Low-carb diet for energy is essential

Adelaide Advertiser
Friday 4/7/2008 Page: 18

POWER stations to close down. Petrol price increases of 10, 20 or 30 cents. Industries from cars to cows needing special deals. No wonder research has shown that most Australians don't fully understand an Emissions Trading Scheme. Let's call a spade a spade. Under a fair-dinkum Emissions Trading Scheme, energy prices will rise. This is because 80 per cent of our power comes from outdated coal power stations and because petrol and gas are greenhouse emissions-intensive.

Switching to cleaner, low emission energy sources comes at a cost. But with careful design and the right policies, these costs can be turned to opportunities. Many studies have shown that significant reductions in greenhouse gas pollution can be made with ongoing strong economic growth. Monash University modelling shows that Australia could be carbon-neutral by 2050 and still triple its economy - boosting jobs and income.

Last week, the Climate Institute Australia released a report from economists at CSIRO and Australian National University which found that, for most Australians, income growth will outstrip increases in energy expenses from emissions trading. A strong package of energy saving reforms and public transport investments can lock this in. The story is more challenging for low-income households. Even with energy savings and public transport investments, some people will have to spend a greater proportion of their incomes on energy. It is a real concern for low-income families but there are measures to help.

A relatively small but significant part of the multibillion dollar emissions trading investment fund can be used for affordability payments and help those low-income and disadvantaged households genuinely impacted by the introduction of emissions trading. Victoria's brown coal power stations are also a big challenge.

Industry insiders jokingly refer to them as burning mud for power - you have to go to Estonia to find something more inefficient. It's difficult to understand how the companies that bought them didn't factor in emission permit prices. Special deals "buying time" for these companies aren't good enough. Any use of the Emissions Trading Investment Fund should be clearly linked to cleaner energy outcomes like renewables, Carbon Capture and Storage or gas. That way, we can ensure supply and a switch to clean energy.

With the debate on climate policies reaching fever pitch before the release of the Garnaut review's draft report today, we shouldn't lose sight of the big picture. Climate policies need to answer three questions.

First, how quickly will this turn around Australia's still-rising greenhouse pollution? Australia's emissions continue to rise with the biggest spikes from electricity generation, up 53 per cent between 1990 and 2006, and transport, up 27.4 per cent during the same period. We should, and can, reverse this trend by 2012, with cuts of at least 25 per cent on 1990 levels by 2020. Second, how will climate policies help achieve a global deal? Australia is particularly vulnerable to the effects of climate change and an effective agreement is very much in our interest.

We can't be a positive player by saying one thing, and doing another. We need to plan significant reductions ourselves before we can ask them of others. Also, we need to clearly signal that we will invest in our neighbouring developing countries. It is in our interests to help clean up their development and prepare them for the unavoidable climate impacts mostly caused by developed countries. A guaranteed proportion of the emissions trading revenues should be set aside for such assistance.

Finally, how will climate policies help us be competitive in the emerging global low-carbon economy, creating jobs and prosperity for all Australians? Meeting emission reduction targets and building the clean energy alternatives will generate trillions of dollars of investment.

The more we waste protecting industries from cleaning up their act, the less we have to invest in unlocking these opportunities for Australian jobs and pay packets. Growing a low-carbon economy will require a full tool kit of policies but these are well within our grasp. With them, we can achieve a healthy economy and a healthy planet to hand on to our kids.

John Connor is CEO of the Climate Institute Australia.