Act now or face disaster, Garnaut report warns

• Chris Hammer, Canberra
• The Age, July 5, 2008
• http://www.theage.com.au/national/act-now-or-face-disaster-garnaut-report-warns-20080704-31xd.html?page=-1

Ross Garnaut's draft report demands greater commitment to renewable energy like these wind turbines atPortland in far western Victoria. Photo: Robin Sharrock

PETROL should be included in Australia's carbon emissions trading scheme, but low-income households should be compensated for higher power and fuel bills, the nation's top climate change expert has warned.

Issuing a stern challenge to the Rudd Government to include petrol in the scheme, when it begins in 2010, Ross Garnaut warned of dire consequences for Australia's natural icons unless urgent and decisive action is taken.

"Without early and strong action, some time before 2020 we will realise we have indelibly surrendered to forces that have moved beyond our control," he said.

Professor Garnaut proposed that low-income households be compensated through tax cuts or welfare payments.

While he said emissions trading should be left largely to the market, he raised the option of the Government easing into the new system by setting a low, fixed carbon price for the first two years. This would keep a lid on price rises, he said.

Evoking an apocalyptic vision of a devastated Great Barrier Reef, a Kakadu flooded by sea water, and an increasingly barren Murray-Darling river system, he warned against taking half-measures.

"The most inappropriate response would be to delude ourselves, taking small actions that create an appearance of action, but which do not solve the problem."

Professor Garnaut has left open moving to a transitional emissions trading scheme — with fixed-price permits between 2010 and 2012. However, it is understood the Government favours moving directly to a fully fledged scheme from 2010.

The 537-page report recommends a major effort should be put into clean-coal technology, so coal-dependent regions such as Victoria's Latrobe Valley continue to prosper.

Professor Garnaut has taken a hard line on coal-fired power stations, saying compensation should be a low priority, while the Government has said there would be measures to address the impact on strongly affected industries.

The report also makes clear that the developing world — particularly China — must be included in controlling greenhouse emissions. Professor Garnaut wants China locked into a global post-Kyoto reduction agreement by 2013.

Climate Change Minister Penny Wong would not be drawn on the call for petrol to be included in the scheme, but supported the thrust of the Garnaut report, pledging that the Government would weigh the issues "carefully, methodically and responsibly".

Opposition Leader Brendan Nelson reaffirmed his own policy of exempting petrol for an emissions scheme, declaring: "Australians have already received a significant price signal on petrol."

The Greens praised Professor Garnaut's understanding of the science of climate change, but attacked what they described as a lack of urgency in suggesting emissions trading could start gradually until 2012.

"If we are to have a real chance of avoiding catastrophic, runaway climate change, we will need rapid, transformative policies to build a post-carbon economy, not ad-hoc, incremental change that prioritises increasing our wealth," said Greens senator Christine Milne .

Professor Garnaut proposes that roughly half the money collected from selling carbon permits be used to compensate low-income households for increases in electricity, gas and petrol. He advocates that about 30% go to help energy-intensive, export-exposed industries, and about 20% be spent on research, development and commercialisation of low-emission technologies.

Asked if neutralising increases in petrol prices by cutting fuel excise would compromise the scheme, Professor Garnaut said he could not see "any good reason" for such an approach.

"Once you start making arbitrary adjustments, it's not very easy to hold the line against making more, and you could end up with a bit of a mess of a scheme," he said.

He indirectly criticised the former Howard government's inaction on emissions trading. Senator Wong said unless developed countries like Australia demonstrated leadership, developing countries would not commit to the required reductions in greenhouse pollution.