Saturday, July 24, 2010

Joint forum on climate change

On 12 July a high level group of 27 experts on climate change and Australia’s response to it was held at the Australian National University.  The group included some of the nation’s leading climatologists, economists, climate policy experts and representatives of Australian business.  

The meeting was hosted by Australia21, Universities Australia (the peak body representing Australia’s 39 universities) and The National Business Leaders Forum on Sustainable Development.

The question under discussion was “What are the best available policy options for reducing greenhouse emissions in Australia in the context of the Copenhagen result and the delay of an Australian CPRS [the government’s proposed emissions trading scheme]?”   

At the end of the day the three organisations hosted a small function to enable us to meet with various Canberra based people who are involved in the climate change issue in one way or another.

My task at this point was to give our guests my take on what had occurred during the day – a summary that I hope did not do too much violence to how any of the other participants saw the proceedings.

My summary was recorded by my colleague, Australia21 Chairman Professor Emeritus Bob Douglas, who had chaired the day’s proceedings, and what follows is a transcript of my extemporised summary.


It will not come as a surprise to any of you – because Australia has been thrashing around with this problem of climate change since 1992 – that our discussions today have not produced any new magic bullets. We know what most of the solutions to our policy problems in this area are, so please do not be surprised if a lot of what I say in the next few minutes has a familiar ring to it. This is my summary of the consensus of the people who met in the room today.

The genesis of this meeting was a feeling that following the postponement of the Carbon Pollution Reduction Scheme and the disappointing outcome of the Copenhagen discussions – though I am not as disappointed about that as some commentators – Australia21, as an organisation interested in public policy, should be sitting down and thinking – “Well, what can Australia actually do? What are the politically feasible next steps?"  Happily, Universities Australia and the National Business Leaders Forum on Sustainable Development were very happy to collaborate in hosting today's event.

The first point is that we all agree that action is urgent from the climate point of view. A 2° rise in average global temperature is almost inevitable.  2° will be difficult to cope with. What we are dealing with right now is not only abatement but also adaptation. We must have a very clear view that we are in the adaptation phase right now.

Action is urgent from another point of view, to create investment certainty and to ensure that there is investment for our future energy needs that can take place on an informed basis. People need to know where they stand. It is also important from the point of view of enabling consumers to make informed decisions about technologies they want to use in the abatement and adaptation process. Inaction in that regard has already cost us.

There was a clear view that we must price carbon and that we must develop a carbon market. There are at least three reasons why we need to price carbon, and the first is of course the obvious one of the impact on demand that results from having a price on carbon. Equally, or perhaps more important, is the incentive that a carbon price creates to innovate, and to innovate on a clear view of what the market is telling you.  So the question becomes “what will be a commercially sustainable form of innovation?”

The third point is that a carbon market – a futures market in carbon – is a mechanism to bring perceptions of the future back into the present. As new technologies emerge and new situations arise, people in the market can say “Well, I am going to respond to this in a certain way.” That in turn will have an impact on the price of carbon.

We also have to recognize that the climate is a driver of a number of issues.  The most obvious ones are water availability and water management, our food production systems, which lead to questions of what will be the distribution of life and living and economic activity in rural and regional Australia, and will have a very profound implications for the preservation of biodiversity

We can't predict the future. So we need to make sure that we adopt resilient policy frameworks. By resilience we mean the ability to withstand a shock and continue to function with the purpose for which we want the system to function.  One clear way to create resilient frameworks is to have a diversity of technological solutions. We should not get locked into one view of the future with a single bet or a narrow range of bets.

Because of the urgency, we need to take early actions. And they obviously have to be politically feasible early actions. Amongst the early actions, we can see the necessity to communicate a target for a carbon budget, to set the transitional price on the pathway to a long-term framework and to pluck – to use a cliché – the low hanging fruit. That requires an emphasis on identification and implementation of the energy efficiency frameworks that are currently evolving.

We need to look now to a broad roadmap of the long-term actions to be taken and those would include a robust long term energy pricing and trading framework.  It is very important to try to depoliticize the subject and in the long run transfer the market process to an independent institution where it is more secure from the political hurly-burly.

Government needs to approach the public debate strategically. By strategically, I mean changing the environment within which the debate takes place, and that means communicating to the public the science, the urgency, the mechanisms and the policy framework.

Above all, we would assert that central government has to re-capture and act on the climate change issue. It must put itself back at the centre of policy and the centre of the debate, and not simply be reacting. It needs to be leading the issue, and creating the political climate for action.

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