Getting a grip on Garnaut and the Green Paper
Ideas have been flying around on emissions trading, carbon pollution prevention and climate change. Here is one person’s attempt to chart a path through the information maze.
On 4th July, Professor Ross Garnaut unleashed an interim report to the Federal Government, initially commissioned when Kevin Rudd, in opposition, had the foresight to seek information on the likely costs of action and inaction on climate change for Australia– much like the earlier UK Stern Report. Facts and figures will bolster Garnaut’s proposed design of an emissions trading scheme (ETS) in his final report on September 30th.
Garnaut’s report (available at www.garnautreview.org.au), essentially pointed out that:
· Australia has much to lose from delaying action on climate change, including potentially devastating impacts on major food producing regions like the Murray-Darling Basin, sea-level rise, worsening storm events and increased political instability in our region;
· Under an Australian ETS, companies will buy permits to emit greenhouse gases within an overall emissions target, currently set at 60% reductions over 2000 levels by 2050;
· Any ETS based on the ‘cap-and-trade’ technique (see box) has to ensure its effectiveness is not watered down by the temptation to hand out free permits to influential heavy polluters.
Emissions Trading Options
A Cap and Trade system sets a limit to carbon emissions and allows all polluters to buy permits that they can trade. Companies with emissions exceeding their permits must buy credits from lower polluters. Gradually lowering the cap then effectively encourages reduced emissions.
A Carbon Tax is a direct tax on carbon dioxide and other green house gases. This confronts users with the true environmental cost of carbon. Taxes raised can be returned to the public or spent on funding further greenhouse projects.
A week after Garnaut, a major CSIRO report confirmed that Australian agriculture is highly vulnerable to climate change (www.csiro.au/resources/AgricultureAdaptationReport2008.html). A lead author, Dr Mark Howden from CSIRO’s Climate Adaptation Flagship, explained that:
· Australian agriculture is already noticeably affected by climate change in some areas and the magnitude of these impacts would increase if greenhouse emissions are allowed to raise the mean temperature of the continent by 5 degrees Celsius by 2060;
· This doesn’t mean the end of agriculture – we grow food in Bundaberg and in Melbourne , but what we grow and how we farm varies with local conditions. Under worst case climate scenarios, producers will be rapidly adapting to very different conditions.
· Adaptation, eg. developing new cultivars and growing regimes, takes time, but access to good information and consistent support will help ease the transition.
The past climate is no longer a good guide to the future climate, so the skills and resources to respond flexibly are essential. Australian farmers are used to ‘adapting to unrelenting change’.
On July 16th, the government’s Green Paper came out. A good summary can be found at www.climatechange.gov.au/greenpaper/summary/preferred-positions.html. While the ‘carbon pollution reduction scheme’ (presumably so-called to make its importance easier to grasp) is yet to be finalised, key guidelines have been recommended for the development of Australia ’s proposed ETS.
The Green Paper correctly identifies no single solution, but sets out three pillars for action:
* reducing Australia ‘s greenhouse gas emissions (mitigation);
* adapting to climate change that we cannot avoid (adaptation);
* helping to shape a global solution (international leadership).
The government will set a carbon pollution target in late 2008 and is likely to pass emissions trading legislation in March 2009, on a pathway towards its 2050 target. Unfortunately, the pace and scale of its recommendations falls short of the urgent need for early action on climate change. The proposed carbon pollution reduction scheme guarantees:
· A cent-for-cent cut in the fuel excise to offset increased fuel prices due to the ETS, with reviews after one year for heavy vehicles and after three years for agriculture and forestry;
· Major polluting industries such as coal-fired electricity coal and aluminium smelting issued with free permits to reduce the burden of the ETS in its initial stages;
· Agriculture remains outside the ETS until 2015, while forestry can opt-in 2010.
My major concern is the view that all other measures (eg mandatory renewable energy targets, rebates, feed-in tariffs etc) can be removed once an ETS is in place. Yet it is clear the ETS will not be in place until 2010 or 2012, will begin gently and only ramp up slowly. Key greenhouse polluting industries have free permits from the outset, despite Garnaut’s specific warning that it was better to have a straight-out carbon tax than a flawed cap and trade system.
It is always easier to criticise than to put forward constructive alternatives. CEFE responded to the Green Paper by calling on Penny Wong and Peter Garrett to develop an integrated renewable energy strategy that sets out a visionary but practical plan for aggressively developing renewable energy. This submission argues that it is in Australia ’s best interests to:
· Set an ambitious Mandatory Renewable Energy Target (MRET) at the national level to clearly show companies that Australia is serious about addressing its greenhouse emissions;
· Use all available policy tools in an integrated and coordinated fashion to ensure that real progress is rapidly made towards reaching these goals;
· Put in place a National Feed-In Tariff (NFiT) on the gross production of renewable energy into the grid, akin to the successful FiT that has driven the uptake of solar power in Germany at 55% per annum (incorrectly printed as 5% in last edition);
· This NFiT is crucial to achieving a future in which renewable energies, solar energy in particular, can contribute their full potential to addressing our energy-carbon debt.
Two exciting facts are a. that governments need not provide support ad infinitum – like a jumbo jet, once the solar industry reaches take off speed (when its price reaches parity with wholesale grid power as early as 2016), its rise will be unstoppable; and b. a vibrant renewable energy industry will create jobs and benefit the Australian economy and society.
In a worrying sign, on 5th September Garnaut dropped his sights for an initial Australian target to 5-10% greenhouse gas reductions by 2020, largely ignoring his own previous advice that early action on climate change will be less expensive and more effective than delayed action. Ironically at the same time he raised his 2050 target to 80% – it is a moot point whether we could reach this if we set off on a lame though ‘politically palatable’ trajectory that could contribute to global carbon concentrations of 450ppm.
It’s vital that the Australian community remain vigilant and vocal about the key decisions being made on our behalf in the lead-up to crucial international climate talks in December. However, it’s also a timely reminder of the need for communities to lead from the front and not wait for politicians to swing in behind a social movement for change
Stokes CJ & Howden SM (eds) (2008) An overview of climate change adaptation in Australian primary industries – impacts, options and priorities. CSIRO, Canberra (340 pages) – See.www.csiro.au/resources/AgricultureAdaptationReport2008.html Carbon Pollution Reduction Scheme Green Paper (2008) – See the summary at www.greenhouse.gov.au/greenpaper/summary/index.html
Garnaut Climate Change Review Draft Report (July 2008) – See www.garnautreview.org.au/CA25734E0016A131/pages/draft-report
Agriculture and Food Policy Reference group (2006) Creating Our Future. – See www.agfoodgroup.gov.au/
Clive Hamilton’s response to Garnaut
Clive Hamilton essay: Politics trumps science in Garnaut report
Tuesday, 30 September 2008
Clive Hamilton writes:
•Ross Garnaut’s interim report in February was a remarkable document; unlike all previous official reports on climate change, it recognised the true implications of what the scientists are trying to tell us. For the first time, the analysis of emission reduction targets and the international structures required to achieve them were linked closely to the climate science.
The unusual directness of this link meant that the interim report’s analysis was less clouded by implicit political judgments about “what is feasible” and less attenuated by undue emphasis on scientific uncertainties.
The dismay felt by many people on the release in early September of the Garnaut draft supplementary report Targets and Trajectories stemmed from the decision to sever the close link between the science and the policy recommendations and allow political judgments to intercede. In the intervening months Ross Garnaut had redefined his job: his task was no longer to tell the Rudd Government what it needs to do to avert climate chaos but to strategise politically on its behalf.
Garnaut concedes it is no longer the science that governs his recommendations. Instead of aiming to stabilise global emissions at 450 ppm CO2-e or below, as the science demands, he has recommended to the Government, albeit reluctantly, that Australia take a target of stabilising global emissions at 550 ppm to the Copenhagen conference in late 2009.
Garnaut summarised his strategy in his 5 September Press Club address:
The path to 450 parts per million lies through early progress on 550 parts per million. The path to 400 parts per million, lies through early progress on 450 parts per million.
The rationale he gives is that the world is not ready to accept the economic impacts of a 450 ppm target. It requires more economic sacrifice and political resistance than some governments are willing to absorb. Garnaut believes that if we aim initially for 550 ppm it will become apparent that the pain is less than anticipated, a realisation that will allow Australia to argue to the world that we should pursue a 450 ppm target and then a 400 ppm target.
Apart from several serious flaws set out below, the argument is wholly contradicted by the report’s economic modelling. The results show that pursuing the 550 ppm target will shave a little more than 0.1 per cent from GNP growth through to 2050. This means that instead of growing annually at, say, 2.5 per cent if we do nothing, GNP per person would grow at “only” 2.4 per cent if we aim at 550 ppm. What does this mean?
At an annual real growth rate of 2.5 per cent per person, then with no emissions target, Australia’s GNP will double in 2040. We will all be twice as well off. If the Rudd Government adopts policies aimed at the 550 ppm target our GNP will not double until 2042. In other words, we will have to wait an additional two years before we are twice as rich.
What about the extra cost of aiming for the 450 ppm target that Garnaut says is not feasible? According to the modelling, if we aim for 450 ppm we will have to wait an additional six months before our incomes double. Instead of two years we will have to wait for two and a half years.
A better understanding of the history of international climate change negotiations and how they have framed notions of fairness would have signalled to Professor Garnaut that his proposed strategy is dangerously misguided. Any one of the serious flaws in the approach renders it self-defeating. Together they risk turning Australia from a potential global leader into a laggard once again, reducing the momentum to reach a bold agreement. I explain each of these flaws.
1. Reduces expectations. A negotiating strategy based on the assumption that the Copenhagen conference will fail to reflect the science is self-fulfilling. Adopting a strategy with a soft interim ambition pre-empts the outcome and contributes to it. Garnaut puts forward no real evidence that aiming for 450 ppm at Copenhagen is infeasible, and his own economic modelling indicates that the difference in cost between a 550 and a 450 target is disappearingly small.
Garnaut may turn out to be right that a more stringent global target will prove too difficult; but that does not mean we should not try. The strongest agreement at Copenhagen will emerge if all parties push for the strongest outcome. This seems blindingly obvious, yet Garnaut is saying that the strongest outcome in the long-term is to accept a weaker outcome in the short term. Even if this is true, to flag that this is what Australia expects reduces the chances of getting something better than 550.
Professor Garnaut is reported today as saying that we should not be too ambitious because we do not want another Kyoto. This reflects a mistaken understanding: the Kyoto Protocol was not too ambitious. Its failures were due to the intransigence of governments in Washington and Canberra dominated by sceptics and captives of industry. Climate science and public opinion have hardened a great deal since then.
2. Naively flags intentions. Flagging one’s negotiating strategy in advance of the Copenhagen conference is naive. Other nations and blocs may well go to Copenhagen with 550-type scenarios as fall-back positions, but it is unlikely that any other government would signal its reserve position before the negotiations have even begun. Garnaut is able to describe game theory well but his report suggests he needs practice playing the game.
In attempting to base an approach on subtle political assessment, Garnaut has already spiked his own strategy. Its success depends on the Rudd Government having the authority to persuade the world that it is a credible one, yet recommending Australia adopt cuts of 10 per cent by 2020 when the science calls for 25-40 per cent and Europe is willing to agree to 30 per cent, destroys our credibility. This is the contradiction embedded in Garnaut’s position.
The Garnaut report is hobbled by delusions of grandeur, as if an Australian Government, advised by Garnaut, can cut through all of the complex difficulties and solve the problem with a strategy no one else had thought of.
3. Alienates key players. It is not clear whether Garnaut believes the obstacle that makes the 450 target infeasible is the Australian public or major players in the international community.
If it is the Australian public then he is saying to them: “Here are the facts on climate science and economic cost. The science is much worse than you think and the abatement costs are much lower than you think. However, I don’t believe you are able to appreciate these facts so I am recommending a soft option I think you will accept. Then later, when you have accepted it, I am going to spring tougher action on you”. In my view, he should treat the community as adults.
If his target is developing countries then he is saying to them: “Here are the facts on climate science and economic cost. Although it’s strongly in your interests to aim for a 400 ppm target I don’t think you are ready to accept that so I am recommending a soft target that I think you might be willing to accept. Then after you have become used to the idea you might be willing to face up to what we really need to do”. This is arrogant and condescending and will not be well received by the cadre of experienced, sophisticated and well-informed negotiators around the world.
4. Misjudges time frames. The report’s strategy assumes that agreeing initially to 550 ppm will buy enough time to persuade the world we should in fact be aiming for a much lower target. A 550 ppm agreement would allow emissions to increase through to 2021 (Figure 5.1). Any sort of agreement at Copenhagen will lock the world in until 2020 before an opportunity arises for a tougher set of targets. Yet the scientists tell us we do not have that much time, that global emissions must peak in 2020 at the latest, so the path mapped out by Garnaut leaves a very high probability of irreversible, catastrophic changes.
5. Ignores how fairness is conditioned by history. Because he came to the climate change issue late and does not have a good understanding of the history, Garnaut does not seem to appreciate the political meaning of his recommendations. He argues that a 10 per cent target for Australia is much tougher than it looks when set against the European position of 20 per cent without an agreement and 30 per cent with one, and against the 25-40 per cent Bali number that the scientists say rich countries need to pursue.
Some of his arguments about relative economic burdens are persuasive (and some, such as the population growth one are not – more on this below). But the headline rate has enormous political significance. We must remember that the huge ovation for Prime Minister Rudd at Bali reflected the profound relief after years of enormous hostility towards Australia for the role we played at Kyoto where we almost destroyed the treaty at the last moment and extracted a deal seen almost universally as outrageous. The chief EU negotiator said Australia had misled everyone and had “got away with it”. Another senior negotiator said the Australian increase was “wrong and immoral”. The subsequent repudiation of the Protocol and sustained attempts, with the United States, to sabotage it, dug a deep wellspring of bitterness.
The rest of the world is fully aware that Australia was required to do nothing to meet its Kyoto target, while some other countries – Japan, United Kingdom, Germany – have made substantial efforts to meet theirs. Why would Japan, which started from a more difficult position after picking the low-hanging fruit in response to the oil shocks of the 1970s, agree to a 27 per cent cut after all it has done when Australia, which has done nothing, is allocated a 10 per cent cut?
This must seem like some sort of joke. If Australia goes to Copenhagen saying the best we can do is 10 per cent this will be seen as Australia reverting to the role of laggard and spoiler once again, reducing global expectations about what can be achieved, eating away at the willingness of other nations to act boldly and forfeiting any leadership ambitions the Rudd Government may have.
6. Failure to think about reception of the plan. Blind Freddie could have predicted the immediate reaction to the lamentable optics of the draft report. Yet, innocent of history, neither Garnaut nor the Rudd Government seems to understand the critical role of the environmental NGOs in setting expectations about an acceptable benchmark. Both here and abroad, the media judge outcomes against what the NGOs say is necessary to avoid dangerous climate change. In the past the NGOs have gone as far as the climate science allows, but over the last two to three years their demands have fallen well short of what the science indicates is needed.
Garnaut has developed a roundabout approach to getting to the science-based target of 400 ppm, yet he evinced surprise when environmental organisations and climate scientists criticised his recommendations for being soft.
So for all of the strategising, the Garnaut Review forgot to account for the immediate reception the report would receive and how that reception would undermine, perhaps fatally, perceptions of the plan.
As this suggests, no matter how cogent the counter arguments are, the Garnaut recommendations look like a special deal for Australia. There are an additional three ways in which the scheme proposed does in fact represent special pleading for the country putting it forward.
7. Australian special deal 1 – Unfair model of per capita. For many years, most environmentalists who have been involved in the international debate have agreed that in the long term the international sharing of the emission reduction burden should be based on per capita allocations. There is thus widespread support for the contraction and convergence model as the only principle that can include developing countries in a fair way. It is gratifying to see this principle adopted by Professor Garnaut.
However, he has interpreted and applied it in a way that makes Australia look self-serving, and therefore not truly interested in fairness. Garnaut has assumed that convergence should occur in a linear manner. The model of contraction and linear convergence to equal per capita emissions in 2050 gives rise to the proposed 2020 emission cuts reproduced in my table above. As I have said, anyone with even a vague sense of the history of this debate will immediately see that the burden-sharing scheme Garnaut proposes just happens to allocate the most lenient headline target to Australia among all Annex 1 countries. Just like the Howard Government.
In a serious blunder, the draft Garnaut report actually owned up to this.
“The fact that the emission reduction targets in absolute terms are much less stringent shows how the per capita approach protects Australia’s position by allowing for population growth, a key factor in providing Australia with the least stringent 2020 reduction targets of any of the developed countries/regions modeled.” [emphasis added]
We can be sure this has been carefully noted by officials around the world. It sounds a lot like the sort of self-serving sophistry that the Howard Government used to defend its position of protecting trade interests at all costs.
8. Australian special deal 2 – Treatment of population growth. The model of linear convergence taking account of changing populations is responsible for Australia being allocated what appears to be a very lenient target. Population growth in this country, unlike most others, is largely a policy choice. If we decide we want the economic and social benefits of high rates of immigration, why should we be permitted to impose the costs of our decision (in the form of higher national greenhouse gas emissions) on the rest of the world? For any stabilisation target, any extra tonne of emissions Australia puts out because it wants the benefits of immigration has to come off someone else’s budget. Tell that to India.
9. Australian special deal 3 – Ignores our hot air. It appears that both Professor Garnaut and the Rudd Government believe that the slate can be wiped clean and the sins of Australia under the Howard Government will be forgotten by the rest of the world. In the spirit of reconciliation and progress, that may be so, although it would be a sign of good faith for the new Government to declare that Australia is willing to do more than its fair share to compensate for our history of free riding. It should be remembered that the Australia clause, which allowed us to count post-1990 reductions in emissions from land clearing towards our Kyoto target, meant that our emissions from all sources other than land clearing will have risen by close to 30 per cent above 1990 levels in the 2008-12 commitment period.
Most of the decline in land clearing occurred before the Kyoto conference in 1997 and was therefore equivalent to the “hot air” embodied in the Russian target. Russian hot air was due to the collapse of Soviet industry after the fall of the Berlin Wall while Australia’s hot air was due to the collapse in land clearing after reaching peak levels in 1990. Yet after asking the rest of the world to wipe Australia’s slate clean and allow us to retain the benefits of the Kyoto deal, Garnaut proposes that Russia be denied the benefits of the hot air included in its Kyoto target. This will not be well received.
Despite its admirable attempts to warn us of the implications of the science and the effort given to developing a fair model of burden sharing, the Garnaut report’s recommendations reflect an ignorance of the historical context of the debate and the perceptions of fairness that will shape its reception here and abroad. In short, Garnaut’s subtle negotiating strategy has already foundered on its awful optics.
By so forthrightly and accurately acknowledging the true implications of the science in his earlier reports, Professor Garnaut took on a duty to alert the community and the Government to the dangers, and inform them that cutting emissions sharply is possible at very modest cost. After all, his own modelling indicates that if we pursued a 450 ppm target the cost to GNP would be trivial – instead of our real incomes doubling in 2040 we would have to wait until 2043.
This is the most important message of the report, but Garnaut has chosen not to emphasise it. Instead, he has decided that his job is to formulate a subtle, even tricky, global strategy for the Rudd Government to take to international forums. It should be no surprise that the gap he has now opened up between what the science demands and what he recommends has been met with dismay.
The Garnaut Review is being too clever by half: it is trying to preserve the Review’s political relevance even though what is proposed involves terrible risks for us all. The bottom line is that the Garnaut report provides the Rudd Government with the excuse it’s been looking for to go soft while pretending otherwise, bids down the likely ambitions of developed and developing countries at the negotiations leading to Copenhagen, and erodes the chances of Australia playing a leadership role.
Making waste a winner
The Clean Energy Action Plan released by Clean Energy for Eternity (CEFE) in February 2007 outlined a wide range of options that might enable our region to reduce its energy use by 50% and generate 50% of its energy needs from clean renewable sources by 2020. The renewable energy options included wind, wave, solar, hot rocks, biomass and biogas.
By August 2008 we’ve seen exciting progress on solar energy, with the initial feasibility study for the community solar farm about to kick off with funds from the Green Precincts program. There have been some positive moves on wind, with a clear local Council policy on the installation of domestic micro-wind turbines and several wind companies investigating potential wind farms across this south east corner of NSW.
Last Tuesday representatives from Bega Cheese Coop and Bega Valley Shire Council met with Mike Kelly, Clean Energy for Eternity, and a visiting Melbourne company called Szencorp to discuss the potential of biogas as an option for the area.
The concept is simplicity itself on the face of it. Cows emit greenhouse polluting methane, councils collect green waste then need to do something with it; farmers have to manage effluent and pay for electricity. So – why not install a biogas plant that can put the cow poo and green waste through a digester, capture the methane released and co-generate electricity and heat. The by-product is a stabilized nutrient and carbon rich fertilizer that can replace increasingly expensive fertilizers.
Obviously there are some serious sums to be worked out before we leap in at the deep end. However, it seems the biogas technology can be both flexible and scaleable. It can operate at the smaller scale, providing individual dairies with the potential to offset their on-site heating and cooling costs required to deliver milk that meets requirements of Bega Cheese. At the other end of the scale, a larger co-generation plant might provide Bega Cheese Coop with significant savings in electricity and heating/cooling and give our Council another realistic waste management option to consider.
CEFE is ready and willing to work further with all groups to help our region make this crucial transition towards renewable energy and greenhouse gas reduction. We’ll be holding a major renewable energy forum soon – watch this space!
under threat. Why are we so slow to take up the challenge?
If you are someone who has decided to ignore climate change, there are several possible explanations. You may have decided that the science of human induced climate change is incorrect.
Climate change has happened before, maybe it’s all part of a natural cycle.
Maybe you are worried, but feel that there are more important things to spend
money on. Perhaps you think money should be spent on tackling climate change, but it should be someone elses money. You may think that there is no economic incentivem for our nation to show leadership on climate change. Or maybe you just don’t give a damn. Who cares what the planet is
going to be like in 100 years.
What I would like to do is look at the first reason, that climate change is all
part of a natural cycle, and therefore out of our control. They used to grow
maize on Greenland, sea levels have been much higher, and much lower in the
past, droughts come and go, and the Arctic has been ice free before.
What about CO2?
Currently, atmospheric CO2 is increasing at a rate of about 2 parts per million
each year. It has been on the steady increase for about 100 years, and the
increase is accelerating. Currently, atmospheric CO2 is significantly higher
than it has been since apes started walking on 2 legs. By the end of this
century, CO2 will be more than double what it has been for at least the last 1.2
million years, and more likely triple. The changes that we are seeing have
occured before, but over tens of thousands of years, not decades.
If you believe that climate change is all about natural variation,I would like to ask
you 2 questions. Firstly, please tell me what natural process is
driving the rapid increase in atmospheric CO2? Is it an increase in solar or
cosmic radiation, is it a huge increase in volcanic activity? Can someone please
show me, so that I can get back to my day job.
If you can’t answer the first question, could you have a crack at the second.
Can you convince me with science that a doubling or tripling of atmospheric CO2
by the end of the century will be benign. Answer either of those questions and I
can retire from Clean Energy For Eternity.
Will electricity replace petrol by 2020?
Oil is not just breaking the budgets of Australian families and playing a major role in Climate Change, but it is damaging our balance of trade and is a huge cost to the national economy.
NRMA Motoring Services has just released a report, “A Roadmap for Alternative Fuels for Australia – Ending Our Dependence on Oil” that maps a transitional strategy to the year 2020 when oil could be replaced by electricity as Australia’s main transport fuel.
The report shows that while Australia was a net exporter of oil in the first half of 2003, just 5 years later we are importing $10 billion worth of oil a year, and within a few years that figure could be a whopping $25 billion. Furthermore our governments are subsidising the oil industry at the rate of about $10 billion a year, and spending another $13.5 billion in maintaining existing fossil fuel infrastructure.
A detailed plan for transition to environmentally friendly transportation includes more efficient engines, small diesels, hybrids, plug-in hybrids and electric vehicles. These motors will run on bio-diesel, ethanol from sugar cane, LPG, and electricity. This transition will cost a fraction of present government spending on fossil fuels, and replace oil imports that are devastating to our balance of trade.
The report also recommended that our governments
• set mandatory standards for vehicle emissions and fuel consumption comparable to those of the EU, Japan, China and California. (The EU standard for small cars is 4.4L/100km.)
• impose import taxes and registration fees on vehicles based on their greenhouse gas emissions, instead of their purchase price.
• buy old inefficient cars and have them scrapped to get them off the roads.
The NRMA is to be commended for this farsighted report that should be adopted as the national transportation fuels policy. The report is well worth reading in its entirety. Google: NRMA Jamison Report.
Bill Caldicott 15 August 2008