Ross Garnaut says we have a window of opportunity to meet the climate challenge, but it is a small, short-lived one and we need to act quickly. The difficulties are “diabolical”, he says. [17 June 2008 | Peter Boyer]
A little over a year ago the then Federal Labor opposition and Labor governments of the states and territories got together to appoint a Canberra economics professor named Ross Garnaut to help them work out long-term climate policies.
The Garnaut Review is charged with looking at the impact of climate change, and the costs and benefits of various policy options to reduce this impact, producing a draft report by the end of this month and a final report on September 30.
Last week, Ross Garnaut told a gathering of his peers at the H.W. Arndt Memorial Lecture of the myriad difficulties and dilemmas facing his review team as they gather and process the enormous quantity of information needed to make informed recommendations.
Make no mistake: the economic changes and choices facing Australia – along with all other developed and major developing economies on the planet – are the toughest we’ve faced at least since the Great Depresssion.
Effectively, Garnaut is being asked to find ways of enabling the Australian economy to withstand a buffeting that, left unattended, may cause complete collapse.
He must consider the economic impact not only of climate itself – droughts, floods, extreme events, rising seas and the like – but of resulting international pressures and our own national emissions trading scheme.
An emissions trading scheme is due to be introduced in 2010. By putting a price on carbon emissions, it will affect the cost of virtually everything we do – driving a car, hiring a plumber, buying food, using electricity. Nothing in our lives will be untouched.
In examining the economic impact of emissions trading, Garnaut is having to wrestle with a potentially enormous wealth distribution problem. While emissions from richer households are more than double those from poorer families, the proportion of income lost as a result of emissions trading will hit poorer households much harder than their richer counterparts.
Having previously warned that the scheme must be as broad-based as possible, Garnaut acknowledged in his Arndt Lecture the political reality that there needed to be some control on the carbon price.
But this should apply only in early years (till 2012), in the form of a fixed, low price for carbon permits. Garnaut does not favour an overall, long-term price cap.
He said it might be thought that framing rational policies for the “diabolical problem” of climate change was impossible: “The issues are too complex, the vested interests surrounding it too numerous and intense, the relevant time-frames too long.”
But, he added, there remained a chance – “just a chance – that Australia and the world will manage to develop a position that strikes a good balance between the costs of dangerous climate change and the costs of mitigation.
“The consequences of the choice are large enough for it to be worth a large effort to take that chance, in the short period that remains before our options diminish fatefully.”
It would be folly to put all our eggs in the Ross Garnaut basket. But we must all hope that his review hits the mark, and that effective political action follows.