The Age, June 08 2009
Plans to deal with this emergency contain fundamental weaknesses.
FACING up to the implications of climate change, we are witnessing the greatest failure of leadership Australia has seen. Political and corporate leaders claim to accept that human-induced climate change is a serious risk, and requires urgent action to reduce carbon emissions to avoid dangerous consequences.
Yet the scientific and policy debates are like two ships passing in the night. The latest authoritative science indicates that we may face catastrophic, irreversible outcomes as the full effect of even the current 387 parts per million of carbon dioxide in the atmosphere unfolds. Despite much rhetoric from political leaders, virtually nothing has been done so far to contain emissions.
Meanwhile, the policy debate is built around science that is at least six years out of date. As a result it is aimed at the wrong problem - stabilising atmospheric carbon dioxide concentrations in the 450-550 ppm range, with emission reduction targets of 5-15 per cent, possibly 25 per cent by 2020, and 60 per cent by 2050. Even 450 ppm exposes us to unacceptable risks. The science is now calling for stabilisation around 300 ppm and emission reductions of 45-50 per cent by 2020 and 95-100 per cent by 2050.
The latter is a far greater task, and the carbon pollution reduction scheme (CPRS) must be looked at in this light. There is nothing wrong with its framework; in essence it is similar to various proposals under development since 1998. Where it falls down is that its key parameters, such as emission reduction targets, compensation and carbon price caps render it incapable of meeting the challenge we now face.
Leadership in these circumstances is vital. Leadership means being prepared to honestly acknowledge this challenge, set out the solutions, however unpalatable, and build support for, and drive, implementation.
Instead, we have managerialism - the incremental improvement of the status quo, oblivious to the fact that the status quo is unsustainable.
The Government and Opposition have approached climate change as yet another political issue, with policy being arbitrated between competing ambit claims. It cannot be solved this way, as the Government's scientific advisers should have been making abundantly clear. Policy must be based on the latest authoritative science. The only people who seem to understand this are the Greens.
Corporately, the image of Australian industry in the debate is set by the managerialism of Mitch Hooke and Heather Ridout, representing specific industry associations. As usual in the past decade, implicit denial continues, with the emphasis on slowing up implementation and demands for unjustified compensation. The problems and costs of change are exaggerated and the enormous business and job creation opportunities are ignored. This time the excuse is the global financial crisis; last time it was to avoid doing anything that might disrupt the China boom. Not a good look, given the risks we now face.
It is high time the chairmen and chief executives of corporate Australia took leadership on climate change by speaking out personally, rather than hiding behind the fog of industry associations. Large corporations, more than any other groups, have the financial muscle and the intellectual capability to understand the climate science and its implications. Yet they are silent, despite the fact that they have known about the risks for years and have a fiduciary responsibility to look after the interests of their shareholders in perpetuity.
Climate change is likely to be the most material issue affecting shareholders in the coming decade. Non-government organisations, similarly, have been persuaded to toe the managerial line and lower their expectations, by supporting the proposed carbon pollution reduction scheme.
So what to do with the scheme? We already know that the targets should be raised immediately. The compensation and escape clauses built into the proposal will further work against this, as well as providing the opening for additional compensation if changes were made. Most importantly, these features will stifle innovation and slow the move to a low-carbon economy at precisely the time it needs to be accelerated.
Much is made of the need to provide business certainty, but it is irresponsible to provide false "certainty" with the knowledge that it will rapidly change. The outcome is likely to be more stranded assets, for which further compensation will undoubtedly be sought.
As regards a negotiating position for Copenhagen, the likely effect of the targets in the current proposal, even the 25 per cent by 2020, is to lower international expectations and lessen the prospects for a realistic global agreement. If we are going to have a negotiating position, it should be aimed at the peaks, not the foothills.
The carbon pollution reduction scheme should be urgently reworked as part of an emergency response. The time has come for a government of national unity on this issue - the climate change challenge is that serious.
Ian Dunlop is a former chairman of the Australian Coal Association. He is deputy convener of the Australian Association for the Study of Peak Oil, a fellow of the Centre for Policy Development and a director of Australia 21.