Tuesday, August 26, 2008

Where is the big picture?

By Amanda McKenzie

ABC News Online, Posted Tue Aug 26, 2008 8:42am AEST

The Business Council of Australia recently released a controversial report on the Government's Carbon Pollution Reduction Scheme.

The report advocates addressing climate change while in the same breadth proposes to rip the guts out of the Government's emissions trading scheme, rendering it an ineffective tool to reduce emissions and significantly reducing the scope for Australian business to capitalise on the burgeoning green global economy.

We want to be able to enjoy a climate similar to that of our parents, grandparents and generations of human beings before them - the climate that has allowed humanity to thrive and prosper. Two degrees Celsius of global warming is often cited in the scientific literature as a threshold beyond which we can expect to witness global climate disaster. Two degrees will cause catastrophic impacts on natural systems that support human life, for instance a 40 per cent drop in Australia's agricultural capacity. We should aim far, far below this threshold.

According to the Intergovernmental Panel on Climate Change, to give us a 50 per cent chance of staying below 2 degrees global warming we must stabilise greenhouse gas concentration in the atmosphere at 450 parts per million (ppm). This requires a minimum reduction in Australia's emissions of 40 per cent by 2020 and over 90 per cent by 2050. However, if you think that a 50 per chance - a flip of a coin - is not great odds, we would need even stronger reduction targets.

In contrast, the BCA advocates a greenhouse gas reduction target of no higher than 10 per cent by 2020. Such an inadequate target makes a mockery of the science and effectively accepts global warming of over 2 degrees and its devastating impacts. It also suggests a failure to appreciate the substantial consequences for many Australian businesses, particularly in agriculture and tourism, if we fail to take adequate action.

Finding fair solutions

Say I'd been dumping the rubbish from my business in the local tip for years. It's been great for me, increasing my profitability. However after some years the tip starts to smell rancid, it is affecting the health of children at a nearby school and the community can no longer use the creek behind it for fishing or swimming. The council decides that they will take action and lets everyone know about it. For 20 years there are consultations and discussions and I am particularly vocal. They then announce that in a further two years they will impose a cost on dumping in the tip. I am outraged and demand compensation from the community. I argue that as I have had a free ride for so long I should continue to have it. What would you say to me?

Similarly generators of coal-fired electricity have used the atmosphere as a dumping ground for greenhouse pollution for years. They have been artificially profitable because they have not had to pay for the climate change consequences of their actions. Now, despite knowing about climate change and the likelihood of an emissions trading scheme for many years, the BCA advocates that these generators continue their free ride by receiving a substantial amount of free emission permits. Why should the rest of the community - households, other businesses and government - have to pay for their poor planning?

As the BCA notes, some industries that rely on international trade and cannot pass their costs onto consumers may require some assistance. However, this does not mean these companies should be "compensated". Any assistance should be carefully tied to push companies to transition into the clean energy economy and to invest in renewable energy and energy efficiency. The quantity of this assistance must be carefully weighed up as it will increase the burden on the rest of the economy. Every dollar given to polluters is a dollar that is not used to help households adjust.

Economic opportunities

The BCA report fails to highlight the wealth of opportunities for economic growth, innovation and job creation from implementing a robust emissions trading scheme. In Germany the government has created a regulatory regime favourable to reducing emissions and participated in the European emissions trading scheme, which has enabled their green economy to boom. Cloudy Germany is now is a world leader in renewable energy exporting their technology to the world. Businesses have capitalised on the new regulatory environment with turnover in the renewable energy industry increasing nearly four fold since 2000 and jobs doubling between 2004 and 2007. Jobs in renewable energy in Germany are expected to increase from 250,000 to 710,000 by 2030.

With a favourable regulatory environment Australian companies can also begin to reap the rewards of this growing global green economy. We are the sunniest country in the world and one of the windiest - where better to develop renewable technology? However Australia must move quickly as Germany, Spain, China, the US are all leaving us in their wake. It is in Australia's interests to be creating and exporting the solutions to climate change, rather than waiting and having to import them from the rest of the world.

Report lacks rigour

What is most disappointing about the BCA's report is that it lacks academic rigour and impartiality. The report is moulded to achieve a certain political outcome rather than to contribute productively to the Australian policy debate. For instance, the report assumes a carbon price of double what is expected in an Australian scheme and hand picks 14 unidentified, relatively strongly affected companies as its reference point. It is a shame that some valid points in the report have been undermined by the poor quality of the whole.

Climate change is desperately urgent. Melting is occurring so rapidly in the Arctic that we can now expect that there will be no summer ice by 2013, 100 years earlier than scientists had previously predicted - we have already changed the map of the world. At this time we need quality impartial research which seeks to provide an objective and informative assessment of the best policy to solve this crisis in the interests of us all.

In contrast, this report demonstrates the worst of narrow self-interest, seeking to capitalise on the uncertainty and confusion surrounding the debate on emissions trading. To remain relevant to business in the 21st century, the BCA must adapt to the reality of climate change and the rapidly emerging green global economy. Rather than holding us back, the BCA should propel us forward - assisting Australian businesses to shoulder their fair share of the burden, as well as to capitalise on the vast array of opportunities emerging.

Amanda McKenzie completed her honours thesis in climate law at Monash University in 2007 and is the national coordinator of the Australian Youth Climate Coalition, a partnership between youth organisations across Australia.

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