Tuesday, September 30, 2008

Climate Challenge Bigger Than The Financial Crisis

Finally the much anticipated Garnaut Report has been delivered. After upsetting the environmentalists with the earlier draft report by identifying an emissions reduction target of 10% by 2020, Professor Garnaut has now identified a range of possible targets depending upon the nature of whatever international agreement is reached. The most ambitious option is for a reduction of 25% by 2020 and 90% by 2050, well in excess of the Federal Government’s target of 60% by 2050. This very ambitious plan, described as the “strong mitigation” position, would be appropriate in the context of a global agreement to reduce atmospheric carbon concentration to 450 parts per million.

The fly in the ointment is that Professor Garnaut believes that the world will not reach such an agreement, and in that case he recommends a plan to reach 550 parts per million, involving the previously mentioned target of 10% reduction by 2020. The third scenario is one where there is no global agreement, and in those circumstances Professor Garnaut recommends a national target of 5% reduction by 2020.

While the report attempts to cover a range of eventualities, the fact is that the world is now confronting a massive distraction in the form of the financial crisis. This poses a number of problems. First, the United States economic collapse threatens its capacity to embrace a carbon trading scheme. Second, the international effect will be to prompt some nations to place economics ahead of environment, undermining the opportunity for genuine international cooperation. Third, the downturn in the economy could lead to business failures and job losses even here in Australia despite the repeated assurances that we are better placed than most to weather the storm.

The reason that job losses are important is quite simple. At the end of the day, it is the ordinary everyday people who will be asked to foot the bill for emissions trading. Already we have been told to expect to pay more for electricity, for fuel, and for goods and services exposed to those costs, which is almost everything. It is obvious that there are those who stand to make big money out of emissions trading, but there’s no guarantee that the benefits of such profits will filter through to the battlers. In fact, quite the opposite could well occur without proper regulation.

In such a scenario, it is likely that more and more people will begin to ask “Can we afford to fight climate change?” But the harsh reality is that we can’t afford not to. That’s why stabilizing the world’s financial systems, while important, is only part of the way forward. The next step is to abandon so called economic rationalism.

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