Being green for cost of a call

Sydney Morning Herald
Friday 15/2/2008 Page: 1

FOR the cost of a daily local phone call, Australians could cut their greenhouse gas emissions to the same ambitious levels now being considered by the most advanced European countries, an economic study has found. The report by the management consultants McKinsey and Company, advisers to some of the world's biggest corporations and institutions, says that by 2020 Australia could cut its greenhouse emissions to 30 per cent below 1990 levels for a cost of less than 80 cents a day for each household - or $290 per year. Over the same period household income is expected to rise by more than $20,000 per year.

The cuts could be made without a big technological breakthrough or dramatic lifestyle changes, the report finds, and by 2030, emissions could be slashed up to 60 per cent. "This is not daydreaming. This is a fact-based analysis aimed at setting the goal posts," one of the report's authors, Stephan Gorner, told the Herald. The report, An Australian Cost Curve for Greenhouse Gas Reduction, pre-empts the Federal Government's own studies on the cost of cutting greenhouse gases by Ross Garnaut and the Treasury. Professor Garnaut is not due to release a draft of his report until June and yesterday the Treasurer, Wayne Swan, said his department's modelling would not be available until then.

The Rudd Government has consistently refused to set its 2020 target for cutting greenhouse gases until it receives the Garnaut report. It has committed only to a 2050 target of cutting emissions by 60 per cent from 2000 levels. The McKinsey authors have briefed the offices of the Treasurer; the Climate Change Minister, Penny Wong; and Professor Garnaut on their report, which stresses the need for urgent action to achieve the cuts.

"Significantly reducing Australia's greenhouse gas emissions is achievable and affordable but requires rapid action", the report concludes. It notes,"The scale of changes required is substantial." Mr Gorner, who came to McKinsey's Sydney office from Germany, rejected suggestions that the report was too optimistic but said: "You have to act now to make it happen." "There are likely to be winners and losers," he acknowledged

The report investigates more than 100 opportunities to cut greenhouse gases across the economy, including stepping up investment in wind power, in creasing regulations to slow land clearing, using tougher regulations to lift energy efficiency, speeding up new technologies through tax breaks and subsidies, lifting fuel efficiency standards, increasing the use of biofuels and increasing the use of renewable energy.

Reducing emissions in the building sector, cutting emissions from air-conditioners, hot water systems, lighting and appliances will be the most economic way of cutting emissions because the savings to the consumer will pay for the changes, the report finds. The heavily polluting power industry will need to radically cut its emissions, which are soaring. Without any new action, Australian emissions are set to rise to 127 per cent of 1990 levels in 2020 rather than fall.

Controversially, the report assumes that clean coal technology will be commercially available for coal-fired power stations by 2030, and two-thirds of the industry will be using it. As yet there is no clean coal plant in commercial operation. The report acknowledges that, without clean coal, the cost of slashing emissions by 60 per cent by 2030 will increase by almost a third. Alternatively, the use of renewable energy will need to increase greatly.