Australia Should Cut Carbon Emissions 10% by 2020

By Gemma Daley

Sept. 5 (Bloomberg) -- Australia needs to reduce carbon emissions by 10 percent from the 2000 level by 2020 to tackle climate change and protect its $1 trillion economy, government adviser Ross Garnaut said.

Garnaut, releasing a supplementary draft report in Canberra, said meeting the goal would make it possible to achieve an 80 percent cut by 2050, above the government's current 60 percent target. The plan would trim economic growth by 1.1 percent by 2020, assuming an initial price of A$20 ($16.30) per ton of carbon when proposed emissions trading starts in 2010, he said.

``The impact of unmitigated climate change on Australia would be severe,'' Garnaut said in the report today. ``The devastation wrought by temperature increase of five or six degrees would be global in nature, but Australia is amongst the most vulnerable.''

The 10 percent reduction is less ambitious than a 25 percent to 40 percent cut from 1990 levels proposed by the EU, China and developing nations including India and Pakistan at United Nations climate-protection meetings held last year. Australia's emissions from fuel combustion rose 31 percent in the decade through 2000 and jumped 45 percent in the 15 years through 2005, International Energy Agency data shows.

Garnaut's plan would reduce greenhouse gas emissions to a concentration of 550 parts per million, Garnaut said. Australia would have to cut 2000 greenhouse gas levels by 25 percent in 2020 to achieve a more ambitious 450 parts per million result, he said. Greenpeace was among environmental groups that said the targets aren't far-reaching enough.

G8 Pledge

Prime Minister Kevin Rudd, who ratified the Kyoto Treaty on his first day in office last November, plans to introduce a cap- and-trade system as part of meeting the government's 2050 target. The G-8 countries on July 8 pledged to reduce output of heat- trapping pollution by at least 50 percent by 2050.

About 180 nations are negotiating a climate deal through 2009, overseen by the United Nations. World carbon dioxide emissions from energy use rose 2.8 percent last year as coal consumption outpaced crude oil and cleaner-burning natural gas, BP Plc said.

``The task of reducing the risks of dangerous climate change to acceptable levels is immense,'' Garnaut said. ``The process of international co-operation is perhaps the most formidable of international relations challenges: more formidable than multilateral trade negotiations that have recently collapsed.''

Last year the United Nations Intergovernmental Panel on Climate Change recommended that industrialized nations reduce emissions by 25-40 percent by 2020. China also said developed nations such as the U.S. should cut emissions by 25-40 percent of 1990 levels by 2020, a position supported last year by the European Union and developing nations.

`Work to Do'

``We have a lot of work to do as a community of nations on the global agreement,'' Climate Change Minister Penny Wong told reporters in Canberra today. ``Professor Garnaut is right when he says Australia matters.'' Garnaut is due to hand his final report to the government on Sept. 30.

Garnaut in July said the nation needed a ``broadly based'' emissions trading system and that the government should ``go further'' on its 60 percent pledge on gas reduction. Australia's proposed cap-and-trade system is similar to that used in the European Union.

The A$20 a ton initial price of carbon would rise four percent a year in real terms, or in addition to gains in the consumer price index, he said. That would mean an increase to A$34.50 in 2020, Garnaut predicted.

Fuel, Power Costs

A A$20 carbon price would add five Australian cents a liter to gasoline prices and increase electricity costs by some 40 percent, Garnaut told the National Press Club in Canberra today.

Companies may leave Australia because of increased costs under the carbon plan, the nation's Business Council said on Aug. 21. BHP Billiton Ltd. Chairman Don Argus earlier this week urged the government to rethink the cap-and-trade system and consider a carbon tax instead.

The government plans to issue free permits or give a one-off cash bonus to some coal-fired power generators to compensate them for the added expense of introducing a cost on carbon.

It will boost welfare payments and cut taxes to help households, especially those on low incomes, cope with the system.

The Australian Treasury will release economic modeling on the emissions trading system in October and the government will publish its final report by the end of the year.

Greenpeace said accepting an atmosphere with 550 parts per million greenhouse gas concentration would mean as much as 39 percent of the world's species would become extinct. There would be a 77 percent chance that the Greenland ice sheets would melt irreversibly, and 87 percent of the world's coral would die, the organization said in an e-mailed statement.

``This is the government's chief climate change adviser suggesting Mr. Rudd write a death warrant for the Great Barrier Reef, the Kakadu National Park, and our international reputation,'' said Greenpeace head of campaigns Steve Campbell. ``All countries must adopt a war footing and play to win this fight.''

To contact the reporters on this story: Gemma Daley in Canberra at gdaley@bloomberg.net