Jul 02, 2012 - 1:17pm
originally published in ABC's The Drum
on 2 July 2012.
By John Connor, CEO, The Climate Institute
Yesterday marked the end of an overdrawn free ride, with some of Australia's largest greenhouse gas emitters finally starting to take responsibility and pay for their carbon pollution.
Carbon pricing is here to stay - even with its many question marks, the Coalition's policy has a carbon penalty price.
A key and almost totally missed part of this reform is that it also legislates limits to pollution, with reductions of almost 40 million tonnes over the first four years and a least 12 million tonnes per year after that.
The reductions should in fact be greater, but this will depend on a process overseen by a fascinatingly balanced and independent Climate Change Authority, which includes the likes of Clive Hamilton and Heather Ridout.
This is an important and historic reform. The challenge now is to move forward and focus on achieving the purpose of pricing and limiting carbon pollution – integrating it swiftly into smarter, cleaner, healthier economic development here, and helping build on current global ambition and action.
We haven't gone through all this trouble just to put an expense on business. This is a shared investment in a safer climate. It is an insurance payment against the risks to Australia's food and water security, our natural environment, and our way of life posed by the imbalances in the natural carbon cycle we contribute to. Heat-trapping greenhouse gases are now 40 per cent above 1800 levels and at their highest in at least 800,000 years.
This investment will be squandered if our political and investment leaders don't leverage it into both domestic and global efforts.
Domestically, there are additional key policies to ensure we actually begin to transform our economy, which has been so carbon dependent. The carbon price floor ensures the scheme does not become a paper tiger in 2015, and allows companies to invest in clean energy with greater confidence as global markets mature.
The 2020 renewable energy target and energy efficiency policies speckled across the states have been effective in helping reduce energy use and slowing increases in our carbon pollution. They are particularly important to driving shorter-term skills development and the deployment of clean energy which will, as the International Energy Agency has noted, reduce the costs of the long-term transition needed to low- and zero-carbon economies.
The continued bipartisan support for the renewable energy target is sensible and should be built upon with a national Energy Savings Initiative that can drive economies of scale into state-based schemes, reduce compliance costs, and help our economy catch up with the level of energy efficiency improvements in comparable economies.
Business investment strategies and government policy should also enable the flexibility to achieve the other commitment that remarkably remains bipartisan - 2020 pollution reduction commitments of 5 to 25 per cent below 2000 levels. Both major parties say they will calibrate higher targets to levels of global action.
Both major parties have many short-term temptations and tensions to keep them at the 5 per cent lowest level of ambition, and there is a curious left/right alliance of cynicism and scepticism that continues to affirm this as the only relevant benchmark.
The 25 per cent target is the one that Australia needs to commit to if we are to have a chance at achieving the target we and other countries have committed to work towards in avoiding dangerous global warming.
Estimates from the Australian National University, Professor Garnaut, and The Climate Institute have Australia's fair share of existing global commitments at 10 per cent or greater reductions.
Many countries around the world are acting because of concern for climate change impacts, energy security and air pollution. Clean energy policies like carbon prices, renewable energy targets and emission standards are at historically high global levels, driving investments which now match fossil fuel investments.
China and South Korea are implementing emissions trading schemes to join those across Europe, in New Zealand, and California, with others emerging.
Global companies from KPMG to GE to BHP and almost 300 national companies from Westpac to AGL have recognised that the future is carbon-constrained. The smartest among them are seeing the opportunities that will arise from improving carbon competitiveness and carbon productivity. Many of them have had shadow carbon prices to help them in their investment decisions.
Carbon pricing and business responsibility has now finally emerged out of the shadows; it is important to realise the risk-management and insurance objectives that drove their need in the first place.
John Connor was CEO of The Climate Institute from 2007 to March 2017. Whilst qualified as a lawyer, John has spent over twenty years working in a variety of policy and advocacy roles with organisations including World Vision, Make Poverty History, the Australian Conservation Foundation and the NSW Nature Conservation Council. Since joining The Climate Institute in 2007 John has been a leading analyst and commentator on the rollercoaster that has been Australia’s domestic and international carbon policy and overseen the Institute’s additional focus on institutional investors and climate risk. John has also worked on numerous government and business advisory panels.