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Wednesday 16 July 2008 (Updated on 30 July 2008)

RAPID ROUNDUP: Green Paper on Emissions Trading Scheme – Experts respond

The federal government's green paper on the “Carbon Pollution Reduction Scheme” which outlines an emissions trading scheme for Australia was released today. Below, experts respond to the report.

Copies of the green paper are available here.

Feel free to use these quotes in your stories. If you would like to speak to an expert, please don’t hesitate to contact us on (08) 8207 7415 or by email.

Dr Andrew Glikson is an Earth and paleo-climate scientist at the Australian National University.

"The Green Paper, as well as most responses, continue to hinge on economic, social and political considerations, failing (not for the first time) to take account of the most recent science evidence. However, nature is not waiting for human decision, as indicated by: (1) runaway climate change consequent on carbon cycle feedbacks and ice sheet melt/exposed water feedbacks have overtaken the most serious projections by the IPCC 2007 Report (Rahmstorf et al., Science Express, 2007); (2) recent paleoclimate studies define the melting of the ice sheets at about 450 ppm CO2-equivalent, perilously close to present levels (Hansen et al., 2008); (3) ice core studies indicate runaway warming of near-4 degrees C occurred at the last glacial termination over periods as short as a few years (Stefensen et al., Science Express, 2008), militating for extreme vulnerability of the ice sheets and the atmosphere. Given the Green Paper projects emission cuts by 60 percent by mid-century, at the present rates of emissions (near-3 ppm CO2-equivalent/year) by mid-century CO2 levels will exceed 500 ppm - tracking toward an ice-free Earth.

In their recent circulated draft paper Hansen et al. (2008) state "Paleoclimate evidence and ongoing global changes imply that today’s CO2, about 385 ppm, is already too high to maintain the climate to which humanity, wildlife, and the rest of the biosphere are adapted." Sadly the public, business and politicians do not get it!"

Barney Foran is a Visiting Fellow at the Fenner School of Environment and Society at ANU, Canberra

"That market instruments alone, in the absence of stringent design standards, will achieve 60% emissions reductions by 2050 is a triumph of belief over reason, economic orthodoxy over physical reality. The softly softly approach of this Green Paper does not acknowledge that consumption decisions by Australian households drive over 80% of national emissions. This is its critical flaw. Industries are an easy target,for policy makers seeking to avoid unpleasant truths. This ETS must force behavioural change at a fast pace for emissions first to stabilise, and then rapidly reduce. But if an ETS hurts too much, it seems both households and industries will be compensated, especially laggards like the brown and black coal electricity generators. Has no one heard of the 'rebound effect', not once mentioned in the report's 618 pages? This 'one step ahead, two steps backward' policy will be appreciated by an affluent voter who likes to talk the talk, but does not like the walking part. Nevertheless, this Green Paper represents many profound and courageous insights, and gives a first focus for some tough decisions over the next two decades."

Professor Rod Keenan is Head of School of Forest and Ecosystem Science at the The University of Melbourne

"The Government greenpaper proposes a design focused on consistency with the Kyoto Protocol. This provides for continuity with existing national greenhouse accounting arrangements but it may present some challenges for international integration if future international negotiations result in a very different model to Kyoto.

In relation to forest-based sources and sinks, the proposed design is much more limited than that proposed in the draft Garnaut report. Credits will be limited for new forests established since 1990, on an ‘opt-in’ basis. It recognises the need for risk management and pooling arrangements for forest growers.

There is to be no allowance for carbon storage in wood products, although the government believes that this is not an accurate reflection of reality and aims to rectify this accounting anomaly through international negotiation.

Emission reductions from reduced land clearing will also not be included. The paper suggests that alternative mechanisms will be sought to provide incentives for further reduction in land clearing. While this avoids some immediate issues, such as who would be able to purchase permits, in the longer term there could be inconsistency between the domestic Australia scheme and efforts to reduce deforestation internationally.

The report also recommends that emission reductions resulting from changes to savannah forest fire management in northern Australia are not included.

Overall, the proposed model for the forest sector is conservative and internationally-consistent. It presents few financial risks for forest managers and some opportunities for those who have the land and resources to establish new forests and manage them primarily for greenhouse benefits. "

Dr Matthew Clarke is Director of International and Community Development at the School of International and Political Studies, Deakin University. He is also the author of a book on "Post-Kyoto: Designing the Next International Climate Change Protocol", which will be published later this year.

"Climate change is a scientific issue that will have social, economic and environmental impacts. While it is important to remain cognizant of these impacts, our response to climate change must be based on scientific knowledge. However, the proposed cuts in emissions proposed are not determined by science but rather political expediency. The Intergovernmental Panel on Climate Change argues that carbon emissions must be cut by 80% (of 2000 levels) by 2050 to minimize climate change. One of the most precious commodities in this future scenario would be the right to emit carbon. Allocating this right therefore becomes central in designing the next international climate change protocol.

The greatest challenged faced by the international community in designing the next international protocol on climate change is to develop a framework that includes all countries, wealthy and poor, including China and India. A Kyoto Protocol approach (that excludes these countries) which bases future emissions on past emissions will fail by entrenching the 'emissions-gap' between poor countries and wealthy countries. Allocation of future emission rights must not be based on previous emissions (as with Kyoto) but on a per capita basis - as an Australian has no greater right to emit carbon than someone living in China, India or any other developing country.

If Australia was to reduce its per capita emissions to a level in accordance with the scientific need for a global reduction of 80% by 2050, Australia would need to reduce its current emissions by over 90% by 2050 - a far cry from that currently being recommended politically."

Professor Barry Brook is the Sir Hubert Wilkins Chair of Climate Change and Director of the Research Institute for Climate Change and Sustainability at the University of Adelaide.

“The Government’s ETS Green Paper is somewhat of a Curate’s egg – good in parts, off in others.

The terminology, a ‘carbon pollution reduction scheme’ is quite appropriate in that it explicitly recognises that carbon compounds such as carbon dioxide and methane, whilst natural, are also environmentally damaging when produced in excess – in other words, a form of environmental pollution for which costs are borne by nature and society and for which a cost of impact must be paid. That is what the ETS is really all about – recognising this cost (worsening climate change impacts) and putting a real economic price on it too mitigate damage.

What is good is that the coverage is broad, there is compensation for low income earners and there is incentives for the no-brainer economic reforms, such as widespread and rapid uptake of energy efficiency measures. Discounting fuel to offset carbon cost increases doesn’t really make sense, and should at best be a short term expediency.

Unfortunately some parts of the science are crudely handled – and this matters in terms of its effectiveness. For instance, the effect of methane as a climate forcing agent is downplayed in two ways. First, the impact on global warming is diluted by averaging its impact over a 100 years, when almost all the warming impact of this gas comes within a few decades. Second, the agricultural sector will not initially be included – yet this is the sector that produces most of the methane, and will be responsible for more climate warming during the next two decades than all of Australia’s coal fired power stations. The claim that it is not practical to include it at this time simply doesn’t wash – agricultural emissions have been estimated in various national inventories for years, forestry is meant to be included in the ETS and yet this sector also has major verification issues and its measurements mostly lacking scientific rigour.

Overall, it strikes me that there was too little scientific input and consultation into this ‘ideas paper’, yet contributions are needed from a wide diversity of disciplines (from agricultural science to ecology to climate science). So if I had just one recommendation to make to the Government before this evolves into a White Paper and is legislated, it would be this: get the Australian scientific community more actively and formally involved in the next stage of this crucial policy strategy. It is not just a matter of economic convenience – it is about getting all the key evidence right, ensuring the focus correctly matches what the latest climate change science is saying, and bringing the right discipline-specific expertise to bear on each component of what is inevitably a hugely complex – yet vital – economic and social reform.”

Dr John Williams is Commissioner of the NSW Natural Resources Commission and a member of the Wentworth Group of Concerned Scientists

“The oil price hike, as demands rise and supplies become less certain, would have happened one day regardless of a response to climate change. This makes the Emissions Trading Scheme (ETS) and fuel a complex issue. But having an ETS without also having structural change and incentives to move away from a carbon releasing energy sources for our economy will reduce how quickly we are placed on a more sustainable future.”

Professor Philip Jennings is Professor of Energy Studies at Murdoch University, WA

“Our need to convert the global economy to one not reliant on fossil fuels is a tall order, but the emissions trading scheme (ETS) the Federal Government has promised to introduce in two years isn?t the big threat that many may imagine, and negativity is distracting the focus from the many opportunities that can be created for business here.

Energy costs are generally about one per cent, or less, of corporate budgets – with exceptions in energy intensive industries such as aluminium refining, smelting of minerals and the liquefaction of natural gas - but the Government has promised to compensate these industries so they can retain their international competitiveness. We now have a fantastic opportunity to boost funding, research, employment and business in clean, green and renewable technologies.

Australia will miss out on economic rewards if we fail to invest in renewable energy research and education - years of neglect have reduced our capacity in this area and major new investments are urgently needed. The Government could achieve the least-cost path to a renewable energy future by investing heavily in speeding up the deployment of low or zero-emissions technologies. As experience is gained, the cost of these technologies will fall and make it even easier politically to achieve a big reduction in emissions.

Rather than exaggerating the 'pain' that may be involved in social change, we should look at how businesses can take the initiative and develop our vast renewable energy resources using locally developed technology, and so bring the costs of these products down. Murdoch University is setting a lead in this respect. Today it signed a deal to become the highest percentage university user of accredited renewable energy in the country, purchasing 15 per cent of its energy needs from GreenPower. Murdoch has long been a leader in renewable energy research and education and the university's Research Institute of Sustainable Energy (RISE) led by Professor David Harries is focused on bringing down the cost of renewable and low emission technologies.”

Ian Lowe is emeritus professor of science, technology and society at Griffith University and is president of the Australian Conservation Foundation

“The Green Paper accepts that the costs of inaction are greater than the likely costs of action, so we need to act on climate change starting in 2010. The scheme covers most sectors, the only big exclusion being agriculture, and there will be compensation to low-income groups for the costs it will impose. What is not yet known is what the cap will be, as the real test is whether the scheme actually cuts our greenhouse pollution. It is very disappointing to see that the scheme guarantees continuing public subsidies of road freight and aluminium smelting, at least in the short-term a continuing subsidy of coal-fired electricity and a five-year exemption of transport fuels from the scheme.

The Green Paper says nothing about regulatory measures or government spending, so it seems to be based on a trust that market forces will achieve the changes needed. To cut our greenhouse pollution, we also need strong targets for renewable electricity and a serious investment in public transport.”

Dr Mark Diesendorf is from the Institute of Environmental Studies at the University of New South Wales. He is the author of ‘Greenhouse Solutions with Sustainable Energy’.

Naomi Standing is a Senior Economist with The Centre for International Economics, a private company specialising in global economic analysis. 

“Despite answering a number of key questions about the design of a carbon pollution reduction scheme, the Green Paper still does not provide the full story. The economic modeling by Treasury has been delayed. Minister Wong suggests that informed discussions can occur based on just design. However, it’s the details that matter. The Paper asserts that the costs of inaction will be greater than the costs of action. That remains to be seen. Information about how much is the scheme going to cost is needed, as is information to assess whether the transition measures are adequate. The Paper asserts that the Scheme is the answer to the need for a responsible policy – both economically and socially. Australia faces the significant risk that abating carbon in isolation of other major emitters (e.g. US, China) will not deliver economic benefits. If this is the case, Australia may need to think beyond mitigation to adaptation, which the Green Paper does not address.

The Green Paper sets out some clear principles about how the scheme will be implemented. It clearly reflects input from key industries and stakeholders about trying to balance achieving GHG abatement through a medium term transitional path. For example, the Green Paper signals that the Government intends to move towards 100% auction of permits, which we know is more economically efficient. It also clarifies who’s in and who’s out. Transport is in. Agriculture is out – at least for the time being. This approach makes sense given the technical complexities of monitoring and measuring agriculture’s GHG emissions. Lastly, the Paper outlines how it intends to compensate the most adversely affected. However, the details of compensation strategies are essential to understanding if they will simply undermine the carbon price signal – in other words, subsidizing energy bills simply lessens the need to make hard choices about trading off between GHG-intensive and non-GHG intensive goods and services. "

Kevin Goss is Chief Executive Officer of the Future Farm Industries CRC

“The Australian Government has taken a commonsense approach with agriculture in its proposed Carbon Pollution Trading Scheme. However it leaves farmers exposed to rising costs from input suppliers covered in the Scheme without incentive for cost savings through new technologies in the short term. Farmers now face the double jeopardy of early impacts of increasing drought frequency and now a jump in costs.

Importantly farms will not be selling carbon pollution permits (except for forestry) until the rules for the sector have been settled. This gives time for the science, technology development and measurement systems to get on top of all parts of the farming enterprise including soil carbon. Just as important the Government with the agricultural industry must accelerate its efforts to improve the economic position of farmers, through even greater investment in R&D, through trade negotiations and through incentives for energy efficiency."