Ross Garnaut's draft report presents a clear picture of the possible future impact of climate change on Australia, and begins the process of determining what we must do about it. Yet so diabolically complex is the climate problem that Garnaut's team had insufficient time to complete the economic modelling needed to determine targets for carbon emissions, trajectories for emissions reduction, or recommendations on a carbon price. So we'll have to wait until late August for this critically important information.
In the report's preamble Garnaut notes that the Australian economy has ridden the wave of development sweeping Asia - the very development that's accelerating climate change. Australians are therefore in a better economic position than ever to pay the costs of emissions abatement, and to assist those less well off to adjust to the changes. With the partial exception of a few exporters, he warns that exempting any industries from the scheme would be catastrophic, and of course all must pay for their pollution permits, rather than be given them.
Garnaut argues that quick, effective action is urgently required, and that delays will only magnify the risks we face, as well as making action far more expensive. In fact he thinks that we should have acted years ago, and in this respect the Opposition's attempts to delay the carbon trading scheme in order to perfect it harks back to failed policy: the truth is that the issue is so complex, yet so urgent, that we have no choice but to learn on the job.
In determining the level of risk we face from climate change, Garnaut relies on the projections of the Intergovernmental Panel on Climate Change. Sadly, new data indicates that the Earth's climate system is changing faster than those projections allow. Indeed, for the rate of warming, rate of sea-level rise, and extent of CO2 accumulation, the real-world data lie outside the panel's envelope of projections on the high side. This indicates that we're heading towards a catastrophic scenario, which the panel rates as being less than a 10 per cent probability. One specific risk highlights what's at stake. Models developed by the CSIRO indicate that climate change will continue to reduce stream flow in the Murray-Darling basin, with a 10 per cent probability of the river system drying up almost entirely. Garnaut does not assess the economic impact of this 10 per cent risk, yet what we see in the real world seems to be more consistent with it rather than less catastrophic outcomes. For the second year in a row there's been zero water allocation to many irrigators in the basin, and the lower Murray is in crisis, with parts of the system on the verge of turning hypersaline or acid.
Some elements of the green movement have criticised Garnaut for his emphasis on carbon capture and storage. But Garnaut is right to emphasise this technology, for China is so hopelessly addicted to coal that the world has no choice but to develop such technologies and push their widespread adoption by 2030 at the latest. One disappointment was to see that forestry and agriculture will not be included, at least initially, in the scheme. Eight per cent of all atmospheric CO2 is absorbed each year by vegetation. Trees are the greatest engine of planetary cleansing we possess, and unless we use their power I can't see how we can stabilise our climate.
Garnaut recognises that we will need far more than just carbon trading. Political leadership which aspires to profound transformations in electricity and transport infrastructure, incentives to develop new technologies, mandated efficiency programs, technological transfer and a rationalisation of government powers will all be required if we are to reduce the pollution stream that's changing our world. I've just returned from a meeting in Denmark where I saw a model of how some of this might be achieved. A wind energy pioneer and an electric car company, have teamed up and are working with the Danish Government to accelerate the uptake of electric cars. Nationwide battery exchange stations and kerbside power supply will be in place by next year, as will the first new generation of fully electric vehicles.
When he presented his report at the National Press Club on Friday, Garnaut was asked how carbon trading would affect communities such those in the Sydney basin which depend for their economic livelihood on generating electricity by burning coal. His answer was that their fate depended in part upon how the various companies dealt with the challenge. Even within the coal industry there would be winners and losers, he said, and if companies invested successfully in carbon capture and storage they would continue to grow and prosper. If, however, the industry failed to rise to the challenge, not only would communities dependent upon local electricity generation fail to prosper, but the contagion would spread to the coal exporting regions as well. Reports, and even government, can do only so much to shield people from global changes. Sometimes it's essential that industries take risks to ensure their future.
With this report Ross Garnaut has shown himself to be that rarest of commodities - an highly competent economist capable of taking a broad view of complex issues. In his report he has mastered the science behind climate change, grappled with tortuous issues of social equity, and broad environmental significance. The high quality of his work may well find broad application, for he's shaped the highly promising beginnings of a carbon trading scheme which is suited to a non-European context at a time when the US, Canada and perhaps even China are looking for leads. This international leadership, indeed, may be the most important aspect of Garnaut's various reports. Kevin Rudd deserves congratulations for appointing him. Let's hope he's listened to.
Professor Tim Flannery is chairman of the Copenhagen Climate Council and Australian vice-chairman of The Climate Group.