The Prime Minister, Kevin Rudd, has confirmed that Australia’s proposed emissions trading scheme, the Carbon Pollution Reduction Scheme, will commence in 2010.
Speaking on the ABC’s 7.30 Report on 30 October 2008, immediately following the release of the results of the Commonwealth Treasury’s economic modelling in the report Australia’s Low Pollution Future: The Economics of Climate Change Mitigation, Mr Rudd said ‘Our scheme will be launched in 2010. We have a timetable we put out there and that’ll mean getting a White Paper out at the end of the year’.
The Treasury’s modelling was carried out before the recent global financial turmoil. However, when questioned as to the effect of this on the government’s plans, Mr Rudd said:
There’s an economic cost attached to not acting on climate change; it factors into the one equation. And we believe if we are calm, cool, methodical about getting [the introduction of emissions trading] right, it’s important for the long-term wellbeing of our economy as well. And business wants the certainty of a regulatory environment for the future on climate change, not continued uncertainty.
The Treasury’s report sets out economic modelling carried out with respect to four mitigation scenarios, with the following predicted outcomes in relation to the ultimate emissions stabilisation goal, medium- and long-term emissions reduction targets, and the prices of emissions permits:
|
Scenario |
CPRS -5 |
CPRS -15 |
Garnaut -10 |
Garnaut -25 |
|
Emission stabilisation goal
(parts per million
carbon-dioxide equivalent) |
550 |
510 |
550 |
450 |
|
Emissions target relative to
2000 levels: |
|
|
|
|
| 2020 |
-5% |
-15% |
-10% |
-25% |
| 2050 |
-60% |
-60% |
-80% |
-90% |
|
Australian emissions permit
price per tonne of
carbon-dioxide equivalent: |
|
|
|
|
| Start of scheme |
23 |
32 |
30 |
52 |
2020
(2005 prices) |
35 |
50 |
35 |
60 |
2050
(2005 prices) |
115 |
158 |
114 |
197 |
The modelling revealed that, under any of the scenarios, the effect on Australia’s real gross national product per capita will be modest—average growth of 1.1 per cent per annum as opposed to average growth of 1.2 per cent in the absence of mitigation. However, there would be a significant decline in the rate of return from, and investment in, certain emissions- and energy-intensive sectors, particularly mining, metal production and transport.
While the report acknowledges that emissions-intensive trade-exposed industries (such as aluminium production) will lose some of their competitiveness if Australia acts before relevant international competitors, it also states that ‘fears of carbon leakage may be overplayed’.
The Treasury’s report also confirmed that the government will announce a national emissions target range for 2020 by the end of this year, and actual emissions targets for that period in early 2010. The government is seeking responses to the Treasury report before it sets the emissions target range.
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