Report calls for emissions cuts, but plays down the opportunities

Scaling back coalmining is one way Australia could make big progress towards its emissions targets. CSIRO/Wikimedia Commons, CC BY-SA

Australia should cut greenhouse gas emissions by 30% below 2000 levels by 2025, according to a draft recommendation released by the Climate Change Authority today.

Australia will need to put a solid emissions target for 2025 on the table for international credibility on climate change. The Authority’s recommendation is justified on principle but will likely be unacceptable to the government.

Meanwhile the Authority gives surprisingly little heed to the opportunities for Australia of a low-emissions economy, instead highlighting international emissions trading.

The post-2020 target game

Under the United Nations climate negotiations, all countries are called on to submit an emissions commitment for the period after 2020 in the coming months. The United States, European Union and some other countries have already announced their targets and China has announced the outlines of its contribution.

What would it mean for Australia to pull its weight? The Climate Change Authority, the independent statutory body to advise on emissions targets and policies, factored three aspects into its recommendation today: Australia’s relative capacity to afford action to reduce emissions, the nation’s responsibility to do so, and the effort required to meet the target.

Australia is right up at the top end of per person income, indicating strong capacity to act.

It is similar for responsibility: Australia emits the highest amount of greenhouse gases per person among the major developed countries. And add self-interest: as a country that is highly vulnerable to climate change, Australia has much to gain from global action.

How hard is it to cut emissions in Australia?

That leaves the question of effort. As Australia’s Ambassador for the Environment, Peter Woolcott, pointed out at a recent public forum at ANU Crawford School, views will diverge about “what Australia can realistically achieve given its unique national circumstances and characteristics, including its resource endowment, and economic and population growth”.

It is a fair guess that the government will point to Australia’s ample endowment with fossil fuels, relatively high population growth and the expectation of continued economic growth as justifications for going for a lower target than other countries.

The recommended 30% target translates into large reductions in per capita emissions and in the emissions intensity of Australia’s GDP. But as the Authority’s report shows (in Figure 3 of its report, see below), Australia’s per capita emissions and emissions intensity at 2025 would still be much higher than those of the United States and more than twice Europe’s, under their respective targets.

Climate Change Authority

As the world gradually turns away from emissions-intensive development, the national-interest case for such reductions strengthens.

The coal question

What about resource endowment, specifically the abundance of coal in Australia?

The resources boom is coming to a halt, and growth in mining and energy extraction will be slower than expected.

Energy use and emissions in resource industries will grow more slowly or tail off. The government’s most recent projections of slower underlying emissions growth bear this out.

And most importantly, as a country with high coal use and relatively low energy efficiency, Australia has much more room to manoeuvre than other countries that do not rely so much on coal or where energy productivity is already much higher. Phase out coal and stop wasting energy, and we get big reductions in emissions.

A solid international commitment underpinned by clever policy could create many new opportunities for economic growth.

Nevertheless, it is difficult to conceive that the government will decide on a target that is stronger in nominal terms than that of the United States.

Australia can cut emissions deeply, cheaply, with benefits

That is not to say that stronger cuts are out of reach, either technically or economically.

Our recent study with ClimateWorks Australia on Deep Decarbonisation Pathways, which built on modelling by CSIRO and Victoria University, showed that Australia can cut emissions deeply and do so while maintaining strong economic growth.

The scenario gets Australia’s net national emissions to zero by 2050. That is on the basis of zero-carbon electricity supply drawing on Australia’s ample endowment and technical potential for renewables, shift from direct fuel use to electricity, and economically valuable improvements in energy efficiency and industrial processes.

Remaining emissions – many of them from agriculture and mining for export – are fully offset by carbon plantations.

For 2025, the modelling shows a one-third cut below year 2000 levels, and a halving to 2030. The estimated economic costs are modest and major changes in Australia’s economic structure would be unlikely as a result.

Reviewing the major reports produced over the last eight years in a report for WWF Australia released yesterday, we found that the estimated costs of future emissions reductions in Australia fell in every successive modelling exercise.

A major reason is that the outlook for many zero-carbon technologies keeps improving and costs are falling. For example, the cost of solar cell power stations is now already only about half what the Australian Treasury projected it to be in the year 2030 in modelling done in 2008.

Add to that co-benefits from going to low-carbon technologies including less local pollution, economy-wide productivity benefits from energy efficiency, and the possibility for Australia to gain a new comparative advantage in low-carbon industries of the future.

Trading makes life easy – and might miss part of the point

But the Climate Change Authority does not even call for most of the actual emissions reductions to be made in Australia. It sees international trading in emissions units as a legitimate and possibly large part of the overall contribution.

Modelling for its earlier report has purchases of international units playing a decisive part in meeting future reduction targets.

As long as it is assured that such trading amounts to actual investment in emissions reductions in other countries where cuts can be achieved at lower cost, this is sensible.

But if international trade is used to avoid domestic transition towards a cleaner economy, this would mean missing out on broader benefits.

Pie in the sky, yet really not so bold

And so the Climate Change Authority’s recommendations are simultaneously more ambitious than the government will be prepared to accept, and not so ambitious by way of assuming that international emissions trading may mean no deep emissions cuts domestically.

At the end of the day, the central issue is not what number government picks, but what steps will be taken towards a lower-emissions economy.