Thursday, October 16, 2008

Financial crisis will pass, climate change won't: Garnaut

THE "unprecedented" financial crisis — no matter how severe — will be short-lived and should not stand in the way of global action on climate change, Ross Garnaut says.

In his final salvo before winding up the Garnaut review office, the outgoing government climate adviser warned it would be bad policy if long-term structural change to cut greenhouse emissions was delayed by a short-term response to economic upheaval.

His comments came hours after Italian Prime Minister Silvio Berlusconi threatened to veto a world-leading European Union climate agreement on the grounds that businesses hit by the crisis should not be asked to carry extra costs.

Professor Garnaut urged governments to think about how the world got into the current financial mess — by placing too much emphasis on short-term economics.

He said the financial tumult was not likely to slow growth in emissions, and the available evidence suggested the long-term cost of climate change would be extraordinarily high.

The veteran economist predicted the current crisis would have run its course by December 2009, when a new global deal to replace the Kyoto Protocol is due to be reached at a United Nations meeting in Copenhagen.

"Financial crises in general, however severe, are short-term phenomena," Professor Garnaut said at the launch of the book of the The Garnaut Climate Change Review at Melbourne University.

"If the financial crisis leaves a legacy of recession … it is to be expected that normal patterns of growth will be re-established by 2013, at the time at which arrangements agreed at Copenhagen are being applied." Professor Garnaut said that while it was possible climate change would be downgraded as a political issue in the wake of the crisis, Australia had thoughtful leaders on both sides of politics who took the issue seriously.

"I would be surprised if either Kevin Rudd or Malcolm Turnbull put short-term issues over long-term issues to the extent that they significantly damaged Australia's long- term economic prospects," he said.

Earlier, Climate Change Minister Penny Wong told a London audience that the Australian Government believed it had a moral responsibility to tackle climate change, and planned to start emissions trading in 2010 as proposed.

"Despite the current financial crisis, Australian industry peak bodies have emphasised their desire for certainty — further delays will only result in added business uncertainty," she said in a speech at the London School of Economics.

While Professor Garnaut's report focuses primarily on Australia, he will spend the next week launching it overseas: in Indonesia tonight and in China next week.

Cambridge University Press has ordered a print run of more than 5000 for the Garnaut report. It will sell for $79.95.

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