Wednesday, December 17, 2008

The economy won't matter if the Earth dies

KEVIN Rudd and Penny Wong are prepared to bet the global environment against a plan to wedge the Coalition in the Senate to win the next election.

Their commitment to cut Australian greenhouse gas emissions in 2020 by 5 to 15 per cent on 2000 levels amounts to an invitation to the rest of the world to sign on to a joint suicide note.

Or it is a belief that other developed countries will pull their weight (and Australia's) and adopt emission targets of a 25-40 per cent cut by 2020 to keep global warming below a 2-degree increase above pre-industrial levels?

Either way, the Rudd Government policy is unsustainable.

Australia is the biggest per capita emitter in the world — about 26 tonnes carbon dioxide equivalent, which is about one tonne higher than the US, more than twice as high as Britain, Germany and Japan, four times higher than China and 12 times higher than India.

Even if we cut emissions by 15 per cent (equal to a 34 per cent per capita reduction) and the rest of the world stood still, our per capita emissions would still be almost twice as high as Europe's mature industrial economies.

The science of climate change now tells us that if global temperatures are allowed to rise by 3 degrees — which is compatible with widespread adoption by developed countries of the Rudd Government 2020 emission targets — irreversible changes will be set in place that will drive the global temperature increase to 6 degrees above the pre-industrial level.

If this is allowed to happen, it will have catastrophic consequences for the environment and human civilisation.

Even managing to contain global warming to 2 degrees would involve risks for the planet that would be unacceptable to most individuals if the same odds of death applied to air travel or engineering projects.

And yet the cost of avoiding the risks associated with climate change are trivial if we act now compared with the cost of cleaning up the global financial meltdown or even the cost of maintaining standing armies to contain the risk of invasion.

Already the consequences of global warming are apparent. Extreme weather events are becoming commonplace. The lower Murray and the Great Barrier Reef are crippled almost beyond repair.

If the Rudd formula is applied generally, science tells us the consequences of global warming above 3 degrees include in Australia the deaths of the Great Barrier Reef, the Murray-Darling-Goulburn Basin and Kakadu National Park.

Internationally, the costs include loss of Arctic summer sea ice. Without ice to reflect the sun, the temperature rise will cause the irreversible loss of the Greenland and Himalayan ice sheets, which would translate into an eventual seven-metre rise in sea levels. Under threat are the 200 million people living on flood plains; 22 of the 50 largest cities, which are at risk from tidal surges; and the billion people in an ark from Pakistan to China whose lives depend on the six great rivers of Asia to keep flowing during the dry season.

In the face of the catastrophic cost to the economy of failure to deal with climate change within the next few years, it is risible to argue that change should be delayed because of the probability of recession due to the global meltdown. Either the world deals with climate warming or there will be no economy as we know it. Dealing with it requires deeper cuts in emissions and higher carbon taxes to drive structural change so Australia can engineer comparative advantages in the new energy-efficient industries and rebuild its manufacturing base.

The tragedy is that because of the Rudd Government's amorality or ignorance, Australia is likely to continue to be a follower rather than a leader in the restructuring process that must occur if world is to avoid catastrophic climate change. It looks like another replay of the old story — a toxic combination of market and government failure to capitalise on Australia's combination of intellectual capital and individual genius for inventiveness, leading to our best ideas being exploited overseas. It should be obvious — it is easier to restructure in a recession because the collapse in private spending means there is no necessity for higher interest rates and taxes to "make way" for new investment.

Further, the spectre of climate change provides a clear direction for industry policy. Given the importance of climate change, every policy, especially regulation, taxation and transport, should be examined through the prism of climate change and ranked inversely against its contribution to greenhouse gas emissions.

Kenneth Davidson is an Age senior columnist.


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