November 02, 2006
Mike Steketee: Reducing emissions can't wait
THE Stern review moves the debate on climate change beyond science to economics and in the process it catches the Howard Government short.Only six weeks ago, Industry Minister Ian Macfarlane declared himself to be "a sceptic of the connection between emissions and climate change". He conceded the need to lower emissions - the kind of non sequitur that only a politician can explain - but said that could be done through new technology and "you don't necessarily need to give a price signal".
Nicholas Stern's report to the British Government challenges those views, saying the scientific evidence of the seriousness of climate change is overwhelming and there is no doubt about the causes: human activity. As for the response, it is a case of all hands on deck as far as Stern is concerned. It "will require deeper international co-operation in many areas, most notably in creating price signals and markets for carbon, spurring technology research, development and deployment, and promoting adaptation, particularly for developing countries".
John Howard told parliament on Tuesday there could be no effective response to global warming unless "you have all the culprits in the net", including big polluters such as the US, China and India. But Stern argues we cannot afford to wait because that will mean much higher costs.
Australia's policy has always had an element of the surreal about it, influenced heavily by those who argued that the warming of the planet was just one of those naturally occurring phenomena but acknowledging that doing nothing was not an option politically. And so we try to have our cake and eat it, too: as a large resources producer and emitter, we negotiated special conditions for Australia in the Kyoto Protocol. Then we refused to ratify because it would cost jobs and excluded the biggest polluters. Nevertheless, we made a big deal of meeting the targets anyway.
Ironically, the Government can make this latter boast mainly because of the decisions of the state Labor governments of Queensland and NSW to ban broad-scale land clearing, thereby reducing the contribution this was making to greenhouse gases. This offsets the increase in emissions from other sources and allows us, so far, to stay on track to meet the relatively generous target for Australia of limiting emission increases to 8per cent above their 1990 levels. The land clearing ban provides largely a one-off benefit. Nevertheless, the Government is protesting to the UN about a report this week that does not include land-use changes and concludes that Australian emissions increased by 25 per cent between 1990 and 2004, compared to a 15 per cent reduction for industrialised countries that are parties to the Kyoto Protocol.
In contrast to Howard, the Stern report argues the Kyoto Protocol has established valuable institutions to underpin international emissions trading and that it can be seen as a first stepping stone to international co-operation. "It is not obvious that starting from scratch with an entirely new approach would produce a more effective regime and it could take many years for the shape of a new approach to emerge," it says. The Government claims to be deeply involved in international negotiations on climate change but when the 165 countries that have ratified Kyoto meet in Nairobi in two weeks to discuss future initiatives, Australia, together with the US, will not have a voice.
While large polluters such as China and India are not bound at this stage by emission reduction targets - they argue that developed countries caused the problem so they should take the lead - Stern says China has one of the most ambitious policies to reduce emissions. Its goal is to reduce energy use per unit of gross domestic product by 20 per cent in the next four years, and it has made a big commitment to renewable energy.
Australia is not part of the emission trading scheme set up under Kyoto, meaning we deny ourselves the benefits of carbon credits. Nor will Howard contemplate a carbon tax. But in reality he acknowledges the economics of climate change. As he said on Tuesday, to reduce emissions "we have to clean up coal and, as you clean up coal, you make it dearer and, as you make coal dearer, you make nuclear power economically more feasible".
The Prime Minister is having fun with what he calls "the big N option" because Labor is divided on nuclear power. But there also is an irrefutable logic to his argument, even though Macfarlane was in denial about it only a few weeks ago. Reducing emissions requires a price signal, whether through a carbon tax or factoring in the cost of new technology.
Accepting Stern's policy prescriptions does not require endorsing the detailed projections produced by his economic modelling: that failing to act will reduce global GDP by at least 5 per cent a year and possibly more than 20 per cent, and risk social and economic disruption on a scale similar to the 20th century's world wars and the Depression. By contrast, the report says, reducing greenhouse emissions to avoid the worst effects of climate change would cost only 1 per cent of GDP. But even taking elementary precautions points to doing more than the Howard Government has been prepared to consider.
So does politics. How the issue is playing was captured by the headline yesterday in Sydney's The Daily Telegraph, a newspaper that Howard monitors closely: "PM fiddles while the world burns". In the past, Howard has not allowed previous commitments to stand in the way of catching up politically. Until he does so on this issue, he will only lend credibility to Kim Beazley's slogan that Labor is "the future party".
Mike Steketee is The Australian's national affairs editor.
