Where should we head with our emissions targets?

The debate into Australia's emissions reduction targets has begun in earnest as an official review begins. What will be most interesting is not whether the 5 per cent 2020 target should be altered, but just how we get to 80 per cent by 2050.

This week in Melbourne, the Grattan Institute and the Climate Change Authority held the first of a series of public seminars to promote debate on whether Australia’s emission reduction target for 2020 should be changed and what future targets are needed to achieve a trajectory to the long term goal of an 80 per cent reduction in emissions by 2050.

The Authority has released an Issues Paper as part of this first review of “caps and targets”, which it is required to conduct every two years under its legislation. Details of the consultation process and how to make submissions by the deadline of May 30 are available here.

Anthea Harris, the Climate Change Authority CEO, gave a detailed presentation outlining the issues but emphasised the basic legislated form of the carbon price scheme and the science behind climate change were not part of the review

Harris began with some “significant semantics” explaining the meaning of key terms used in this discussion – including the difference between:

-- A target (the objective for total emissions in 2020);

-- A cap (the limit applied to the 60 per cent of the emissions covered by the carbon price – the other sectors are not subject to a cap but have to fit within the target);

-- A trajectory (the shape of the curve to get to the target); and,

-- A budget (the total emissions over the period).

The Authority will be combining this Caps and Targets review with the progress report it is also required to give measuring reductions in emissions. Critically this will include a re-evaluation of the ‘business as usual’ (BAU) scenario which has been the baseline for much of the policy development in the last five years. As Climate Spectator recently argued (here and here), there is mounting evidence that the BAU has been overestimated.

The report will also look at the vexed question of international trade in permits and what the actual and net reduction in Australia’s emissions will be – a central point in Greg Hunt’s critique of the carbon price scheme.

A 5 per cent reduction compared to 2000 emission levels is the currently committed target of both Labor and the Coalition. What is often overlooked is that Australia has formally committed itself through the Cancun agreement to reducing emissions by 15 per cent or 25 per cent if respective sets of conditions are achieved.

It is unclear what the Coalition position is about these conditional targets. They argue that other countries are not making similar commitments and hence not meeting the conditions that Australia has set. However, there are some 90 countries who have indicated a position as part of the Copenhagen process – many of them for greater reductions than 5 per cent – but not a large number of these are binding. The Climate Change Authority review will include an update on the status of these commitments.

At the seminar, Professor Ross Garnaut outlined the principles he saw coming out of the Cancun negotiations which he said would lead to a convergence towards some equity in per capita emissions by the middle of the century.

He pointed out that whilst Australia, the US and Canada were currently at the top end of the scale in per capita emissions, stronger population and economic growth, greater efficiency and a higher starting point would play in our favour.

Significantly, he said his estimate of what Australia would need to achieve for a trajectory to get to this point is a 16-17 per cent reduction in emissions by 2020 – the same as the current US non-binding commitment. He supported his confidence in this target by recounting a conversation with the then US Secretary for Energy, Stephen Chu.

At the time the US cap-and-trade legislation died, Chu said that the government would still achieve the same goal, but by “more expensive and less efficient means”.

Professor Garnaut’s judgement may turn out to be prescient, but it is hard to see either Labor or the Coalition having any enthusiasm or motive to change the 2020 target from a 5 per cent reduction. What is of greater interest is how both parties see the trajectory from there to achieve 80 per cent less emissions (than 2000) over the following 30 years.

Anthea Harris made the telling point that the longer a decision on further reductions is left, the steeper it will have to be to achieve the overall carbon budget objective. It will be interesting to see if climate change activists can develop any consensus around a realistic interim target – such as getting to Professor Garnaut’s 17 per cent reduction by 2025.

At this stage the Authority is simply out seeking views. In October they will publish their own views in a draft report which will be subject to a further round of public comment. This will fall after the election and the Authority’s proposal for new targets could become a turning point in the climate debate.

This review is being conducted under Part 22 of the Clean Energy Act 2011 and is required to be completed by February 14, 2014. It is not within the power of a new minister to cancel this review until the Clean Energy Act is amended or repealed.

Moreover, under section 57 of the Climate Change Authority Act, a minister is not able to give directions on the conduct of an inquiry or the contents of a report. This throws up various potential scenarios if there is a change of government and an incoming Coalition government was unable to get legislation for abolition of the Authority through the Senate during the course of the current Caps and Targets review.

Industry will no doubt complain about any recommendation to ’move the goal posts‘ but the degree to which other countries have committed themselves by the end of this year will become the critical issue about whether Australia is moving too fast – or too slow.

Andrew Herington is a former Labor Ministerial Adviser now a Melbourne freelance writer.