Tuesday 10 March 2009

We can keep jobs and save the planet

Age
Friday 6/3/2009 Page: 15

AS DEBATE on emissions trading demonstrates, an enormous gulf still separates rhetoric from action on global warming; there is a macabre irony in government, opposition, industry groups and economists all being hoist with the petard of their own inconsistent policies.

Emissions trading is one essential building block of a national emissions reduction strategy if the transition to a lowcarbon economy is to be achieved. There is nothing wrong with the framework proposed in the Federal Government's carbon pollution reduction scheme (CPRS); it is essentially similar to various proposals under development since 1998. Where it falls down is that its key parameters are inconsistent with the task that, in theory, it is designed to undertake.

It is impossible to design a sensible emissions reduction strategy, and an emissions trading scheme (ETS), without first deciding on the targets to be achieved. The Government's stated objective is for strong action, but the targets, compensation and escape clauses in the CPRS imply exactly the opposite. Hence the avalanche of criticism.

Richard Denniss argues that individual incentives to reduce emissions is negated by the CPRS cap. John Humphreys and others maintain a carbon tax is preferable to emissions trading.

Geoff Carmody argues for a consumption, rather than a production-based, ETS. Most industry lobby groups want the whole process delayed until their members have weathered the financial crisis. The Greenhouse Mafia no doubt see a splendid opportunity to prevent any action at all for another decade.

The fatal flaw in the debate is that current mindsets and policy proposals are based on scientific information that is at least five years out of date. The latest information indicates that we now min a rapidly increasing risk of sudden and total failure of some part of the climatic system, from which recovery may be impossible.

Sensible risk management in this context requires emission reduction targets to be based on the latest, considered science, not on a political view of the art-of-the-possible. The target for stabilisation of atmospheric carbon to avoid catastrophic consequences and maintain a safe climate is now probably a concentration of less than 300 ppm carbon dioxide, not the outdated 450-550 ppm carbon dioxide in current proposals.

This means emission reductions by Australia must be in the range of 45 to 50% by 2020 and almost complete decarbonisation by 2050, rather than the 5 to 15% by 2020 and 60% by 2050 currently proposed.

Many will dismiss these targets as unattainable given that current concentrations are 385 ppm carbon dioxide; it will require not only the rapid curtailment of emissions, but the reabsorption of some carbon already in the atmosphere. We have the technology to achieve this and when real emergencies loons, as at present, then remarkable change is possible.

In this context, emissions trading alone is not enough. It must be complemented with regulatory initiatives and other incentives to accelerate energy efficiency, conservation and alternative energy supply, improve building codes, vehicle and aviation emission standards, personal carbon trading opportunities and carbon sequestration. This involves setting the right framework for rapid change. Compensation must be minimised - public funding should encourage a viable future, not prop up an unsustainable past, particularly when funding is going to be in short supply.

Looked at in the light of strong targets, the current bones of contention fall away. We will need every possible contribution to reduce emissions, with individual efforts encouraged by regulatory and personal trading initiatives. Carbon taxes make no sense as they do not deliver guaranteed emission reductions, the tax quantum required would have to be far higher than politically and commercially tenable, and the cost of meeting 11 targets would be higher than under an ETS.

As the world begins to understand the latest science, rapid global action is now probable, which takes away any justification for compensation to trade exposed industries. The world will be crying out for low carbon products, which will be a source of competitive advantage for those prepared to take up the challenge. There has never been any justification for compensation to domestic high emitters. Thus much of the argument for our consumption-based ETS falls away.

The current mantra is "the preservation of jobs" but this is a fallacy - at best it can only have a marginal impact on the devastation being wrought by the financial crisis. The real focus must be the creation of jobs in the new industries on which our low carbon future must be based, rather than the problems and costs of moving away from the old.

This is the right time to make the transition and it can be achieved at far less cost than the horror stories propagated by the fossil fuel lobby, in many cases with a net economic benefit. Employment is likely to rise because these new industries are far more labour intensive than the industry they replace.

A cautionary tale from the US car industry: GM and Ford lobbied very successfully in the late 1990s to prevent improvements in US vehicle emission standards. The net result is that they are facing bankruptcy while Toyota and Honda now lead the US car market. If the greenhouse mafia continue to get its way, the country will be condemned to penury for decades to come.

Ian Dunlop chaired the Australian Greenhouse Office Experts Group on Emissions Trading from 1998 - 2000, which developed the first Australian emissions trading concepts.

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