There’s something to offend everyone in Ross Garnaut’s final report – except, possibly, the Rudd Government, which has been provided with a rigorous but moderate way forward for addressing climate change.
That looks awfully convenient, but the logic that drives Garnaut’s recommendations is far stronger than any political considerations.
Little has changed in the final report from previous iterations. He has not been swayed by the arguments either of industry or of environmentalists. For Garnaut, the case for addressing climate change remains a conservative, economically cautious one. There is only a small chance that the anthropogenic climate change thesis is incorrect, and it would be a gross dereliction of public responsibility to fail to act.
And in reaching that conclusion, almost in passing, he uses specially-commissioned analysis by ANU econometricians to demolish the claims put forward by right-wing bloggers (and the likes of dolts like Ron Boswell) that the planet is currently cooling. Moreover, the evidence is mounting that things are worse than we feared.
But the same caution and conservatism also drives his recommended approach, which is what will frustrate environmentalists. Garnaut’s approach is to work out what is the most likely approach to obtain the maximum value of mitigation versus the costs of climate change. It is an economist’s approach, and it leads him to examine what he believe will actually work, rather than what would be ideal.
An international agreement is essential to addressing climate change and an agreement aimed at 450ppm is, in Garnaut’s view, very unlikely. Indeed, at his press conference today he commented that many thought an agreement aimed at 550ppm was unlikely. He bristled at the suggestion that he supported 550 over 450, saying he was strongly in favour of 450, but simply didn’t believe it could be reached in an international context at the moment.
The same approach also urges him to recommend models that are practical and likely to maximise the chances of acceptance – in particular, the need to address equity both in an international agreement and domestically.
The flipside of Garnaut’s caution is that — and this is the key addition to the final report — we have modelling on the likely costs of unmitigated climate change. This has been absent from the debate so far as industries and peak bodies like the Business Council of Australia have bleated about the costs to industry of emissions trading. The final report puts this whingeing in context.
On the absolute most conservative case possible, the Report estimates real wages will be 10% lower than otherwise, and GNP 7% lower by the end of the century. Non-modellable (if that’s a word) costs are estimated to be about another 30% of direct costs, increasing GNP loss to 9% and driving real wages down 12-13%.
This is based on cautious climate change scenarios. Garnaut also discusses, but doesn’t quantify, the costs of more damaging scenarios, which when he started his review were considered unlikely but are now, in his view, no longer improbable. These aren’t modelled. There’s no need to. He simply describes these as “catastrophic”.
Not “catastrophic” in the meaning meant by Australian business when they say that the impact of an emissions trading scheme on their sector will be catastrophic, but in the real sense of the world. Such changes would, Garnaut notes drily, “not lead to a marginal reduction in human welfare [but]… would destabilize virtually every aspect of modern life.”
In this context, the costs of an effective emissions trading scheme are small beer. Not, industry might say, to the workers who lose their jobs or the businesses that have to close. But that’s one of the core problems with our approach to climate change. Our businesses and politicians are focussed on the immediate impacts, the consequences over the electoral cycle. Garnaut’s inconvenient focus is on the rest of the century, which is being shaped by every decision we take right now.