Make it 19% with fuel economy standards, international permits

The Climate Change Authority has recommended upping Australia's emissions reduction target to an effective 19 per cent, with vehicle fuel efficiency standards giving the plan a rev up.

After its draft recommendations released in late October suggested Australia should up its emissions reduction target by 2020 to between 15 and 25 per cent, the Climate Change Authority has now signed off on what that number should be - 19 per cent.

In a report released today, the authority has again repeated that Australia's 5 per cent emissions reduction target - over 2000 levels - is inadequate and has set forth a program for achieving a 15 per cent target, which would effectively be a 19 per cent target once extra emissions credits accrued under the Kyoto Protocol are carried over.

"It would require concerted action over the years to 2020, the more so given that emissions in 2012 were about 2½ per cent above 2000 levels," CCA chairman Bernie Fraser said.

As part of its strategy to achieve the target, the authority has included instigating vehicle fuel efficiency standards to match, with a lag, the levels prevailing in Europe and the United States.

"Several prospective opportunities for pursuing reductions in emissions are identified in the report. At this time the authority is recommending that the government investigate the possible early introduction of CO2 emission standards for light motor vehicles," Fraser said.

The fuel efficiency standards call comes in the wake of a ClimateWorks report released this week that said Australia would save 3.7 billion litres of fuel per annum (half of all automotive fuel used in the country in 2012) with standards matching the EU and US.

Under the ClimateWorks plan, Australia would match Europe's 2015 target of a fleet-wide average of 130grams of CO2 per kilometre by 2020 and its 2020 standard of 95grams by 2024. The European Parliament just recently affirmed the 95 gram target.

Environment Minister Greg Hunt has previously expressed enthusiasm for implementing vehicle fuel emissions standards in Australia, and the think tank suggests its target would see 4 million tonnes of emissions sliced from Australia's output by 2020.

The other element in which the CCA said the government could achieve significant gains in meeting an effective 19 per cent target was by allowing the purchase of international carbon credits, which the government has so far ruled out under its Direct Action policy but which Fraser said were at "historically low prices".

"The budgetary cost of moving from the current minimum 5 per cent target to the authority’s recommended target entirely through international purchases is estimated at between $210 and $850 million, assuming average unit prices of between $0.50 and $2 (current prices are under $1)," Fraser said.

Mr Fraser said the current 5 per cent target was weaker than many comparable countries such as the UK and Norway, and also didn't reflect recent strong commitments on climate change by major emitters China and the US.

He said the authority - which the government hopes to ditch upon the installment of the new Senate mid-year -  was also recommending a longer-term emissions reduction target of between 40 and 60 per cent below 2000 levels by 2030.

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