Sunday, July 6, 2008

A global warning

Illustration: Matt Davidson

ROSS GARNAUT'S 500-page draft report presents a clear picture of possible future climate impacts on Australia, and what should be done about them. Yet so diabolically complex is the issue that Garnaut's team has had insufficient time to complete the economic modelling required to determine targets for carbon emissions, trajectories for emissions reduction, or recommendations on a carbon price. For this we'll have to wait until late August, when the supplementary draft report is to be published.

In his preamble, Garnaut makes a strong moral case as to why Australia should act now. Our economy has ridden high on the wave of development sweeping Asia, yet it is that very development that is accelerating climate change. Furthermore, many nations (mostly in Europe) have acted before us, and Australians have never been in a better economic position to pay the costs of emissions abatement, nor to assist those less well off to adjust to the changes.

Exempting industries from the scheme would be catastrophic, he says, the only exceptions being industries that sell into a global market and which face competitors that do not yet pay for their emissions. But even here, he argues, the concessions must be rigorously assessed and absolutely minimal.

Garnaut is at his most persuasive when he argues that quick, effective action is urgently required, and that delays will only magnify the risks we face, as well as making action far more expensive. As he says, we should have acted years ago, and the Opposition wish to delay the carbon trading scheme to perfect it harks back to failed policy: the truth is that the issue is so complex, yet so urgent, that we have no choice but to learn on the job.

In determining the level of risk we face from climate change, the report relies on the projections of the International Panel on Climate Change. Sadly, new data indicates that the key performance indicators of Earth's climate system are changing faster than those projections allow. For the rate of warming, rate of sea-level rise, and extent of carbon dioxide accumulation, the real-world data all lie beyond what IPCC projections allow for. This indicates that we're heading towards a catastrophic scenario, which the IPCC rates as being less than a 10% probability.

One specific risk highlights what's at stake. Models developed by the CSIRO indicate that climate change will continue to reduce stream flow in the Murray-Darling Basin, with a 10% probability of the river system drying up almost entirely.

Garnaut does not assess the economic impact of this 10% risk, yet what we see in the real world seems to be more consistent with it rather than less catastrophic outcomes. For the second year in a row there has been zero water allocation to many irrigators in the basin, and the lower Murray is in crisis, with parts of the system on the verge of turning hypersaline or acid.

Some elements of the green movement have criticised Garnaut for his emphasis on clean-coal technologies. But in this Garnaut is right, for China is so hopelessly addicted to coal that the world has no choice but to develop such technologies and push their widespread adoption by 2030.

One disappointment for me was to see that forestry and agriculture will not be counted in on the scheme from the start. Eight per cent of all atmospheric carbon dioxide is absorbed each year by plants. They represent the greatest engine of planetary cleansing we possess, and unless we avail ourselves of their awesome power, I can't see how we will stabilise our climate.

Garnaut recognises that we will need far more than just carbon trading if we are to avoid dangerous climate change. Political leadership that aspires to profound transformation in electricity and transport infrastructure, incentives to develop new technologies, mandated efficiency programs, technological transfer and a rationalisation of government powers will all be required if we are to reduce the pollution stream that is changing our world.

As chairman of the Copenhagen Climate Council, I have just returned from a meeting in Denmark, where I saw a model of how some of this might be achieved. Two of our councillors, a wind energy pioneer and an electric car company, have teamed up and are working with the Danish Government to accelerate the uptake of electric cars. Nationwide battery exchange stations and kerbside power supply will be in place by 2009, as will the first new-generation fully electric cars.

When he presented his report at the National Press Club on Friday, Garnaut was asked how carbon trading would affect communities such those in Gippsland that are heavily dependent upon coal. His answer was that their fate depended in part upon how companies dealt with the challenge. Even within the coal industry there would be winners and losers, he said, and if companies invested successfully in carbon capture and storage, they would continue to grow and prosper.

If, however, the industry failed to rise to the challenge, not only would such regions fail to prosper, but the contagion would spread to the coal exporting areas as well. Reports, and even government, can do only so much to shield people from changes that are global in nature. Sometimes it's essential that industry, unions, communities and government work together to ensure their future.

With this report, Ross Garnaut has proved himself to be that rarest of commodities — an economist capable of taking a broad view of complex issues. I think his influence may become global, for he has shaped the highly promising beginnings of carbon trading suited to non-European contexts, at a time when the US, Canada and perhaps even China are looking for leads.

Kevin Rudd deserves congratulations for appointing him. Let's hope he's listened to.

Tim Flannery is chairman of the Copenhagen Climate Council, a professor at Macquarie University and Australian vice-chairman of The Climate Group.

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