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Professor Ross Garnaut's Draft Climate Change Report

Ross Garnaut's verdict: Kevin's Slow Boat to China?

Will Professor Ross Garnaut force Kevin Rudd's climate change leadership, or will it be silently 'averaged out' in Canberra?

Within hours of the release of Ross Garnaut's Report on climate change, Greens Senator Christine Milne commented:

"...Garnaut clearly has a blind spot on coal. He has been taken in by "fool's coal" and believes that geosequestration will be the saviour of the Hunter and Latrobe Valleys."

"If he truly understood the urgency of climate change, Professor Garnaut would not be punting on a technology which is at least a decade from proving itself, if it ever can, and can never be one of the truly zero emissions energy sources we need in order to achieve fast and deep cuts in emissions in coming years."

"But, like the politicians, he seems incapable of envisioning Australia beyond coal."

In many ways Garnaut's Draft Report can be applauded, but it seems too weak in its suggestions about the political decisions that need to be taken. In his remarks about the "diabolical political problem" climate change poses, Professor Garnaut may have given a space for the devellish notion, and he may have weakened the demands we must make in order to halt the deterioration of our world as a result of climate change.

About this page

This page collates the early media commentary surrounding the presentation of Professor Ross Garnaut's Climate change report on July 4, 2008. It contains material from the Sydney Morning Herald, The Age, The ABC and material from Crikey. It also features the link to the original report file, stored on our website.

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Related documentation

Climate Code Red5 July 2008: Climate Code Red: The case for Emergency Action - Australian climate scientists David Spratt & Philip Sutton reveal extensive scientific evidence that the global warming crisis is far worse than official reports and national governments have indicated - and that we're almost at the point of no return. According to Green's Christine Milne, they "provide a valuable and sobering contribution to the policy challenge of climate change at a pivotal moment, with their key insight that the expectation of failure has become the norm in climate policy. Climate Code Red is a significant contribution which should be read by anyone seriously contemplating how to set greenhouse emission-reduction targets."

21 March 2008: The Garnaut Climate Change Review Interim Report - Hasn't Australia changed radically in just a few months: under the former government Ross Garnaut, who has just released his Interim Climate Change Review Report, would have been stonewalled, ignored, vilified and sidelined, and Canberra would have followed a lead from industry on its opinion about him. Now he receives appause from the environmental lobby while big energy producers cringe...

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Garnaut urges emissions trading scheme 'without delay'

Posted Fri Jul 4, 2008 1:04pm AEST
Updated Fri Jul 4, 2008 1:05pm AEST

The much anticipated draft climate change report from economics professor Ross Garnaut calls for an emissions trading scheme for Australia without delay as the best of the possible options for cutting greenhouse gas output.

He would include petrol but initially exclude agriculture, but above all he stresses the urgency of introducing the scheme if the death of Australian icons like the Barrier Reef is to be averted.

Speaking on the release of his report in Canberra, Professor Garnaut called for a system to cap greenhouse emissions and a permit system for industry.

The delay in including agriculture acknowledges the difficulties in measuring greenhouse emissions in that sector.

The Federal Government is committed to an emissions trading scheme from 2010, but the Opposition is sceptical about the time frame.

Professor Garnaut says the scheme would have a transition period for two years from 2010, but he says there should be no hesitation in starting it.

"Without early and strong action, some time before 2020 we will realise we've indelibly surrendered to forces that have moved beyond our control," he said.

"Delaying now will eliminate attractive lower cost options. Delaying now is not postponing a decision, it's making a decision.

"To delay is deliberately to choose to avoid effective steps to reduce the risks of climate change to acceptable levels."

The former diplomat, academic and long-time advisor to governments described climate change as a diabolical problem and said the world had already squandered the chance to experiment with different approaches to lessen the impact.

He warns the damage from climate change to Australia may be immense and will be a part of Australia's reality.

The risks, he says are high if nothing is done. Australia's heartland, old rural Australia, could be lost and the Professor says that loss to national identity would be mourned.

The risks include, on median predicted temperature and rainfall changes, a cut to economic growth by 5 per cent, a cut to household consumption by a similar amount and a cut in wages by nearly 8 per cent by the turn of the next century.

Iconic wonders threatened

Professor Garnaut says adapting to climate change will test Australians' values and preferences in profound ways and people will have to think whether they are prepared to pay for the preservation of areas like the Great Barrier Reef.

He has warned that "iconic" natural wonders like the Great Barrier Reef could die out, even if an emissions trading scheme is introduced.

He says the focus must shift to adaption.

"We are forced to decide what consumption of goods and services we would be prepared to forgo, to avoid loss of things that we value," he said.

The report states that even with moderate reductions in emissions, the Great Barrier Reef could still disappear and there would be a 20 per cent decline in agricultural production from the Murray-Darling Basin.

If nothing is done, Professor Garnaut warns that by the end of the century there would be another 4,000 heat-related deaths in Queensland alone, and there would be significant risk to coastal buildings from rising sea levels and storms.

"In the best of circumstances damage from climate change, perhaps immense damage, is likely to be part of the Australian reality of the 21st century and beyond," he said.

The head of the Australian Conservation Foundation (ACF), Don Henry, says Professor Garnaut's report is cautious and the Government must adopt his first recommendation to have emissions trading from 2010.

"This is a credible but conservative report. If we really want a good chance of handing on a healthy Great Barrier Reef to our kids and avoiding devastating droughts, we need to go further and we need to go much faster," he said.

International environment

Professor Garnaut recommends that policy in Australia be deeply integrated with international climate change negotiations and that Australia's effort be aimed at keeping the prospects for an international agreement alive.

With that international agreement, the costs of achieving emissions reduction targets would be lower.

He says developed countries should make an unconditional initial commitment to reducing greenhouse gas emissions, then aim to have a more ambitious offer involving all emitters.

He believes China should be involved in the effort to cut emissions, saying its participation in a global agreement is essential.

Targets and schemes

The report is a draft one and modelling on specific figures will be done over the next few months.

But the report does say Australia's first commitment on emissions targets in the post 2012 period should be similar to those made by other countries and the Professor thinks the Rudd Government target of a 60 per cent cut in emissions by 2050 may fit this.

Key points of the draft report

Clive Hamilton: Garnaut report is Rudd's greatest test

Thursday, 3 July 2008

Clive Hamilton writes:

The release of the Garnaut report tomorrow provides the Rudd Government with an opportunity to stop campaigning and start governing.

The auguries are mixed. For two weeks Prime Minister Rudd allowed himself to be sucked in to the vortex of petrol price populism, until he and his fellow ministers began to fight back against the unscrupulousness of the Opposition.

Rudd began testing his lines in Parliament, working out how to persuade the public to return to thinking about the future.

It worked, putting Nelson and Turnbull on the back foot. They were forced to reaffirm that they are not climate sceptics and accept the science of global warming. That this had to happen only proves how antediluvian the climate debate is in this country compared to, say, Britain where the Tory leader David Cameron has positioned the conservatives as greener than Labour.

Even for the cynics amongst us, the willingness of Nelson and Turnbull to undermine the shaky political consensus on the greatest threat to the welfare of future Australians in exchange for a small and very short-term political gain is breathtaking.

The best news we have had for a while came in the form of this week's Newspoll results. The results showed strong public support for an ETS -- 61% for and 25% against.

Perhaps we should not be so surprised -- both parties promised an ETS and Australians voted for it. Perhaps the petrol price panic is only skin-deep, a bit like an anxiety attack that soon passes.

Kevin Rudd may be right that the Opposition has been lying about accepting climate science and the ghost of Howard still rules the party room, not to mention the Opposition leader's office. After all, Nelson appointed one of Australia's foremost climate denialists as his international adviser. As opinion editor of The Australian, Tom Switzer was always eager to give space to the latest denialist pseudoscience or ideological warriors who equate action on climate change with capitulation to green extremism.

But over the next few days there is much more at stake than petrol price parochialism and ute men complaining about the price of girlie drinks in Gippsland.

Last December, when Kevin Rudd went to the Bali climate conference to receive the ovation of his life, he chose the boldest words to underline his and Australia's commitment to responding to global warming.

"Australia now stands ready to assume its responsibility," he declared.

"Climate change is the defining challenge of our generation ... one of the greatest moral, economic and environmental challenges of our age."

In the most decisive break from the approach of the previous government, he promised the assembled delegates that his government is "prepared to take on the challenge, to do the hard work now and to deliver a sustainable future".

It is a long fall from such a high peak. This week he stands on the precipice, looking into the abyss. It is the greatest test of his political courage. But it won't be the last on climate. The test this week is the comprehensiveness of the ETS. The next, and bigger, test will occur late this year or next when the Government must decide on the level of the cap on emissions. There is an expectation that the target for 2020 will be a 25-40% cut. Unless energy producers and consumers begin changing their behaviour very soon, an emissions limit in that range will mean very large price rises.

It's worth pointing out, given the widespread misunderstanding, that the Government will not be setting a carbon price. It will set a quantitative limit on emissions (the cap) that will become tighter over time. The limited number of permits will make them valuable to the extent demand for them exceeds their availability. The price of polluting forms of energy will rise according to how much those required to own permits are willing to pay for them.

Few Australians are aware of just how closely the rest of the world has watched the greenhouse debate in Australia. Kevin Rudd was received with such acclaim in Bali because the thousands of delegates knew in all its brutal detail how the Howard Government had spent years attempting to sabotage global efforts to reach an effective agreement.

The cheering of the Bali delegates marked the end of that era. Kevin Rudd now has to deliver on his promises.

Garnaut can't see the forest for the trees

Friday, 4 July 2008

Greens senator Christine Milne writes:

Professor Garnaut's much-awaited Draft Report is, in general, strong on the architecture but terribly weak on the big, over-riding issue - preventing runaway climate change. His policy prescriptions are completely out of step with his science.

When we were looking for a transformative vision to take Australia into the post-carbon world, we got an incrementalist approach with a slow start and even a step backwards on the 2050 target.

Let's firstly look at what Garnaut got right.

As foreshadowed for some time, the Professor is strongly calling for auctioning of all permits under the scheme. This is excellent news which, if adopted, will avoid one of the largest problems of the EU scheme, when sectoral lobbying and deliberate gaming of the market led to horrible market distortions in the first years thanks to the decision to grandfather permits.

Another issue where we are in complete agreement is on coverage of the scheme. The immediate inclusion of all energy, industrial processes, fugitive emissions and transport, with forestry and waste being brought in as soon as practicable and agriculture dependent on appropriate measurement capability, is exactly what we have been advocating.

It is particularly pleasing to see support for complementary measures such as feed-in laws and MRETs to bring on line the renewable energy technologies that will power our future, as well as the rejection of nuclear power.

However, Garnaut clearly has a blind spot on coal. He has been taken in by "fool's coal" and believes that geosequestration will be the saviour of the Hunter and Latrobe Valleys. If he truly understood the urgency of climate change, Professor Garnaut would not be punting on a technology which is at least a decade from proving itself, if it ever can, and can never be one of the truly zero emissions energy sources we need in order to achieve fast and deep cuts in emissions in coming years. But, like the politicians, he seems incapable of envisioning Australia beyond coal.

Garnaut, and the Government, must be very careful with the structural adjustment packages they come up with. If they are used to prop up coal jobs, they will surely kill the valleys in the end. If, however, structural adjustment is used to support a green collar revolution, through the restoration of a domestic manufacturing sector and a huge expansion in retraining and re-skilling the workforce, those who are foreshadowing doom and gloom for the Hunter and Latrobe will be proven wrong. Opportunities abound provided the structural adjustment is for the new economy and not trying to shore up coal.

Further to this, on the vexed issue of compensation, Professor Garnaut's focus on equity, and supporting low income Australians well ahead of industry, is pleasing. As we had hoped from the man who noted that nobody was compensated when we floated the dollar, Garnaut is strong on not compensating the coal industry for stranded assets.

However, we would like to see more compensation in the form of investment in energy efficiency rather than welfare payments. As the Professor acknowledged when answering a question on transport and fuel excise, providing alternatives gives permanent relief from rising prices and supports the scheme's goal of reducing greenhouse emissions. Just as structural adjustment has to prepare us for the new economy, so too does compensation.

Troublingly, Professor Garnaut is in denial about Australia's domestic forestry industry and its greenhouse emissions. It is vitally important that, in addition to protecting PNG's forests, we stop destroying Australia's own magnificent and biodiverse forest carbon stores.

Garnaut's biggest problem, however, and the one which may condemn by association all the good material in this draft report, is his support for a slow start to the regime, with a carbon price cap ensuring we don't try to beat our pitiful Kyoto target, and a significant step backwards on the ALP's 60% 2050 target, which he now sees as acceptable in the current global context.

From a man who has come so far on climate science since last November, this delay and weakening of the target is deeply disappointing. It seems that, for all his work becoming a climate change guru, Professor Garnaut is still a conservative economist. We need more than a conservative economist and bureaucrat PM to tackle this challenge.

All you need to know about Garnaut

The Age
July 3, 2008

Ross Garnaut releases the much anticipated draft of his final report tomorrow. Adam Morton tells you what to expect and what it all means.

HERE is what we have learned so far this week: when it comes to carbon trading people are running blind. Australians want an emissions trading scheme, even though they don't know what it is. According to a poll by Essential Research, 93% say they know little or nothing about what will be the biggest change to the economy in at least a generation. But nearly three-quarters think it sounds like a good idea.

In much the same way, it seems people want to hear from veteran economist Ross Garnaut - the Government's handpicked adviser on climate change - despite it being unclear whether what he says will have significant sway with cabinet.

From being painted last year as the Labor Party's torchbearer on the road to a carbon-free society, he is now described as an "input". The Government says it will listen, but is not committed to following any of what he recommends.

Climate Change Minister Penny Wong seemed to take a further step away from Garnaut this week, telling ABC radio that she couldn't reveal anything about his upcoming report except that it was independent - not the Government's - and "from memory" was being released tomorrow.

Despite many of Australia's most influential people - business leaders, bureaucrats, and presumably cabinet ministers - counting down the days until its release, Wong seemed decidedly disinterested.

So what exactly is Garnaut releasing tomorrow?

The report to be launched at the National Press Club on Friday maybe a draft, but at 600 pages, it's one hell of a draft. It will give the first overarching insight into the Garnaut Review's assessment of how climate change will affect the Australian economy, and what we can do about it. Earlier reports have just been snapshots of his thinking; this is a sketch of the full thesis. It is understood to include his first look at what we can do to adapt, including the fairest way to spread costs across households and regions. What it won't contain is any recommendations of emissions targets - the amount Australia should be cutting its emissions in the medium (2020) and long (2050) term.

Treasury modelling of the economic impact of different sized emissions cuts is extraordinarily complicated, and has taken longer than first estimated. The modelling is due in August, and will be included in Garnaut's final report to be released by September 30.

What will it say?

First, that climate change is happening much, much faster than was understood when former World Bank chief economist Lord Nicholas Stern (2006) and the Nobel Prize-winning Intergovernmental Panel on Climate Change (2007) released their landmark warnings that, along with Al Gore's An Inconvenient Truth, thrust the issue in the public eye. An academic paper that Garnaut co-wrote in April found that by 2030 greenhouse emissions are expected to be 14% worse than the IPCC's worst-case scenario last year.

Can it be stopped before the danger to the climate is irreversible?

Garnaut says yes, but has implied on several occasions he doesn't think it is likely. Even stabilising atmospheric carbon dioxide at 550 parts per million - a level that climate scientists agree gives virtually no chance of staving off a two degree rise in temperature, the benchmark that dramatically boosts the chance of catastrophic ecological and economic change - is nigh impossible, Garnaut says in his February interim report, unless we get an "urgent, large and effective global policy change". Stabilising at the most commonly cited target to avert disaster - 450 parts per million - would require global emissions peaking about 2010 and falling to less than half that by mid-century.

With dirty-powered growth in the developing world continuing to soar, turning things around so quickly is a monumental ask. China - now the world's largest emitter - is said to be building a new coal-fired power station a week. After falling in the 1990s, carbon intensity - the amount of greenhouse released per unit of GDP - has actually risen this century. Garnaut says we want to "decouple" the economy from carbon. Right now, we are headed in the wrong direction. Tomorrow's report will have modelling of the impacts on Australia of stabilising at both 450 and 550 parts per million. Garnaut says there was not time to model at the lower, safer target of 400 - a point that has drawn sharp criticism from the environmental lobby, who argue this is effectively conceding we cannot avoid climate disaster.

Remind me again - Australia is responsible for about 1% of global emissions. Why should we be hurting ourselves while much bigger emitters do nothing?

In a nutshell, because Australia is one of the world's biggest per capita emitters and is at greater risk from climate change than most other countries. Worst case-scenarios outlined in Garnaut's interim report in February included up to 90% loss of habitat for Victorian vertebrate species; widespread relocation of coastal settlements and infrastructure due to rising sea levels; up to 80% of Kakadu's freshwater wetlands lost; all of the Great Barrier Reef bleached; and the southward spread of dengue fever as far as Brisbane. Garnaut says much more work is needed to see exactly what the impact on Australia would be. There has been far less research here than in the northern hemisphere.

By bringing in tough anti-climate change measures, and taking a lead in global negotiations, Garnaut says Australia will be saving itself. Part of this will involve offering developing countries help in return for setting emission reduction targets of their own. Lord Stern said it and Garnaut agrees: the cost of not tackling climate change will ultimately be a lot more than doing a little to tackle it now.

Garnaut does not advocate Australia making massive cuts regardless of what happens elsewhere in the world. His emissions trading paper released in March called on the Government to set a series of trajectories beyond 2012 - a relatively strong path to start with, to be replaced by tougher targets once there is a global treaty. If, against the odds, next year's UN meeting in Copenhagen were to agree to emission limits being decided on a per capita basis, that could be as much as 90% by 2050 - much higher than the Rudd Government's current target of 60%.

Europe has already taken this approach - a target of cutting emissions by 20% by 2020 to be lifted to 30% under an international agreement.

While climate change is a uniquely global challenge, Garnaut says it won't be solved through one big post-Kyoto treaty. It will require countries going it alone and making regional commitments, such as Australia's pact to trade permits with Papua New Guinea. But all these small steps must be made with the global perspective in mind.

So, emissions trading. What is it?

Like the Government, Garnaut says carbon trading is the most important plank of Australia's plan to deal with climate change. To date, he has taken a hard line compared with the Government and Opposition, but has tempered his view a little in light of the extraordinary recent surge in oil prices.

An emissions trading scheme is effectively a greenhouse cap. Under Garnaut's approach, the cap would be carved into carbon permits that would be auctioned off to business, allowing them to pollute. Permits could be banked and borrowed - effectively allowing business to emit now and pay later, or vice-versa.

There would be no free permits for power generators, despite intense lobbying from power generators that denying them compensation will risk multibillion-dollar losses and potential interruptions to electricity supply - especially in brown-coal rich Victoria. Garnaut says the scheme must not be captured by vested interests. He has no friends in the power sector, who argue his position might be fine from a theoretical point of view, but is unrealistic in practice.

The major exception on permits under Garnaut's vision would be energy-intensive industries reliant on trade: aluminium, steel and cement.

Should petrol be included?

Garnaut says petrol should be included, and as soon as possible so should forestry and its capacity to allow offsets. Petrol and electricity prices will go up. This is the point - charging more for carbon-related goods will force people to use less, and find non-polluting solutions.

Garnaut has recently softened his stance on how quickly this needs to be forced through. Speaking early last month, he said record oil prices were already doing the work of an emissions trading scheme - pushing fuel prices through the roof and discouraging people from driving. He now proposes starting with a relatively low carbon price, set by the Government, for the first two years of the scheme after it starts in 2010. This would allow the country time to adjust and check that the scheme is working. This, in part, is allowed by Australia's incredibly good deal under the Kyoto Protocol. We are on target to meet our goal of an 8% emissions rise between 1990 and 2012, allowing a gentler start to emissions trading without global penalty if we decide to take that path.

Ultimately, Garnaut says our emissions trading scheme should be linked with compatible schemes to allow deeper, cheaper emissions cuts through offsets.

The Government must be making a lot of money. What should they do with it all?

Modelling by the Climate Institute says the Government could eventually reap as much as $20 billion a year from emissions trading. What Garnaut says on how this should be spent seems a moot point - Treasurer Wayne Swan has already committed to spending every cent on households.

But the Garnaut Review has suggested it should be divided between a larger number of groups. Candidates for help include: poor households needing help coping with price rises; communities built around the coal industry, such as Gippsland's Latrobe Valley and the Hunter Valley in NSW; research and development in clean energy technology; energy infrastructure to connect new developments to the main grid; public transport; helping cut emissions offshore; and heavy-polluting, trade-exposed industries.

What about the holy grail of climate change, "clean coal". Is it a solution?

Garnaut says yes, and says it a lot more enthusiastically than most. He believes carbon capture and storage - taking the carbon dioxide emitted by power stations and pumping it under ground - can be commercially viable by 2020. And he argues Gippsland is exceptionally well placed to benefit, with an extraordinary number of sites suitable for gas storage in the Latrobe Valley and Bass Strait. He foresees a major high-tech industry, perhaps also storing carbon dioxide produced in other parts of Australia. With the developing world building so much dirty power generation, Garnaut also argues Australia should play a part in finding a solution that can be exported.

Do we need a mandatory renewable energy target, as backed by the Government?

Despite Wong yesterday pledging to push ahead with a target of one-fifth of energy coming from green sources by 2020, Garnaut has argued it is incompatible with an emissions trading market, and will need to be phased out.

Adam Morton is environment reporter.

All spin aside, here's the inconvenient truth

The Age
Tim Colebatch
July 5, 2008

ROSS Garnaut's draft report on climate change has six key messages. They are uncompromising, politically tough and they would work. This report is not about spin, but reality.

Message 1

Climate change is happening faster than anyone foresaw, thanks to the industrialisation of China and other developing countries. That will grow even faster and without global action to stop it, so will the climate change.

Message 2

Because it is so dry, Australia is the rich country most exposed to climate change. Its rivers could stop flowing, its farms become unviable, its export prices collapse unless the world brings climate change under control.

Message 3

The situation requires a global agreement, including China - but it will happen only if rich countries lead the way. Australia has to be part of that.

Message 4

The cheapest way to tackle climate change is to set up an emissions trading system quickly, and on the widest possible front - including petrol. Excluding petrol, by definition, will cost us even more in some other area.

Message 5

The revenue raised should be returned to households and business as tax cuts, higher welfare benefits, renovations to cut household energy waste, money for new technology and subsidies to firms competing globally in high-emission industries such as aluminium.

Message 6

New technology is the hope of the side. The West should invest $100 billion a year to research, develop and commercialise low-emissions technology such as solar energy and clean coal - with $3 billion of that in Australia.

This is a draft report; there's no detailed blueprint with targets. But there are two interesting sets of numbers.

The first is in chapter 4, where Treasury models what Garnaut's estimates of future GDP growth imply for emissions. They show economic growth in developing countries will be so rapid that - without global action - by 2030 global emissions will almost double their 2005 levels.

More than 90% of that growth would be in developing countries. China alone would produce 35% of the world's emissions, more than the West and the old Soviet bloc combined. That's why only a global agreement to reduce emissions (or in developing countries, to cut emissions growth) will work.

Then why introduce emissions trading now, you ask? Why not just hold out for a global agreement?

Garnaut gave a long list of reasons why we shouldn't wait for the world; two stand out. First, we would not be alone: virtually all other rich countries already have emissions trading or are moving towards it.

Second, the clincher is "sheer practicality". The West put most of the excess greenhouse gases up there; Australia has the West's highest per capita emissions. "There won't be a next step unless the developed countries move first," he warned.

And, we must accept that, over time, per capita emissions will become the basis for reducing global emissions.

But that's OK: it's in our interests to reduce emissions and slow global warming. And the money raised from emission permits will be returned to households and business.

Garnaut proposes that of the $20 billion or more to be raised every year from emission permits, 50% be directed at households, through a combination of tax cuts, higher welfare benefits and energy-efficient renovations of battlers' homes. The bulk of this would go to low-income households, where fuel bills take up twice the share of spending as in well-off homes.

Another 30% of emissions trading revenue would go to business, mainly to emission-intensive industries competing with developing countries. And 20% should be invested to research, develop and commercialise technology - such as the solar power station at Robinvale, and the demonstration "clean coal" plant announced this week for Loy Yang.

After initial hesitation, the Government seems to be gradually accepting Garnaut's clean, comprehensive, low-cost road map as the way to go. So it should.

'One input' wields an unyielding message

The Age
Michelle Grattan
July 5, 2008

ROSS Garnaut has delivered a very inconvenient truth about the emissions regime. He's told the politicians they'd be cheating to avoid the political pain of still higher petrol prices by cutting excise.

Blowing the whistle on the "fix" proposed by the Opposition and being considered by the Government, Garnaut has stated the obvious. Dealing with climate change is about changing behaviour. Why have petrol in the scheme if you don't send the price signal telling people they should use less of it?

Garnaut has put up a pure model. Don't delay in starting the scheme; begin in 2010 and, if possible, without phasing. Don't exclude sectors (except agriculture, for now). Direct compensation strictly according to need and means. Let the market signals do their job.

Despite the inquiry being commissioned by Kevin Rudd with support from the Labor premiers largely as a political exercise, Garnaut is strongly independent. "I'm just one input into the Prime Minister's thinking and he's just one input into mine." Ouch. The Government had distanced itself from Garnaut, saying his is only one "input".

The draft report is testing for Rudd, effectively setting benchmarks against which to judge the coming green paper. On some issues - almost certainly including petrol - the Government won't want to be as pure as Garnaut. Nelson believes it is better to be populist (and, he hopes, more popular) than pure. He's sticking with his offset proposition, saying the Coalition will protect motorists.

Garnaut says all revenue from permit sales should be returned to households or business. Household help should be concentrated "on the bottom half of the income distribution" to overcome the scheme's regressive effects. The intersection between winning and losing families could be political dynamite.

In 12 months, climate change has turned from electoral gold for Rudd into what Garnaut dubs "a diabolical policy problem". Voters saw combatting global warming as a romantic cause. Confronted with the costs to them personally, inevitably that cause won't seem so attractive. The community's most vulnerable will be worried, regardless of compensation; higher income earners will feel short-changed. Big business has bluntly declared it will pass on the costs.

Selling emissions trading will be an enormous challenge for Rudd as he tries to contain the losers and cope with the detail, as well as keep alive the cause, so people think saving the planet, or at least the Murray Darling, is worth some personal pain.

Miners at the coalface of change

Sydney Morning Herald
Ben Cubby Environment Reporter
July 5, 2008

AFTER going to work at a Hunter Valley coalmine for 20 years, Graham Brown went on holiday to Patagonia, where he saw a melting glacier.

"I was talking to a bloke there, a salmon farmer," Mr Brown said. "He found out what I did for a living and he said to me, 'Where is your heart? Your coal is killing us.'

"I was standing there with a person from the other side of the world and he was talking about the coal we're digging up over here," he said. "There's some pretty big ethical questions that I, as a miner, had to face up to."

Mr Brown returned a changed man, albeit one who still worked at the coalface of climate change. After some thought, he retired from the mines last year and is now a deeply committed environmental activist.

Aged 56, he was arrested for the first time on Thursday when Greenpeace protesters temporarily shut down the coal-fired Eraring Power Station on the Central Coast.

At his side was Peter Kennedy, a fourth-generation Newcastle miner who has also come to believe his industry is part of the climate change problem.

"It's very hard to break the bond between Newcastle and coalmines but, as climate change is slowly taking it's grip, that is what's going to happen," said Mr Kennedy.

Mr Kennedy had some ideas to add to the draft Garnaut climate change review released yesterday. "I'd like to see a $1 levy on each tonne of coal that goes out through the port," he said. "The money can be put into renewable energy. The black coal industry generates revenue of about $23 billion a year, so I think we can afford it."

Newcastle's coal port ships more than 80 million tonnes of coal overseas a year, with plans to expand that to 140 million tonnes. The carbon emissions from Hunter Valley coal burned overseas almost equal the emissions from all sources in Australia.

The NSW Minerals Council said it was unfair to single out the mining industry. "Miners, like the rest of the community, are becoming increasingly aware of the serious issue of climate change and the need to take action," the council's director of external affairs, Lancia Jordana, said.

Mr Brown and Mr Kennedy are joining several hundred activists from all walks of life at a "camp for climate action" in Newcastle on Thursday. The group plans to block the Carrington rail line to the port, delaying a coal shipment in a symbolic act they say will highlight the state's contribution to global warming.

Australia's harsh reality: adapt or perish

Sydney Morning Herald
Phillip Coorey and Stephanie Peatling
July 5, 2008

AUSTRALIANS must pay more for petrol, food and energy or ultimately face a rising death toll, economic loss and the eventual destruction of the Great Barrier Reef, the snowfields, Kakadu and the nation's food bowl, the Murray-Darling Basin.

That is the stark ultimatum presented yesterday by Professor Ross Garnaut in the first comprehensive assessment of the impact on the country of climate change.

Arguing that Australia must introduce an emissions trading scheme in 2010 to discourage the use of polluting forms of energy, Professor Garnaut said the more forms of energy encompassed by the scheme, the lower the price rises would be. This included petrol and other transport fuels.

He said the impact on petrol prices would not be as large as that being caused by the present oil shock and argued against compensating motorists at the pump by reducing fuel excise.

Offsetting the price by "a few cents would not destroy the scheme" but "it weakens the message", he said.

His 537-page report, commissioned by the Prime Minister, Kevin Rudd, and released yesterday, says: "Climate change is a diabolical policy problem. It is harder than any issue of high importance that has come before our polity in living memory."

He warns that, as well as environmental degradation, taking no action would by the end of the century result in $425 billion being wiped each year from the economy and a reduction in wages of almost 8 per cent.

The report recommends adopting an unconstrained emissions trading scheme from 2010.

This would involve charging high-polluting industries such as coal-fired power stations for each tonne of carbon they emit. They would have to buy permits to emit greenhouse gases and the costs would be passed on to consumers, encouraging them to use less and driving everybody to look for cleaner energy sources.

Professor Garnaut said Australia alone could not have any significant impact on reducing greenhouse gas emissions but, unless the developed countries moved first, the polluters in the developing world would not act.

"Any effective remedies lie beyond any act of national will, requiring international co-operation of unprecedented dimension and complexity."

It would be delusional to argue for a delay based on scientific uncertainty and only cost more in the long run.

He criticised the lack of action by the Howard government, saying it should have moved years ago and that Australia had given the US an excuse to do nothing.

The Government will respond on July 16 with a green paper that will indicate for the first time the shape of the scheme it proposes.

The Garnaut report recommends starting the scheme in 2010 but gives an option that would allow a transition to a full scheme in 2013. If there were a transition period, the Kyoto Protocol would define Australia's emissions reduction target and permits would be sold at a low, fixed price. These years would be used to pursue effective international global agreements.

But the Government is unlikely to opt for a delay and will probably start the scheme in 2010, an election year. Sources told the Herald there were ways to soften the immediate impact of the scheme, such as setting a low initial target to reduce carbon emissions. This would result in a low carbon price and only small increases to energy and consumables.

The report warns that current high prices will create political difficulties.

"The emissions trading scheme is likely to be introduced into an environment of recent and perhaps continuing large increases in fuel, electricity and fuel prices - precisely the goods and services whose prices will be affected most by the scheme," it says.

The price increases caused by the scheme will be lower than those being caused by current factors, but consumers will not know what is causing what.

"Households will not be able easily to distinguish between the varying sources of price increases, while agitators against the scheme will be busy spreading disinformation," the report says.

The Minister for Climate Change, Penny Wong, said the report "makes it absolutely clear that the time for playing short-term political games is over".

She backed Professor Garnaut's recommendation that all the billions to be raised by auctioning permits should be returned as compensation.

"Every cent of revenue that we gain through the introduction of an emissions trading scheme will be invested to ensure we assist families, households and Australian businesses to adjust to the impact of a carbon price," Senator Wong said.

The report recommends half the money should go to those on low incomes through tax cuts or social security payments.

Another 30 per cent would go to industries disadvantaged against unconstrained international competitors, and 20 per cent would be invested in developing and commercialising low-emissions technology.

Professor Garnaut said bipartisan support was essential.

But the Opposition Leader, Brendan Nelson, demanded yesterday it be delayed by at least a year so it was not botched.

He repeated that the impact on petrol prices should be offset by a reduction in petrol excise because "$1.70 a litre is a significant price signal for the average Australian motorist".

"To further increase taxes as a result of climate change policies without some other kind of off-set is something that will be opposed by the Opposition".

Professor Garnaut says that in the next 20 years climate change will affect Australia in familiar ways - longer, drier periods, with city people forced to cope with water rationing and country people worried about the ability of the land to remain productive.

But then it will get much worse, he warns. By 2050 the snowfields will be all but gone and the Great Barrier Reef will barely be hanging on.

By the end of the century the Murray-Darling Basin will have collapsed as a food-producing region and people will be moving away. "By 2100, 97 per cent of agricultural production will be lost."

Professor Garnaut said climate change held a serious threat to tourism. "With unmitigated climate change, on the basis of the mainstream science, we won't have much, if any, of the Great Barrier Reef, of Kakadu, of a number of our great environmental assets that are important attractions for international tourists."

A diabolical policy problem

Sydney Morning Herald
July 5, 2008

This is an edited extract of the draft report by Professor Ross Garnaut to the Government.

The weight of scientific evidence tells us Australians are facing risks of damaging climate change. The risk can be substantially reduced by strong and early action by all major economies. Without that action, it is probable that Australians, over the 21st century and beyond, will experience disruption in their prosperity and enjoyment of life, and to longstanding patterns in their lives.

There is no doubt about the position of most reputed specialists in climate science, in Australia and abroad.

There are nevertheless large uncertainties in the science. While there is a clear majority view that there are high risks, there is debate and honest recognition of limits to knowledge about the times and ways in which the risk will manifest itself.

There are prominent dissenters on this matter, gathered under the rubric of "sceptic". For the most part "sceptic" is a misnomer for their position, because these dissenters hold strongly to the belief that the mainstream science is wrong.

The dissent took a curious turn in Australia in 2008, with much prominence being given to assertions that a warming trend had ended over the last decade.

Effective international action is necessary if the risks of dangerous climate change are to be held to acceptable levels, but deeply problematic. International co-operation is essential for a solution to a global problem. However, such a solution requires the resolution of a genuine prisoners' dilemma. Each country benefits from a national point of view if it does less of the mitigation itself, and others do more.

If all countries act on this basis, there will be no resolution of the dilemma. We will all judge the outcome to be insufficient and unsatisfactory.

Resolution of the international prisoners' dilemma takes time - possibly more time than we have. The world has squandered the time that it did have in the 1990s to experiment with various approaches to mitigation.

Climate change is a diabolical policy problem. It is harder than any other issue of high importance that has come before our polity in living memory.

Climate change presents a new kind of challenge. It is uncertain in its form and extent, rather than drawn in clear lines. It is insidious rather than directly confrontational. It is long term rather than immediate, in both its impacts and its remedies. Any effective remedies lie beyond any act of national will, requiring international co-operation of unprecedented dimension and complexity.

While an effective response to the challenge would play out over many decades, it must take shape and be put in place in the next few years. Without action, if 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 the risks of dangerous change, already significant, will soon have risen to dangerously high levels.

Observation of daily debate and media discussion in Australia and elsewhere suggests that this issue might be too hard for rational policy making. It is too complex. The special interests are too numerous, powerful and intense. The time frames within which effects become evident are too long, and the time frames within which action must be effected too short.

The most inappropriate response would be to delude ourselves, taking small actions that create an appearance of action, but which do not solve the problem.

Such an approach would risk the integrity of our market economy and political processes to no good effect.

We will delude ourselves if we think that scientific uncertainties are cause for delay. Delaying now will eliminate attractive lower-cost options. Delaying now is not postponing a decision. To delay is to deliberately choose to avoid effective steps to reduce the risks of climate change to acceptable levels.

The work of this review is directed at nurturing the slender chance that Australia and the world will manage to develop a position that strikes a good balance between the costs of dangerous climate change and the costs of mitigation.

Australia has a larger interest in a strong mitigation outcome than other developed countries. Our location makes us already a hot and dry country; small variations in climate are more damaging to us than to other developed countries. The problems of our neighbours would inevitably become our problems. And the structure of our economy suggests that our terms of trade would be damaged more by the effects of climate change than would those of any other developed country.

However, Australia carries some major assets into this challenge. Australians are facing this new kind of challenge in the best of times. Australia is fortunate that humanity is enjoying the harvest of modern economic development in Asia and beyond. More people are emerging from poverty more quickly than ever before.

Australia is enjoying a double harvest. The internationally oriented market reforms from the 1980s were put in place just in time. We are now riding the extension of the beneficent processes of modern economic growth into the heartlands of the populous countries of Asia.

In the early years of our federation Australians took pride in the highest living standards in the world. We turned in on ourselves, and paid the cost.

Then, a quarter of a century ago, we caught that tide which, taken at the flood, leads on to fortune. On such a full sea we are now afloat.

So we have much to contribute and much to lose as we face the diabolical policy challenge of climate change. Unmitigated climate change could lose this challenge. Or it could be lost by a bungled attempt to mitigate climate change, which would bring back into the centre of our national policy all of the self-interested pressure groups and arbitrary interventions that retarded our progress for so long.

The Asian economic boom is also the source of the sharper immediacy of the climate change problem. The increase in concentrations of greenhouse gases in the atmosphere over the last two centuries has generated the climate change that we have experienced to date and will experience over the next couple of decades. This is the result of economic activity in the countries that are now rich. The rapid increase in concentrations that are expected over the next several decades is primarily the result of activities in the developing countries that are becoming rich. This rapid increase is what makes action to avert dangerous climate change urgent.

It is neither desirable, nor remotely feasible, to seek to lower the climate change risk by substantially slowing the rise in living standards anywhere, least of all in developing countries.

The solutions to the climate change challenge must be found in removing the links between economic activity and greenhouse gas emissions.

For Australia, the commitment to the mitigation of climate change can be seen as the reinvestment of a part of the immense gains that have come from accelerated Asian economic growth, in contributing to reduction of an adverse side-effect of that growth.

Our trade-exposed, emissions-intensive industries have valid concerns.

Along with some of our farm industries, metals processing would be the most affected, and have the first claims for special measures. Every element of costs matters, and no increase in costs should be imposed on business without good reason. But 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 would represent a small fraction of the resource sector's increased revenue from higher export prices in recent years.

Balance, reason and understanding of the premises and logic leading to policy conclusions are the keys to Australia and the world using well its last chance to get this difficult policy problem right.

Getting the monkey off our backs

Sydney Morning Herald
July 5, 2008

Whatever your situation, expect emissions trading to change the world as you know it, writes Ben Cubby.

AUSTRALIA is about to wean itself off the big smoke. Not the tobacco variety, which does enough harm, but the even riskier addiction to coal-fired power and petrol-driven transport. Like nicotine, fossil fuels have got under our skin and breaking the habit will hurt, at least initially.

Most in the Federal Government, together with scientists and economists designing the nation's response to climate change, believe the pain will be worth it. They believe that running an economy reliant on pumping vast amounts of carbon dioxide into the atmosphere would be our greatest environmental undoing, pushing up temperatures, playing havoc with rainfall patterns, rendering useless great slabs of arable land, and threatening low-lying settlement with rising sea levels.

In his interim report in February, Ross Garnaut attempted to outline the extent of the horror that inaction poses. He nominated the loss of up to 90 per cent of Victorian vertebrate animals' habitat, shrinking of Kakadu wetlands, bleaching of the entire Great Barrier Reef, and dengue fever's spread as far south as Brisbane.

The centrepiece of the treatment plan is an emissions trading scheme, an eye-glazing concept with broad public support even though it will raise prices of electricity and petrol, and those commodities that rely on them. And this against a background of most Australians knowing little or nothing of how such a scheme would work. One poll, by Essential Media Communications, found 93 per cent of Australians acknowledged their ignorance about a scheme they're trusting will save the day.

Put simply, emissions trading is an attempt to control greenhouse gas pollution by making polluters pay. The Federal Government will take over state and territory schemes with one national approach.

Permits are likely to be auctioned by government, possibly returning to public coffers $20billion over decades.

These permits will allow their buyers to release a given weight of greenhouse gas - overwhelmingly carbon dioxide - into the atmosphere.

But the system will be underpinned by a Government-imposed cap on greenhouse gas. Emissions now total 580million tonnes of carbon dioxide a year. The Government wants that cut by 60 per cent of 1990 levels, to about 220million tonnes a year by 2050. No interim targets are set.

An alumina refinery is an appropriate example for how emissions trading might work. It buys large amounts of electricity and pumps its own greenhouse gas into the air. It will have to pay more for its electricity because the supplier will have to buy its own permits, and the refinery will need to buy emission rights for its own pollution.

The refiner would need to bid at the initial Government auction for emission permits. If it needs subsequent top-ups, permits will be available on the open market, at the going price. If it cuts pollution to levels less than permitted, the refiner can sell excess permits to others. But the total number of permits will be calibrated to equal the government-imposed cap on total emissions; hence, permit prices will rise over time as permits become more scarce.

Alternatively, the refiner will be able to earn credit - or offsets - against its pollution by, for instance, planting eucalypt plantations, which absorb carbon.

Although Australia emits just 1 per cent of world emissions, its per capita rate is high by world standards, principally because of heavy reliance on coal-fired electricity to meet a boom in power demand from households and industry.

The arrival of emissions trading in Australia will be a unique moment - the first time market forces have been directly harnessed on a national scale to achieve environmental and social objectives. There is a general consensus among commentators, industry and green groups that emissions trading will lead to mass change, perhaps on the scale of the original industrial revolution.

The effects will flow on from the power plants and oil refineries to touch all areas of society. As the price of coal-fired power goes up, so will household power bills, grocery bills and probably petrol. In yesterday's draft climate change review, Professor Garnaut did not hazard guesses on exactly how much food, fuel and power prices would rise - just that people on lower incomes would need compensation.

The scale of change is contested by experts, though most agree that when the trading scheme is brought in, in about 18 months, there will be an immediate spike in costs to the public, accompanied by special offers from competing power retailers.

As the cost of coal-fired electricity and petrol rise, renewable power will be more affordable. By implication, it is designed to encourage everyone - homes and businesses - to find ways to use less power and save money. Local goods may be cheaper than imports facing high transport and climate-controlled storage.

Emissions trading is being tried overseas, with some teething problems but generally high levels of success. The biggest scheme, involving 25 nations, has been operating in Europe since 2005. It is on track to reduce emissions. Over the next two decades, most nations will become embroiled in some form of trading scheme, economists believe.

Some countries may try to position themselves as "polluter havens" to attract industry, but such plans are unlikely to endure under international pressure. However, some companies have cut long-term deals in which local authorities protect them from the polluter pays principle. In NSW, BlueScope Steel has extracted government protection in the form of a 25-year exemption from carbon taxes.

Across Australia, lively competition between dozens of companies measuring and offsetting carbon emissions is likely to increase dramatically. With the right species in the right environment, half a dozen trees can cancel out a tonne of black coal over their 30-year life-span.

"There are some companies that are well aware of offsets and what they will need to do; others have absolutely no idea," said Peter Bassarova, chief executive of Carbon Conscious, which is planting eucalypts throughout the West Australian wheat belt.

Scientific opinion varies on how deeply the world must cut carbon emissions to stave off the worst effects of climate change. Gloomier predictions are made each week. If global temperatures rise by two degrees, the risk of rapidly increasing climate change and a dangerously transformed planet becomes much more likely.

Economic modelling suggests scenarios can be met without ruining the economy. The alternative - doing little or nothing now - would be a steady rise in prosperity, perhaps to the middle of the century, then sharper, more catastrophic falls later on.

Ben Cubby is the Herald's environment reporter.