Garnaut's cry from the heart for honesty

Tim Colebatch

The Age, June 1, 2011   

Lies and political slogans have demeaned our climate change politics.

ROSS Garnaut's final report on climate change has three great strengths. It skewers myth after myth spread by those who oppose putting a price on Australia's carbon emissions. It restates his state-of-the-art 2008 blueprint on how the world should share the burden of cutting global emissions in half by 2050.

But perhaps most important of all, he proposes a way to take politics out of Australia's future decisions on climate change by setting up three independent agencies to advise the government on future targets, on future industry assistance measures and to administer the scheme.

After 18 months of sloganeering and lies that have demeaned Australian politics, this offers us a structure for honest, objective decision-making on what is arguably the most important issue of our time.

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Garnaut's 2008 report to the Rudd government was a landmark of hardheaded analysis with a vision for the future. At the time, it was attacked from both sides: too realistic for the Greens, too tough for polluting industries, the Coalition, and ultimately Labor.

But gradually the Greens saw its strengths, and Julia Gillard asked Garnaut to revisit the issue. The result is less a report than a book, full of anecdotes, in which the renowned economist and China expert spells out why he became convinced that human activity is changing the climate, and how Australia and the world should tackle it.

It does deliver the blueprint Gillard asked him for (although this is spelt out more clearly in a summary paper issued separately). And, as in 2008, his central advice to the government - and even more, to the Coalition - is that putting a price on carbon is essential if you want to reduce emissions as much as possible, as cheaply as possible.

Why? Because markets work. Put a price on the emissions that are heating up the globe, and you create space for ''lots of people with clever ideas of doing things in ways that reduce emissions''. High-emission production becomes more expensive, but low-emission production becomes relatively cheaper. The investment goes into the latter, and it becomes cheaper still.

A prime example of that innovation has been the extraordinary reach of the School of Photovoltaic and Renewable Energy Engineering at the University of New South Wales. The cost of solar energy has plunged worldwide thanks to three of the school's graduates who went home to China and set up companies that are now three of the world's four biggest producers of solar cells.

Garnaut sees Australia as ''in the middle of a great struggle'', not only about whether carbon emissions should be taxed, but over whether good policy is to triumph over scaremongering and vested interests. He wants ''the independent centre'' of Australian politics to rise up in support of good policy, and for the principle that Australia should bear its ''fair share'' of the burden of reducing global emissions.

His broad proposals are similar to those he put in 2008. Start with a carbon tax of $20 to $30 a tonne, then, after three years, convert it to an emissions trading scheme in which the market would set the carbon price, and permits could be bought wherever they are cheapest, such as by saving forests in Indonesia or Papua New Guinea.

On the crucial issue of getting global action, his surprising conclusion is that international action is essentially on track. While Copenhagen in 2009 and Cancun in 2010 failed to deliver the binding global agreement we hoped for, they did deliver path-breaking commitments by key countries and a process that ''can be made to work''.

Garnaut devotes two chapters to spelling out why he sees ''concerted unilateral actions'' by all countries as a workable path to turning climate change around. His key points are that:

■ China has pledged to reduce its emissions per unit of GDP in 2020 to a bit over half its 2005 levels. To do so, it is closing its dirtiest power stations, vastly expanding its forests, building nuclear, wind and solar power stations, a national network of very fast trains, and so on.

■ US President Barack Obama has pledged to cut US emissions in 2020 to 17 per cent below 2005 levels. He lost his battle to set a carbon price, but is using regulatory powers to block new coal-fired stations, close the dirtiest old ones and require big gains in vehicle fuel efficiency. And next January, California (Cate Blanchett's other home) will become the 11th US state with emissions trading.

■Cancun and Copenhagen ended with non-binding pledges from all key emitters, and agreement for ongoing international peer reviews of how each country is meeting its targets.

Garnaut sees the global scene as a glass half-full. The Productivity Commission yesterday gave the government a separate report on the same issue, as yet unreleased. It is more sceptical as to whether the pledges will be delivered - if a Republican wins next year's US presidential election, for example, all bets are off.

Sadly, the same is true here. While Labor and the Coalition have pledged to cut Australia's emissions in 2020 to 5 per cent below 2000 levels, officials estimate that on current policies, we will end up 24 per cent above them. Garnaut's report is a cry from the heart to Labor and the Coalition alike: don't let this great country turn its back on the great challenge of our time.

Tim Colebatch is The Age's economics editor.