the actions of others, that Australia should remain on the Howard government’s emissions trajectory with many years notice before moving to a more ambitious one.
The new proposal that carbon prices be fixed for the initial years of emissions trading to enable a soft start almost certainly rules out any possibility of emissions declining below 1990 levels by 2020. Like the government, Garnaut is still not grasping the dangers of doubling Australian coal exports when there is no prospect that it will be used cleanly in any timeframe that matters.
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Garnaut continues to avoid saying which industries should receive compensation for the impact of an ETS on the basis of their trade exposure and emissions intensity. He won’t get specific about who should get it, how much they should get, or how long what is effectively an emission subsidy should last. Yet, strangely in the absence of that detail, he is apparently still able to suggest what proportion of ETS revenue go towards such compensation.
Almost every industry imaginable is now identifying themselves as a TEEI deserving special treatment, and there is a very real risk that householders and cleaner sectors will end up subsidising the emissions of Australia’s worst polluting sectors for decades to come. Worse, by signaling that these industries will be given the right to pollute freely pending a level playing field in carbon trading internationally, Australia risks attracting even more dirty industry to its shores. That would further cement our position as the greenhouse ghetto of the developed world, and it would make the task of cutting our emissions as a nation even harder.
Under the circumstances, the temptation to outsource our emission cuts to meet national targets will be immense, which is perhaps why Garnaut still proposes no meaningful limit on the use of carbon credits generated offshore—credits that would enable Australia to achieve emission targets without significant change domestically. Many of these credits could come from highly dubious rainforest protection deals with nearby developing nations like PNG and Indonesia. While it might help us achieve emissions progress on paper, it also risks retarding the transition to clean energy in Australia by another decade.
Hopefully, the some of the holes and loopholes will be dealt with once Treasury’s modeling is incorporated into the next Garnaut installment. At present, however, for all the Sternesque benefits of his contribution thus far, I see no reason based on today’s Draft Draft Report to change anything in my previous assessment that Ross Garnaut is not the Elliott Ness of climate change that Australia needs if it is to finally bring the greenhouse mafia to heel.