garnaut report
4 Jul 2008
A Permit to Pollute
The devil in Ross Garnaut's proposed Emissions Trading Scheme is all in the detail, writes Anna Rose
Professor Ross Garnaut has finally handed down his draft report, and it leaves much to be desired. While I agree with his overall sentiment that Australia needs a massive wake-up call and must act quickly and strongly to reduce greenhouse pollution, the devil in the Emissions Trading Scheme (ETS) is all in the detail.My quick checklist for an effective emissions trading scheme is one that includes:
- A strong emissions cap aiming to halve Australia's greenhouse pollution over 1990 levels by 2020.
- Coverage of all sectors emitting greenhouse pollution, including transport (especially aviation).
- Auctioning of emissions permits - no free ‘permits to pollute' for carbon-intensive industries.
- No compensation to industry, but assistance to low-income households to reduce energy.
- Revenue from the trading scheme to go to energy efficiency, renewable energy and public transport.
Let's see what Professor Garnaut had to say on some of these issues.
The draft Review does not address the issue of an emissions cap.
Garnaut supports including the transport sector in emissions trading, stating that "the more sectors included in the emissions trading scheme, the more efficiently costs will be shared across the economy". True.
Consistent with previous statements, the Review supports 100 per cent auctioning of permits - but not until after 2012. From 2010 to 2012 Garnaut says that "permits to be released according to demand, rather than in line with the emissions reduction trajectory". This is problematic. Furthermore, Garnaut's plan for the money raised in the auction is not the best use of the money from a climate perspective.
This leads directly to the next checkpoint: compensation to industry. The Report proposes that half the proceeds from the sale of all permits go straight back to households, that around 30 per cent goes into structural adjustment needs, and the other 20 per cent is allocated to research and development and the commercialisation of new technologies.
Only 20 per cent to deploying and commercialising the technologies we need to solve climate change? That is simply not enough. We're talking about a fundamental economic transformation of the economy. Of course some industries will need to be phased out - in a way that is fair to workers and communities, not profit margins of industries that have refused to deal with the reality of climate change for years. But every dollar given to polluting industries is a dollar less to energy efficiency or insulation programs for low-income households, or a dollar less for a new wind farm.
So how is the Government likely to respond?
There is, of course, a cacophony of voices responding to the report already. Even the Garnaut Review acknowledges, in a very understated manner on page 14, that "some elements of the Australian resources sector have been especially vocal about the perceived threat that a price on carbon poses to their competitiveness and to Australian prosperity".
Despite this, Kevin Rudd must keep his promise to act on the concerns of the Australian community rather than the polluter lobby.
We all know that the Government's promise to reduce Australia's greenhouse pollution was one of the main reasons for its victory in last year's Federal election. In December last year, Rudd called climate change "the defining challenge of our generation" and promised the world that Australia was ready to assume its responsibility to reduce emissions.
Now, the Opposition and polluting industry lobby - electricity generators, coal mining companies, and energy-intensive industries like aluminium and cement - are running a scare campaign against the ETS.
Industry lobbyists are urging the Government to break or delay its promise to implement an emissions trading scheme by 2010, and are pushing for free 'permits to pollute' for carbon-intensive industries. In the past few months, they have spent enormous amounts of time and money lobbying cabinet ministers and trying to influence the media debate around the ETS.
The way that the Garnaut Review is being reported about now and the way the debate turns is being influenced by their press releases, their comments, and their PR agencies.
The scare tactics over job losses are designed to obscure the fact that taking action on climate change will create hundreds of thousands of new jobs in green industries. Last week's CSIRO report Growing the Green Collar Economy found that if Australia takes significant action to cut greenhouse gas emissions national employment will still increase by between 2.6 million and 3.3 million over the next two decades.
Similarly, the outcry over increased prices for business ignores the reality of how much our economy will suffer if we don't reduce our emissions. When compared to these costs, taking action today is much cheaper.
The Garnaut Review points out that, "when assessments of the reasonableness of arrangements for trade-exposed industries are made, we should be mindful of the wider context. The highest possible obligations under an emissions trading scheme, at the top end of the range of possibilities for permit prices for the foreseeable future, would represent a small fraction of the resource sector's increased revenue from higher export prices in recent years".
The Australian community pushed long and hard to place climate change at the top of last year's election agenda. For two years in a row, hundreds of thousands of Australians turned out to the streets for the Walk Against Warming rallies. And we still care. Last weekend's Newspoll found that 61 per cent of Australians support an ETS.
For Kevin Rudd to delay - or decrease the effectiveness of - the ETS because of pressure from the polluting industries is a slap in the face for the millions of ordinary Australians who elected him on a promise of effective climate action. Australians know that reducing greenhouse pollution will change our economy; but they're ready for those changes and they want leadership, not short-term populism.
The polluter lobby must not set the terms of the debate around climate solutions. Climate change is too important and the costs of inaction will affect every aspect of our economy and our lives.
As Garnaut says on page 2 of his epic 600-page report: "While an effective response to the challenge would play out over many decades, it must take shape and be put in place over the next few years. Without such action, if the mainstream science is broadly right, the Review's assessment of likely growth in global greenhouse gas emissions in the absence of effective mitigation tells us that the risks of dangerous climate change, already significant, will soon have risen to dangerously high levels".
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Anna,
I feel your subtitle is misleading. Stating that the ‘devil is in the detail’ implies that Garnaut has somehow attempted to hide "the devil."
But Garnaut openly declares the devils’ presence on page 2 of the Draft of the report. You really should pay more attention. Garnaut (or his voice) states that: "Climate change is diabolical policy problem." Yep, the devil is right there. Right there inside the policy problem.
I understand, though, how you could have missed it. It was probably your inner hyperbole detector that discounted Garnaut’s attempt to come to grips with "the problem." Like any reasonable person, you probably thought to yourself: given the severity of the problem, of what use is the adjective "diabolical"? A silly little rational oversight, really. Anyone could have made it.
Now then, back to reading the new eco-testament…
I recommend the first five pages of the draft report to anyone after a cheap laugh. As a bit of a taste, on the same page that Garnaut identifies the devil in the detail he refers to the climate change problem as "insidious rather than directly confrontational." It seems the good professor has deduced that part of the reason for our climate problem is that "Gaia" is behaving in a passive aggressive manner.
Hi Bob
I didn’t write the subtitle! I’m the States right now, so I sent this in at like 3am our time without a subtitle. But I DO think that one of the problems with emissions trading systems is that they are so detailed/ complicated that the carbon-intensive industries can lobby for, and then abuse, lots of loopholes. In that sense, the devil IS in the detail.
I often think a carbon tax would be better - much less able to be manipulated by industry. What do others think? As long as it was high enough it would do the same job
Anna
www.youthclimatecoalition.org
I thought I’d take a break from ‘wading through’ Garnaut’s edition of The Good News (Beta version) myself, in order to share what I believe is the sole guiding principle of the Emissions Trading Policy…
Fear. Absolute, unashamed scaremongering. This is not the ‘New’ Eco-Testament. Gaia is not the loving, caring, forgiving ideal intent on showing us the way. This is most definitely ‘Old’ Eco-Testament. Gaia is angry. Hell hath no fury like a ‘mother-earth’ scorned.
And ‘we’ are to blame. Therefore, ‘we’ must now pay for our sins. And by ‘we’ I mean all those that can’t afford to be above the law). This is the premise for the logic.
Garnaut is engaged in systematizing a brand of fatalism. In Garnaut’s world, a world frequented increasingly by soap-boxers like Flannery and Monbiot (will Obama join them?), there is no way out of this but through the purgatory of carbon asceticism.
In the ordinary course of things, if somebody suggested that the only ‘reasonable’ way in which to deal with a sinking ship was to auction off those decks not already below the water line (in some vain hope that those who could afford them would come up with a profitable way of refloating the vessel) the suggestion would not be taken seriously. Yet, we have this idea of emissions trading…
giholdaway
An ETS cannot be other than ‘complex’. The problem it addresses is big, complicated - indeed diabolical. My Dad told me to be especially careful with people who give simple answers to complicated questions.
Carbon polluters will lobby / are lobbying for favourable treatment. Why shouldn’t they? They have an obligation to their investors to try to maintain the value of their assets.
The answer to this dilemma is to make decisions on the shape of the ETS as promptly as reasonably possible - and then let everyone adjust via the market mechanism at the heart of an ETS. This is one of those situations where there are diminishing returns to ex ante analysis (and ex ante politiking).
Let’s get going …
I reckon Garnaut has delivered in spades. His draft report seems to be tough where it counts by refusing to compromise to Industry, energy providers and transport, while remaining realsitic; industry is going to need government support in the short term, theres no escaping from that. Also his report is optimistic as he states that Australia is perfectly placed to be a world leader in policy and technology development for dealing with climate change.
Discussing possible consequences of global warming is hardly scaremongering. That charge has been leveled at anybody who has raised the issue of sustainability over the decades. History will show that leaders who failed to act were blind, lacked vision and were only delaying the inevitable transition to a sustainable global society. The lobbyists and nay-sayers who for decades have hindered progress and argued for ‘business-as-usual’ have only ever been concerned with one thing: protecting their own vested interests.
Good point Lukas. The report in general has some great parts, but I am seriously concerned about his acceptance of the "second-best" option for a 2 year, soft ‘slow start’ for the ETS. I’m also worried that he doesn’t think forestry should be included initially, only when it’s "practicable"
I also think it’s a shame that both the impacts of climate change on Australia and the design of the ETS are lumped together in the one report, because it means that reporting of the impacts gets overlooked a bit, because all us policy-wonks and organisers are interested in the design of the scheme which means we aren’t communicating the impacts to "mainstream Australia".
www.youthclimatecoalition.org
I have some serious reservations about all of this and they are:
1) There is no way to measure carbon dioxide outputs from these industries and until that happens (almost impossible) enforcement is going to be impossible
2) An ETS doesn’t reduce emissions, it acts as a disincentive for others to reduce emissions which may not produce the necessary reductions
3) Even if an emitter is motivated to reduce emissions, it can take 20 years from research to actual use of new technologies, time we may not have.
4) 350,000 Australians are in mortgage stress and at risk of losing their homes. Where are people going to get the money to pay this new tax.
5) After successive governments have wrecked the Murray Darling, on what authority do they, and their economists, use to tell us how to fix a planetary climate?
Surely we need more than a report from one man, whose expertise is in an irrelevant area, to understand what we must do to correct our climatological threats.
There has been a lot of hot air in the papers about emissions trading and the title to this piece is good, a licence to pollute, that the core principle of the carbon trading and why its a bit silly! What is more sensible is to not pollute in the first place and look at what our energy and material requirements are (in the first place) and then look at what difference it makes if we start operating on basic principles.
Emissions Trading (ET) is like borrowing a friends license credits after you get done for speeding and need to find a quick way out…it will work in the short term but if you keep speeding you will no doubt crash…or get caught again :(
ET is also an untimely distraction shifting our focus away from the inconvenient truth that we are over consuming energy simply because we can and we are encouraged to so by government policy perversity and media advertising which is keeping us chained to mindless consumerism rather than quality of life and sustainability, all of which are achievable but not possible unless we either 1/ take charge of our own lives and energy decision making or 2/ change the government policies which impel us to expend energy in inefficient and unnecessary ways.
There are far more easy and achievable things we can do as a nation which will stop the rot but there are also powerful business lobbyists (like Garnaut) who would rather we play games and cast our issues into the rhealm of theory and deal with them in the future…why are we constantly having thinkfests and commissioning reports when we could at the stroke of a pen be writing and changing policy to effect immediate change to reduce our global (and currently stinky) energy footprint, freeing us all from the hyperbole of distraction policies which never move us very far in the end :)
The government has made a good start by reviewing Chinese Investment in our resources sector - far better to make changes than to pursue this ET channel…reception so far is a bit FUZZY!!
http://rosettamoon.copley.org.au/?p=175
rosettamoon
The whole global warming scam is coming to an end in the science community, several recent bits of crucial research (relationship between atmospheric temps/rain/clouds and in solar dynamics) have blown the computer models predictions away and many of the so called "gods of doom" are running for cover!
The problem is that the momentum of reducing carbon emissions is now too great to stop and the world is heading back to the stone age both technologically and politically!!!
Private enterprise performance Vs public policy prescriptions, I know which will deliver nefarious outcomes and which will deliver acceptable results.
Anna, you wrote
"I often think a carbon tax would be better - much less able to be manipulated by industry. What do others think? As long as it was high enough it would do the same job" and that the report "leaves much to be desired".
To me, the massive hole is Emissions Tax. My trusty Adobe Reader counted 317 occurrences of "Emissions Trading" (Scheme, System, wot-ever) but only TWO occurrences of "Emissions Tax", one trivial, but the other, tellingly:
"Policy makers would be better off to abandon an emissions trading scheme in favour of a broad-based emissions tax if they felt unable to resist pressures on the political process for ad hoc assistance arrangements."
The ink on Garnaut’s draft is barely dry before NSW’s State treasurer is shouting for electricity generators to be GIVEN upwards of 30-40% of their emission credits. Hmm, let’s let off some of the worst in order to let NSW sell off the generators at better than fire sale prices.
‘Will those aiming to press for ad hoc assistance please form an orderly queue from Parliament to Perth?’
True, the phrase "carbon tax" occurs 15 times, one of which supports the above emssions tax comment:
"a carbon tax would be better than a heavily compromised emissions trading scheme".
I’m sad that so many commentators the world over have assumed that a trading scheme is obvious and a tax system is too ludicrous to warrant serious discussion.
One aspect though that pleases me about the report is the emphasis on "emissions" rather than carbon dioxide, since it is becoming clear that CO2 is not the only danger, particularly given that methane (a big emission of some
poor agricultural practices) is 21 times worse a GHG than CO2, NOx is ~300 times worse, and just recently pointed out, NF3 (used to make LCD TV screens) is ~17,000 times worse.
Sigh…
It’s all a bit beyond me but in the broadest vaguest terms the whole concept of emissions trading reminds me of my mother admonishing me as a child "moving the food around your plate is NOT eating it"
ZanyHatter
ETS (Emission Trading Schemes) uncomfortably reminds me of WTS (Water Trading Schemes) and MIS (Managed Investment Schemes) who are partly responsible for the looming ‘extinction’ of small, conscientiously operated agricultural Family Enterprises and Creative Micro Industries in the Murray-Darling Basin.
"A government that robs Peter to pay Paul can always depend upon the support of Paul." George Bernard Shaw
I was discussing the Emissions Trading Scheme with my partner the other day and he said "I’ll trade you one of my farts for two of your sentences of hot air".
No, jokes aside, this should definitely be an Emissions Tax and directed at those who emit, not at the consumer, although inevitably the cost is always borne by the consumer.
Giving the consumer a viable alternative (and a disincentive to fossil fuel burning energy suppliers) through a direct Emissions Tax should be at the top of the public agenda. Alternative energy schemes should be invested in, as should the creation of (or preservation of) forestry and vegetation sinks, to offset the CO2 (and other greenhouse) emissions that are not-so-slowly killing off many species on our planet.
Although if you subscribe to the Gaia theory, extinction is a part of evolution and also, soon the planet will somehow change its path around the sun into a more elliptical one and therefore offset the warming effects of the greenhouse gases by a more distant trip around the sun. This would make summers cooler, but winters would also be a lot colder too!
This metaphysical theory however, does not take into account the chemical acidification of the oceans and the devastating effects (like the bleaching of coral) that are already in process due to a change in oceanic PH values.
ZanyHatter
Carbon Credits for Responsible Citizens
Emission Trading Scheme- for personal usage by ‘ordinary’ Citizens
In my opinion the switch to Government accredited GreenPower is very appealing to ‘high-income’ earning celebrities, politicians, bureaucrats and academics. Just as trendy as showing off your new hybrid car or solar panel on your roof or going shopping with a green bag. Since raggedy style of dress has become fashionable we need alternative forms of ‘class distinctions’.
I would welcome a simple compulsory system that automatically includes every ‘ordinary’ Citizen.
I envisage some sort of allocation system put in place by the Government of the day
Whereby each citizen is allocated a certain amount of Carbon credits at a low price. This will give a person a choice how to budget their allocation. Whether to reduce usage of electrical appliances in the house, turn off those lights, fantasizing about participation in a Native American healing Sweat Lodge instead of turning on the air conditioner, choose to fly or not to fly, reduce usage of your diesel guzzling motor car, grow some green leafy vegetable in pots and turn off that screen, mend your clothes instead of buying new ones, avoid meat and all processed food.
You will receive an email: "We’re writing to let you know that you’ve just reached 75% of your usage allowance for your standard rate power allocation. This is a reminder that when you exceed 100% you will be billed triple the standard rate!"
Alternatively an Alarm or flashing light system is installed in your kitchen indicating your power consumption by green light flashing up to 50%, orange light from 50% to 75%, red light from 75% to 100%.
With today’s technology and all the fuss about intelligent design? Chickenfeed!
I would like to see a system similar to ‘Flybuys in reverse’ implemented by all Power brokers?
Instead of gaining points for high spending you will gain points for low usage. Accumulated reward points will attract a bonus. Interplanetary voyage?
A similar reward system could be applied for low usage household water consumption!!!
The choice is yours!
This is the opinion of an ‘ordinary’citizen, a former commercial organically certified horticulturist from the Murray Darling Basin!!!