Why Australia needs a carbon budget

Australia has opened the possibility to link short- and long-term emissions reduction targets to a scientifically robust ‘carbon budget’. But why is it needed and how should it be pursued?

This is the summary of a policy brief released today by The Climate Institute.

The Clean Energy Future Act includes an important innovation in Australian climate policy: for the first time, the law opens up the possibility of a way to link short- and long-term emissions reduction targets to a scientifically robust ‘carbon budget’ for the nation.

The development of this national carbon budget is now central to the deliberations of the Climate Change Authority.

The Authority is an independent body, which provides advice to the Parliament on climate policy. Its first targets and trajectory review is currently underway and must be completed by February 28, 2014. An issues paper will be released this month and draft recommendations are due in October 2013. The review must make recommendations for an ‘indicative national emissions trajectory and a national carbon budget’.

The concept of a carbon budget is important in climate policy. The magnitude of climate change is not determined by emissions in any given year, but the total level of pollution released over time. The word ‘budget’ is used deliberately. If we save less now we have to save more later and vice versa. The longer you delay action the more you pay to catch-up.

The challenge for the Authority is that a national carbon budget is not sharply defined in the Clean Energy Act; it is broadly described as ‘the total amount of net Australian emissions of greenhouse gases during a specified period’. A number, or combination, of carbon budget approaches could be undertaken by the Climate Change Authority:

Long-term budget: Define the total allowable cumulative emissions over a long-term period based on a judgement of Australia’s equitable contribution to avoiding dangerous climate change. For example, a total of eight billion tonnes between 2010 and 2050 could be released based on one assessment of our fair share of a 1,500 billion tonne global budget. This global budget would give around a 75 per cent chance of avoiding a 2 degree Celsius increase in global temperature.

Trajectory and target budget: Define an indicative national long-term emission trajectory or target and define carbon budgets with shorter timeframes consistent with this emissions pathway. For example, 80 per cent emission reduction by 2050 and five-year carbon budgets for 2015-2020, 2021-2025 and 2026-2030.

Short-term budget: Define emission reduction targets in the near-term. For example, Australia’s Kyoto target of around 4.6 billion tonnes of carbon emissions from 2013-2020. The principle strength of a long-term budget is that it provides a transparent and direct link to a defined climate outcome. Australia is highly vulnerable to the impacts of climate change and the Act’s objectives state that Australia’s national interest is in ensuring that global temperatures do not increase by more than 2 degrees above pre-industrial levels.

Numerous assessments have demonstrated that global warming above 2 degrees would lead to substantial costs to Australia’s economic, human and natural systems and would exceed the adaptive capacity of key Australian industry sectors.

The total amount of global emissions can be calculated to give a reasonably high probability of achieving the 2 degree goal. A national budget can then be directly calculated based on a judgement of an equitable contribution from Australia to this global carbon budget.

By themselves, both short-term and trajectory and target budgets, provide only a weak link to the global carbon budget and Australia’s national interest. This increases the risks that shorter-term targets may be set without explicit reference to avoiding dangerous climate change.

Action to reduce emissions will not stop in 2020. How a carbon budget is defined can have an impact on short-term decision making and implications for a long-term emissions reduction pathway. If the Climate Change Authority does not consider a long-term budget when it makes recommendations around the short-term emissions pathway, it increases the risk that more dramatic and draconian emissions reductions will be required post 2020 to meet national goals and our emerging international commitments.

The Climate Institute has calculated a number of long-term national carbon budgets for Australia. This gives a broad range of budgets for Australia of between 4 billion tonnes to 15 billion tonnes from 2010 to 2050. This range represents the reality that while scientists can advise on appropriate global budgets, just how this pie should be shared is, ultimately, a question of equity.

To assess the equity implications of the indicative Australian budgets, each is converted to a per capita allocation. Under most of the assessed budgets Australians would use significantly more of the global budget than an average person in either developed or developing economies.

Unless the metrics used to assess our equitable share of the global budget explicitly factors in our relatively small population’s high carbon footprint, then policymakers are implying it is acceptable for Australians to consume more of the global carbon budget than most other people for the next 40 years.

For example, a budget based on the government’s minimum 5 per cent 2020 emission target and 80 per cent target by 2050 would see Australians use four times as much of the global budget as the average person globally. Put another way if other countries emitted, per person, a comparable amount of emissions to that implied by Australia’s current emission targets then total emissions to 2050 would be equivalent to a world where temperatures increase by 4-6 degrees by 2100.

A useful benchmark of fairness could be an assurance that, at minimum, the average Australian consumes no more of the global budget than the average person in other advanced economies. This suggests an Australian carbon budget of around 8 billion tonnes from 2010 to 2050.

The Climate Institute’s key recommendations are that an Australian carbon budget should be:

Consistent with the national interest (as defined by the Act): It should be based on a global budget which has a high probability of ‘ensuring that average global temperatures increase by not more than 2 degrees Celsius above pre-industrial levels’.

Focus on the long-term: The Climate Change Authority should outline an Australia’s carbon budget to 2050. This would provide guidance to short-term cap setting processes and the longer-term indicative emissions pathway to 2030 and 2050. There is little additional value in setting carbon budget to 2020 alone.

Hedge against stronger action: The budget and associated emission pathways should be set to ensure it hedges against the possibility of even more ambitious action in the future (e.g. 1.5 degrees global goal currently under consideration under the UNFCCC).

Erwin Jackson is the Deputy CEO of The Climate Institute.

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