Garnaut Climate Change Review – Final Report

Professor Ross Garnaut has released the Final Report of his Climate Change Review.

The Review is premised on the majority agreement that continued growth in greenhouse gas concentrations caused by human-induced emissions would generate high risks of dangerous climate change.  In the absence of effective mitigation, strong growth in emissions is expected to continue for the next two decades and moderate growth beyond.  Without mitigation, Australia’s emissions are expected to quadruple by 2100 with severe and costly impact on agriculture, infrastructure, biodiversity and ecosystems. The Review suggests that the overall cost of tackling climate change to Australia would be a ‘manageable’ 0.1-0.2% of annual economic growth to 2020.

The Review emphasises the need for a global response to climate change, and accordingly, the suggested trajectories for Australia’s emissions targets are tied to a global agreement. Such an agreement would need to include developed countries, including the largest emitter, China, and the United States, as well as developing countries. The Report suggests that without mitigation, developing countries would account for about 90% of emissions growth over the next two decades and beyond, highlighting the necessity of their involvement.

Given that continued high emissions growth with no mitigation action carries potentially dangerous risks, the Review outlines three possible scenarios;

  • The world reaches a global target at 550 parts per million (ppm)
  • The world reaches a global target at 450 parts per million (ppm)
  • No global agreement is reached at Copenhagen in 2009
If a global agreement on a 550ppm mitigation goal is reached at Copenhagen in 2009: If a global agreement on a 450ppm mitigation goal is reached at Copenhagen in 2009: If no global agreement is reached at Copenhagen in 2009:
This agreement is ‘feasible’. This agreement would be a ‘desirable next step’ from the 550 agreement. Australia should still commit to reduce its emissions.
  • Reduction in emission entitlements of 10% from 2000 levels by 2020.
  • Reduction of 25% in emissions entitlements from 2000 levels by 2020.
  • Reduction of 5% from 2000 levels by 2020.
  • This equals 17% from Kyoto compliance levels over 2008-12.
  • This equals 33% from Kyoto compliance levels over 2008-12.
  • This equals 13% from Kyoto compliance levels of 2008-12
  • This is 30% per capita from 2000 levels.
  • This is 40% per capita from 2000 levels.
  • This is 25% per capita from 2000 levels.
  • By 2050, reductions of 80% from 2000 levels.
  • By 2050, reductions of 90% from 2000 levels.
  • Any effort prior to an effective global agreement should be short, transitional and directed at achievement of a global agreement.
  • This is 90% per capita.
  • This is 95% per capita.
  • GNP is higher with 550ppp mitigation than without by the end of the century.
  • Mitigation costs almost a percentage point more than the 550ppp mitigation of the present value of GNP through the 21st century.

Professor Garnaut recommends that an Emissions Trading Scheme be established in Australia in 2010, with a fixed price of $20 per tonne until 2012.  The proposed scheme will require:

  • Establishment of an independent carbon bank with all the necessary powers to oversee the long-term stability of the scheme.
  • Implementation of a transition period from 2010 to the conclusion of the Kyoto period (ending in 2012) involving fixed price permits.
  • Credits to trade-exposed, emissions-intensive industries to address the failure of our trading. partners to adopt similar policies.
  • No permits to be freely allocated.
  • No ceilings or floors on the price of permits beyond the transition period.
  • Intertemporal use of permits with ‘hoarding’ and ‘lending’ from 2013 (i.e. All permits should be auctioned without restriction on the time of their use).
  • A judicious and calibrated approach to linking with international schemes.
  • Scheme coverage that is as broad as possible (with practical constraints) and is inclusive of emissions from stationary energy, transport, industrial processes and fugitive emissions from fuel production. The scheme should also include forestry, agriculture and land management ‘on the earliest possible timetable’.
  • At least half the proceeds from the sale of all permits should be allocated to households, focusing on the bottom half of the income distribution.

Further recommendations in the Report include:

  • Establishing a new Australian climate change policy research institute.
  • Introducing a system of ‘green credits’ to help with funding of investments in energy efficiency in housing, household appliances and transport.
  • Making up to $1 billion available for matched funding for investment in reducing emissions in coal power generation, as a form of preemptive structural adjustment assistance to mitigate the possible effects of regional employment issues in the coal regions.
  • Committing around$3 billion per annum by 2013 to research, development and commercialisation of low-emissions technologies.
  • Extending the Building Australia Fund’s role to cover energy infrastructure.

The Federal Government has committed to establishing a national Carbon Pollution Reduction Scheme and will consider the Garnaut Report in its policy formulation.

Further information about the Garnaut Review is detailed in the Hawker Britton papers relating to the Draft Report and Supplementary Draft Report (Trajectories and Targets).

The full Final Report and the Media Release are available at .