Reports

With the recent passage of the Australian emissions trading scheme through the Parliament, our representatives at the next major UN climate meeting in Africa later this month will, for the first time in the 20 plus year history of the negotiations, be able to present a credible domestic policy framework capable of delivering Australia’s fair share of global action.

In this context, The Climate Institute has prepared this policy brief to place the current round of negotiations in their historical and  domestic policy context, provide an overview of the key political decision that will confront Ministers when they arrive in Durban; outline scenarios illustrating success and failure; and define Australia’s role internationally.

Key Themes

• International climate change negotiations are inherently complex as they incorporate environmental, economic, security, trade and energy issues. Progress can be difficult, yet over the past two decades, much has been achieved.
• Countries responsible for over 80 per cent of global emissions have committed to limit and reduce pollution under the UN. Kyoto Protocol countries covered 20% emissions in 2010.
  
• Since the Copenhagen meeting in 2009 nearly 100 new significant pollution reduction and clean energy policies have been announced in major economies.
• Over the last three years global investment in renewable energy like wind and solar power has been competitive with investment in traditional power generation. China alone invested over US$50 billion dollars in renewable energy in 2010, followed by Germany (US$41 billion) and the USA (US$34 billion).
• Undue emphasis on the politics and symbolism of a global treaty has tended to overshadow the substantive practical progress that has been made. Although these actions are significant, they remain insufficient to meet the objective of limiting the world to less than 2^oC global warming.
• Both major political parties in Australia support reducing national emissions by 5- 25 per cent below 2000 levels by 2020. Australia’s five per cent pollution reduction target implies an emission reduction on 2000 levels similar to that of Canada but less than the EU, Japan, New Zealand, Norway and the USA. The average reduction among comparable advanced economies is a 19 per cent reduction on 2000 levels.

Global climate diplomacy is in transition as nations head to Durban, South Africa for the 17th annual Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC). We are witnessing a transition from a ’treaty before action’ approach to an ’action and agreement’ approach.

Download Policy Brief (PDF, 870KB)

Launched by consumer advocate CHOICE, the Australian Council of Social Service and policy research organisation The Climate Institute, this study gives households the tools to weigh up their own costs, financial support and potential savings under the carbon price with an independent online tool  - yourcarbonprice.com.au. The CSIRO-AECOM research underpins the figures used in the tool, as well as a national information program available to councils, schools, faith groups, business groups and other organisations.

The CSIRO-AECOM research shows impacts on households are likely to be smaller than anticipated. It calculates Australia’s carbon pollution price will add 0.6% to inflation in 2012-13. This is less of an impact on the economy than estimated by Treasury modelling, and may be even smaller as the modelling assumes a 100% pass-through of costs by businesses to consumers. The study also compares the effect of the carbon pollution price with other inflationary events such as the introduction of the GST, Cyclone Yasi and the mining boom. It finds that the impact on prices of the 2001 GST was more than 4 times bigger (2.5%) than the carbon price, while fruit prices, led by bananas, spiked by a massive 70% after the damage of Cyclone Yasi. The study reports that without domestic and global action to slow down climate change, the impact on basic food prices is likely be 20 times greater than the carbon price impact by 2050 because of extreme weather events.

The Spotlight Report and CSIRO/AECOM Summary can be found below. For additional information on this study, including household casestudies, the full CSIRO/AECOM report and associated methodologies, please visit the project page here.

Spotlight Report
Download to View (PDF, 1MB)
Download to Print (PDF, 1MB)

CSIRO/AECOM Summary Report

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Which Sources of Financing are Promising and How Much Could They Raise?

Frank Jotzo¹, Jonathan Pickering², Peter J. Wood^1
1Crawford School of Economics and Government, Australian National University
² Centre for Applied Philosophy and Public Ethics, Australian National University

Abstract

Developed countries have pledged to mobilise $100 billion per year by 2020 for climate change action in developing countries. Progress on financing is necessary to ensure broader progress on climate change cooperation. Supporting the global commitment is in Australia’s interests, since climate finance can harness low-cost mitigation opportunities and help vulnerable countries in the Asia-Pacific region adapt to climate change. Based on Australia’s wealth and emissions, we find that a fair share for Australia may be around 2.4 per cent, or $2.4 billion a year by 2020. We analyse possible sources of finance in Australia. Carbon markets could provide large financial flows but their shortterm prospects are uncertain, and additional public finance is needed in any event. While Australia currently draws its climate finance from a growing aid budget, a large scale-up of climate change aid could raise concerns that aid is being diverted from existing development priorities. A carbon levy on international transport could provide considerable revenue and could be implemented unilaterally ahead of a global scheme. Reducing tax breaks for fossil fuel using and producing activities could raise revenue well in excess of Australia’s total climate finance commitment, while improving economic efficiency and cutting carbon emissions. Further, Australia’s exports of coal and other resources provide a very large tax base which could be tapped to a greater extent.

Download Paper (PDF, 1MB)

Citation:

Jotzo, F., J. Pickering, and P. J. Wood (2011) Fulfilling Australia’s international climate finance commitments: Which sources of financing are promising and how much could they raise? CCEP Working Paper 1115, Centre for Climate Economics & Policy, Crawford School of Economics and Government, The Australian National University, Canberra.

Research for this report was supported by World Vision Australia, the Australian Conservation Foundation, and The Climate Institute.

The current state of the climate policy debate has left many Australians and probably a few politicians confused and wrongly forecasting economic doom and gloom. A new series of fact sheets sets the record straight on a number of key myths and misconceptions in the climate policy debate. It’s time to move beyond the squabbling and sensationalism and look at the real challenges and opportunities of taking action.

Australia is a big polluter. We can have significant pollution reduction while growing jobs. And we are at no risk of leading the world in taking action. Instead, taking decisive action now will open up new clean energy opportunities, creating up to 34,000 new jobs in the electricity sector alone by 2030, and ensure our industries remain globally competitive as the world switches to cleaner energy and cleaner economies.

1. MYTH: Australia is not a significant polluter so there is no need for us to act. FACT: Download (PDF, 340KB)

2. MYTH: A price on pollution will not do anything to help the environment. FACT: Download (PDF, 270KB)

3. MYTH: A pollution price will see the demise of mining and other sectors. There will be massive job losses. FACT: Download (PDF, 350KB)

4. MYTH: Other countries aren’t acting so why should Australia move ahead of the rest of the world? FACT: Download (PDF, 380KB)

5. MYTH: If you have a pollution price then you don’t need other clean energy measures. FACT: Download (PDF, 990KB)

6. MYTH: Taking action to price pollutin ahead of other countries will hurt Australia's global competitiveness in the short-term. FACT: Download (PDF, 270KB)

7. MYTH: A pollution price is all we need to make us more energy efficient FACT: Download (PDF, 220KB)

8. MYTH: Putting a price on pollution won't change behaviour. FACT: Download (PDF, 230KB)

9. MYTH: Scientists can't agree. The jury is still out on whether climate change is real. FACT: Download (PDF, 260KB)