Carbon Footprints

Garnaut’s review, launched today at The National Press Club in Canberra, is simply titled the “Garnaut Climate Change Review – Draft Report, although there was, according to Prof Garnaut, a suggestion to call it “No Pain, No Rain.”

It’s the conclusion of his investigation that some very real risks can be mitigated by some very short-term action. As it is, all Australians will experience “disruption in their enjoyment of life”.

Garnaut described the “diabolical policy problem” of addressing climate change, one that is “harder than in living memory, a new kind of change.” Garnaut discussed that a real reason it is so hard, and it is an insidious reason, is that the impacts and remedeies happen over long time spans, disconnected by any sort of decision cycle. He emphasised however that “delay is not avoiding a decision, it is making one.”

The decision to delay, for whatever reason, could be disastrous. Garnaut described the current times as “the best of times,” and explained that the Asian economic boom was brilliant for the Australian economy. Indeed it was the cause of 50% of Australia’s own prosperity. But that same economic growth is the cause of a vast amount of current and future greenhouse gas emissions.

“We can’t constrain the developing world,” he said, “Truncating the hopes for higher living-standards for billions of people.” Garnaut added, “The challenge is to remove the links between economic activity and emission of greenhouse gases.” He described climate change as “an adverse side-effect of economic growth.” and as a “classic prisoners’ dilemma.”

Garnaut explained that the release of this draft report was a stage in a journey. He explained the lengths they have gone to to get consultation, with the first interim report back in February, the discussion paper in March, and many public meetings. In all they received around 4000 submissions.

The purpose of today’s release is to expose the general approach and methodologies used in the modelling and calculations, and to invite responses and criticism. It describes reference cases and is the first such exposure of the approach and results to date. It looks first at a model of the economy as if there were no such thing as climate change, and as if we didn’t have to mitigate against it. That ‘fantasy’ model shows 47 million people living in Australia by 2100 each, on average, earning three times today’s adjusted incomes. The economy would have grown by 7% per year in this fantasy scenario, still lagging behind China and India. The global population will peak at 9 billion then supposedly start to decline, although he didn’t mention why this might be, and what all those extra people will be dying of.

Garnaut describes a few categories of economic modelling: The first category is ‘conventional market economic effects’, things you can measure and have data for. The scond category is ‘things you can measure and model but for which you have no real data’. Tourism falls into this category and so his core model excludes tourism for now. The third category is ‘things we value but that fall outside conteporary economic models’, things such as the Great Barrier Reef, which, when we lose them forever there’ll be a national sense of mourning. He emphasised that the numbers only tell a story in category one, tell a made up story in category two, and tell no story at all in category three.

Garnaut’s modelling excludes changes in insurance costs due to increased storm activity and so forth and is based on what science agrees are likely, but not extremely unlikely scenarios

He claimed, “costs of acheiving a target will be much lower within the framework of an international agreement.” and asked rhetorically, “Why should we be early?”

1. We are not that early. European countries are way ahead on this.
2. Some US States, with economies much larger than Australia’s have already taken action in parallel to European actions
3. Chapter 4 is path-breaking research on an international scale that takes into account realities of economic growth in developing countries. It’s been generally accepted by all parties that the critical first step must be the developed world’s to make. The reasons for this are historical responsibility (most emissions to date came from economic growth in developed world), capacity (developed coutries have better infrastructure and economies to design for change), and most important it’s a practical necessity to universal action, “We don’t want to be the reason for them not to take the next step.”

Garnaut points out that Australia is “we’re already hot and dry. Small rainfall changes affect Australia heavily. We have a strong interest to champion [climate change].”. He adds “unlike other developed countries, our neighbours are mostly developing countries. Climate change would impact our terms of trade.”

The Emissions Trading Scheme is the centrepiece of Australia’s emissions reduction plan. Details of the general approach were released in last discussion paper in February and there have been incremental changes since. As before the emphasis is on coverage, credibility, clarity of trajectories which are firm for 5 years followed by incremental reductions thereafter. It is cost-effective.

Garnaut explained that there are three kinds of market failures that are important

1. The world needs a bigger research and development and commercialisation fund to finance the development of low emissions technology and methods. That fund should be, globally, $100 billion per year. He proposes to set up an international fund for this. The Australian contribution to this fund would be around $3billion per year. Each country can set their own national priorities under this scheme, with ours being priorities geothermal, solar, geosequestration, while Japan and the French may choose nuclear.
2. The next is network infrastructure failures, i.e. transmission grid failures that have plagues countries like the USA and 3rd world. The report proposes that energy infrastructure be included in the ‘Building Australia‘ programme.
3. Last comes energy efficiency. There are massive information problems and aging equipment problems in this, and many countries that need direct attention

Garnaut discussed coal and explained that “coal is in national interest” but it has to be clean coal and that needs to be demonstrated on a large scale and when it works at that scale it will provide jobs for displaced coal workers. It doesn’t all quite add up if you think about it. Why will these workers be displaced if their beloved coal is still being mined and processed and burned, albeit “cleanly”. He stressed however that is “too late to avoid major impacts” of climate change already, saying, “Immense damage is likely to be part of the australian reality,” and that “adaptation will test us and our values in profound ways.” On a brighter note he added that adaptation planning will “focus our minds on mitigation choices,” requiring us to ask the question “How do we value future generations?”

Garnaut believes we will be “forced to decide what consumption to be forgone,” and asks, “are we prepared to pay for presevation of dimensions of our national life we’ve always taken for granted?”

Under ‘business as usual’ the Murray Darling system will be gone according to Garnaut’s models, an historical artefact, a symbol of early Australia, birthplace of ideals of mate-ship, of roaming shearers, poets and prime ministers, would be lost forever. “The Murray Darling Basin would be mourned,” he concluded.

There were a few questions from the press:

• Herald Sun: “If the Government signs up to this plan will it be the longest political suicide note in history?”
  Garnaut (in essence): That’s for history to decide, but if the Government is disciplined then there should be positive outcomes for all.
• Herald Sun: “Should there be compensation for fossil industry investors who’ve invested via super funds?”
  Garnaut (in summary)
  1. Half of the permit revenue should go back to households in one way or another, in way that encourages energy efficiency
  2. Focus on the poor
  3. Super funds are diverse. There will be huge winners in this; look to the sunrise industries.
• The Age:”You’ve recommended petrol must be included; would the scheme be compromised if the Government cut fuel excise?”
  Garnaut (in essence): An across-the-board scheme is cheaper and more effective. Cutting fuel excise would send a confusing message.
• The Age: All revenue returned to community or industry, why not some money on adaptation and infrastructure?”
  Garnaut (in essence):
  1. He has recommended that half of the revenue go to housholds in efficiency raising ways
  2. 20% go to to Research, Development and Commercialisation funds for low-emissions technologies, contributed to a global pool
  3. 30% to trade exposed industries but there must be discpline in the application of that money, with clear materiality thresholds being set
• The West Australian: “You mention iconic areas being damaged, what about the reverse of that with the loss of regional communities built around coal, have you modelled those impacts?”
  Garnaut (in essesnse): Some of these impacts will be in the next report, not this one. Regions likely to be hurt may be the coal regions but these could also be regions of prosperity and expansion with carbon capture and storage technologies providing jobs. We should be doing everything possible to move that ahead, everything as early as possible to test CCS and other technologies. He explained that regional adjustment can be done well, citing changes in the hunter valley steel industry.
• 10 News: “Given the urgency for Australia and the world must address climate change, how important is it for Australia in your view to take a leading role and the Australian emissions trading scheme be in place for that meeting in copenhagen. Or is there a danger of rushing it?”
  Garnaut (in summary)
  1. The meeting in Copenhagen will be a decisive one
  2. We can’t play the leading role, others have done that years ago
  3. We can play our full part as a developed country
  4. We’ll be more credible if we can meet our commitments
  5. It would have been better to have started six years ago, but that’s water under the bridge now.
• Science in Media: “Any observations on the announcement of the NZ Government’s proposed emissions trading scheme?”
  Garnaut (in summary):
  1. I suggested there is an advantage in integrating with the New Zealand and Japanese emissions trading schemes as early candidates
  2. It’s a good idea for ministers to be discussing this
  3. One of the special features in NZ scheme is agriculture and forestry and we should study it

He was quite clear that forestry and agriculture would not be included in his design for an Australian emissions trading scheme and I will have to read up on why.

The next release will be the supplementary Draft, containing targets and trajectories, by the end of August and then the final report will come out in September.

Enjoy. — DS

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This entry was posted on Friday, July 4th, 2008 at 3:09 PM and is filed under Climate Change, The Carbon Economy, The Reading Room. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.