Emissions can be cut, we just need the will

Age
Wednesday 4/4/2007 Page: 17

TOM Burke is an old hand on climate change. A veteran environmentalist, he has advised British governments on both sides of politics, and companies such as BP and now Rio Tinto. And he is one of those guys who makes his case with startling clarity. Amid the wealth of interesting and valuable points made at Labor's national climate change summit in Canberra on Saturday, one of his comments cut to the heart of the issue.

Noting that carbon dioxide concentrations in the atmosphere have already risen close to the 400 parts per million seen as "the threshold of dangerous climate change", that the International Energy Agency forecasts that global emissions are on track to increase by a further 50 per cent by 2030, and that coal remains central to the world economy, he paused, then added with deliberate emphasis: "This is an issue on which we can't afford policy failure.

There is no rewind button. We won't get a second chance to fix it." You can have a million arguments about global warming, how serious it will be, and what we should do. As Graeme Pearman, formerly the CSIRO's top climate change scientist, declared frankly: "We don't know all the science. We don't know all the solutions. We have to deal with that, and manage the risk." But after you've had the million arguments, when all is said and done, the ultimate truth left is the one stated by Tom Burke: this is an issue on which we can't get afford to get it wrong. Burke drew a parallel with the 1930s, when the democracies failed to face up to what Churchill called "the gathering storm": the threat from Nazi Germany.

"Bad as climate change has become, it is still a manageable problem, within the envelope of our technical and economic competence," he said. "But it is clear that in the near future, it will become an unmanageable problem, unless we act decisively." In which direction? A recurring theme of the summit was that there is no one solution. We need a strong policy framework of economic incentives for clean energy sources and efficient energy use. And we need to accelerate research, development and take-up of a wide range of technologies, to maximise the chance of getting low-cost solutions that work.

Burke puts the goal simply: "We need to get carbon out of our energy system, and keep it out forever. We have to make our energy system carbon-neutral by the middle of the century." That's a heck of a challenge.

But Burke argues it's a feasible one, given the potential for cost-effective technologies in four areas:

• Carbon capture and storage, with the goal of making coalfired generation carbon-free.
• Hydrogen fuel-cells in transport, to phase out use of petrol.
• Energy efficiency, which the IEA says could cut the world's energy demand in 2050 by half today's demand level.
• Renewable energies such as wind, solar, biomass - and the surprise newcomer, geothermal energy.
  

How do we get there? Business leaders such as Charlie Lenegan, CEO of Rio Tinto Australia, and Tim Sims, managing director of Pacific Energy Partners, said the first step must be to put a price on carbon, through an emissions trading scheme (the global favourite) or a carbon tax. Change the prices enough, and you create incentives and disincentives that make business and households change their behaviour. Sims said government should "seize the initiative by acting early". Its initial focus should be on increasing energy efficiency, where easy gains can be made.

Thirty per cent of emissions make no sense, he said, because cutting energy waste would make consumers better off. "We need to regulate to ensure that people pick up the $100 notes lying on the street." The Government's emissions trading taskforce will report back next month. With Labor already committed to an emissions trading scheme, and business now strongly in favour, Prime Minister John Howard is expected to drop his longstanding opposition, and endorse a scheme before the election. But it will be the party winning the election that will decide its shape.

The design will be crucial. The states' own taskforce has proposed a good model for rolling 10-year target zones in setting carbon prices. It's a compromise that would give business a degree of certainty while preserving the Government's flexibility to shift tack gradually if the urgency of taking action changes. The states' model, however, proposes scoring an own goal by giving free allocations of emission permits not only to energy-intensive export industries such as aluminium (which makes sense) but also to electricity generators (which doesn't).

As CSIRO economist Steve Hatfield-Dodds pointed out, the generators have known for years that carbon pricing will come. Effectively exempting the electricity sector would be a brake on efficiency gains when we desperately need to accelerate them. The timing is crucial. It will be 15 to 20 years before the cleaner technologies we are looking to - carbon capture and storage, nuclear, geothermal and other renewables - will have any significant impact.

Making rapid gains in energy efficiency would allow us to put off new power stations until clean technologies are proven and economic. Picking up those $100 notes buys us time. The cost of halving emissions by 2050 is minor. Australia's GDP per head would still double. Annual growth in GDP would fall by about 0.2 per cent. This is not fanaticism, and it would not wreck the economy. The Howard Government should cut the hot air and get on board.