Alarm on carbon trading scheme

The Age, Tim Colebatch 

July 15, 2008

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ONE of the world's best-known economists, Jeffrey Sachs, has warned Australia against using an emissions trading scheme to tackle climate change, saying it would never win global support.

On the eve of the Rudd Government releasing its blueprint for emissions trading, Professor Sachs said the concept was "highly disliked" by China and other developing countries, and they would never agree to it.

Professor Sachs, economic adviser to United Nations secretary-general Ban Ki-Moon, and author of the best-seller The End of Poverty, made the warning yesterday at a conference at the Australian National University. Standing alongside the Government's climate change adviser Ross Garnaut, who wants Australia to adopt emissions trading, Professor Sachs declared that:

–  There would never be a global agreement to introduce emissions trading or carbon taxes to tackle climate change.

–  The world instead should seek agreement on goals, and plans to develop and share new technologies, then leave each country to decide how much of the burden it would take on, and how.

–  Australia should introduce a carbon tax as a simpler and less rort-prone system, and invest the proceeds in the development of new technology.

Professor Sachs said any attempt to get an international agreement had to start with the West assuring developing countries that their goals to achieve economic development would take priority over tackling climate change. "I think nobody is going to like this (emissions trading), frankly," Professor Sachs told the ANU's annual China Update.

"It's such a mess administratively. It covers only a fraction of what needs to be covered. It's hard to implement. It's hard to monitor. It's not transparent, it's highly manipulative - which is why the banks love it.

"I can't ever believe we're going to get global agreement on these mechanisms. We're going to get agreement by showing a path, and saying to (nations like) China, first, we understand that your desire to catch up (in living standards) is non-negotiable.

"Yes, we need (carbon) pricing. I actually believe it will come country by country, and not by a global agreement."

Professor Garnaut quickly disagreed, warning that without global agreement, every country would put its own interests first. "China is an essential part of the solution to the problem," he said.

In a paper with ANU colleagues Frank Jotzo and Stephen Howes, Professor Garnaut warned that under business as usual, China's carbon dioxide emissions would more than treble by 2030 - when they would make up 37% of global emissions, three times those of the United States.

"With China's emissions now growing at more than 10% a year, they urged it to adopt the goal of cutting emissions growth to half the growth in GDP - slowing emissions growth to 3% to 4% a year over the medium term."

But another world-renowned ANU climate change economist, Warwick McKibbin, endorsed most of Professor Sachs' critique, while warning that without a long-term carbon price, business would not invest to develop clean technology.

Prime Minister Kevin Rudd made a surprise appearance to close the conference, but steered away from any mention of climate change.

Earlier, he used a visit to the drought-hit Hume Dam near Albury-Wodonga to bolster his case for a robust emissions trading system.

Brandishing a new CSIRO report predicting water inflows into the Murray River will continue to drop dramatically over the next 20 years, Mr Rudd said: "The situation in the Murray Darling Basin demonstrates that doing nothing on climate change is not an option."

Mr Rudd also appeared to be rebranding emissions trading before tomorrow's green paper, repeatedly referring to it as a "carbon pollution reduction scheme", a term also adopted by Climate Change Minister Penny Wong.

The CSIRO report says water extraction along the Murray has reduced the flow reaching the mouth of the river by 61%. Its best estimate predicts the availability of surface water in the river will fall by another 14% by 2030, with a worst-case scenario predicting a fall of 41%.

Inflows into the Murray over the past decade have already been less than those predicted for 2030 under climate change.

Opposition Leader Brendan Nelson, meanwhile, has decided to break his week's leave to respond to the Government green paper. This followed bad publicity after his office said he would be on leave when the paper was released.

Support in the electorate for emission trading appears high, with new polling showing 75% of respondents believe Australia should move to emissions trading even if other countries do not. Of Coalition voters polled, 58% supported an early move to emissions trading, despite Dr Nelson saying last week that Australia should not move before major emitters. The poll, conducted by Essential Research, found just 10% of respondents were sceptical about climate change.

With CHRIS HAMMER, MICHELLE GRATTAN