Friday, February 22, 2008

Garnaut: Cut by 90 per cent and don't compensate most polluters

Australia will need to go way beyond the Rudd Government's target of a 60 per cent cut in carbon emissions by 2050, according to the interim report of its Garnaut Climate Change Review.

The report, presented to state and Commonwealth leaders yesterday describes the Kyoto Protocol as "only a starting point" and says that while the government's 60 per cent target is acceptable right now, as soon as developing countries sign on to emissions targets Australia will need to go "considerably further" cutting emissions by 90 per cent by 2050.

The interim report says the world is moving toward dangerous climate change much more quickly than had been thought. Australia, with a generally hot, dry and variable climate had more to lose than just about any other developed country.

It recommends that Australia this year set a interim emission target for 2020 and controversially recommends that existing polluters generally not be compensated for the cost of the permits they would need to buy...

The Howard government's emissions trading task force recommended that
existing polluters be handed for free enough permits to allow them to
continue to pollute as before for up to 20 years.

The Garnaut report notes that "there is no tradition in Australia for
compensating capital for losses associated with
economic reforms."

Among the reforms for which it says business has not been compensated
have been the floating of the dollar, the introduction of the Goods
and Services Tax and the program of tariff cuts overseen by the
report's author, Ross Garnaut as an advisor to the Hawke government in
the 1980s.

It also notes that there is no tradition of taking away from
businesses the windfall gains that have flowed from other reforms such
as cuts in the corporate tax rate.

"In the case of this particular reform, the business community has
been aware of the risks of carbon pricing for many years
and many businesses have sought to re-engineer their
production processes to reduce their reliance on emissions," the report says.

Businesses exposed to overseas competition would get special
compensation, but only for as long as the countries they were
competing against held out against adopting emissions targets.

Dr Garnaut said yesterday that it would be important to be
disciplined in calculating whether those circumstances really existed.

"You need an independent body that is authoritative, that can do the
analysis independently of political pressure," he said.

Senator Wong yesterday played down the interim report, saying even the
final version due in September would be only one of a number of inputs
to decision making.

"We will make our decisions after receiving not only Professor
Garnaut's advice but also the modeling from Treasury and other
considerations," she said.

She also appeared to reject the call for deeper cuts saying that the
60 per cent 2050 target that the government took to the Australian people
would be the one it would adopt.

The Greens leader Bob Brown accused the Minister of reducing Ross
Garnaut to input.

"It sounds to me like the Rudd government is subject to coal capture," he said.

"There are huge vested interests at play here - the coal industry, the
aluminum industry, the forest logging industry, and it is up to the
Rudd government to put this country ahead of those vested interests."