Stern urges Rudd: stick with Garnaut

• Adam Morton, Poland
• The Age, December 11, 2008
• http://www.theage.com.au/national/stern-urges-rudd-stick-with-garnaut-20081210-6vw2.html?page=-1

LEADING climate change economist Nicholas Stern has urged Prime Minister Kevin Rudd to accept the advice of his Australian counterpart Professor Ross Garnaut and leave open the possibility of a 25 per cent cut in greenhouse emissions by 2020.

Speaking at the United Nations climate change talks in Poland, Lord Stern said it would be "worrying" if Australia's greenhouse targets announced next week were less ambitious than those backed by Professor Garnaut.

The former World Bank chief economist's intervention comes as the Government faces intense pressure over its 2020 targets from industry and environmentalists at home and from developing nations demanding that rich nations set the pace in tackling climate change.

But in Bali yesterday, Mr Rudd said the Government had never given any commitment to an ambitious goal to cut carbon emissions.

The Government is expected to nominate a range of reduction targets between 5 and 15 per cent - 5 per cent if there is no comprehensive international agreement post-Kyoto, and a more ambitious curb in emissions, between 15 and 25 per cent if an agreement is reached.

After months of lobbying, emissions-intensive industries have secured a more generous formula for determining which sectors of the economy will be eligible for "free" permits under the scheme.

The Age believes the Government will use both a revenue formula and a "value added" formula to determine which industries can access free permits - a move that could extend compensation to emissions-intensive processing businesses such as smelters.

The Government is also expected to revise a crucial time period in which businesses measure their emissions intensity. Initially, the time period was between 2006 and 2008 - the peak of Australia's economic boom. The Government is now expected to allow measurement between 2003 and 2008, which is a more acceptable formula for resources companies.

Mr Rudd, Treasurer Wayne Swan and Environment Minister Peter Garrett are believed to have made in-principle decisions about the key policy issues, including the targets, but those decisions have yet to be endorsed by the cabinet.

The cabinet is expected to sign off on critical details next Monday, with a new white paper to be released that afternoon.

Speaking yesterday after Indonesia's President Susilo Bambang Yudhoyono urged developed countries to lead the way in tackling climate change, Mr Rudd warned that complex negotiation lay ahead and there was "a long way to go".

Lord Stern is credited with sparking widespread understanding of the threat of climate change through his 2006 report to the British Government.

While praising Mr Rudd - who was "light years away from the appalling John Howard" on climate change - Lord Stern said the Garnaut review should not be watered down.

Though widely quoted as supporting only a 10 per cent cut by 2020, Professor Garnaut backed Australia offering to make a 25 per cent cut under a strong global deal. The catch was he did not think that deal was possible in the short term.

Climate Change Minister Penny Wong, who is in Poland for the ministerial section of the climate summit, said the Government was not backing away from what was agreed at Bali, that rich nations recognised that cuts of 25 to 40 per cent were needed across the developed world. But she said it was too early to say whether an agreement between rich nations bound by the Kyoto Protocol in Poland would include the 25 to 40 per cent range.

Responding to warnings by China and South Africa that Australia must commit to at least a 25 per cent cut to get developing nations to sign a new deal, she said she expected nations to advocate their national interest. "Maybe it's an Australian thing - if we want to put something on the table we want to know we can deliver it."

With TOM ALLARD, KATHARINE MURPHY