On Garnaut: industry comment

By Rachel Purchase
EcoGeneration — July/August 2011

On 31 May this year Professor Ross Garnaut’s updated Garnaut Climate Change Review was released. EcoGeneration found out what Australia’s leading clean energy industry players have to say about Professor Garnaut’s climate action strategy.

The updated Garnaut Climate Change Review was commissioned by the Federal Government in 2010. It tracks developments that have taken place since the original Garnaut review was released in 2008 in the areas of emissions trends, climate change science, carbon pricing, low-emissions technology development, biosequestration and the electricity sector. These developments were examined individually in a series of eight update papers written by Professor Garnaut, released between February and March this year. Combined, these papers make up the contents of the updated review.

Significance of the Garnaut Climate Change Review

Professor Garnaut is the Federal Government’s lead climate change advisor and he sits on the panel of experts that makes recommendations to the Federal Government’s Multi-Party Climate Change Committee. As such, his observations and suggestions may come to shape the direction of Australian climate change action.

Here EcoGeneration learns what the nation’s clean energy industry leaders – also shaping climate action in Australia – have to say about Professor Garnaut’s updated review.

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John Connor, CEO, The Climate Institute

“[Professor Garnaut’s update papers] have been incisive and insightful and The Climate Institute agrees with many of the directions to which the review has pointed.

“Making our current carbon pollution intensive generators finally start to pay for their carbon emissions is a very important initiative in opening up potential for cleaner energy.

“Professor Garnaut once again shines the torch on the poor performance in terms of research, development and deployment for clean and renewable energy. It is clear that this will need to be a key part of any final agreement.”

Tristan Edis, Research Fellow within the Energy Program at the Grattan Institute

“[Professor] Garnaut’s Update Paper Seven represents a very useful contribution to the debate around what the Australian Government should do to support low-emission electricity technologies. As the Grattan Institute’s recent report Learning the hard way: Australia's policies to reduce emissions illustrated, supporting low-emission technologies through funds which allocate money via highly subjective tendering processes does not work.

“[Professor] Garnaut’s proposal that great amounts of funds be allocated on the basis of simpler and less subjective qualification criteria that removes the need for resource-and-time intensive, and highly-politicised tendering processes would be an excellent reform. It would make it easier for clean energy companies to understand exactly what is required to qualify for funds, which is essential for long-term planning and investment in this sector.”

Ian Porter, CEO, Alternative Energy Association

“At many other times, the Garnaut update papers would have had a considerable impact on the policy making process. The early update papers have largely confirmed the conservatism and due caution of the policy framework used in the original review, while the updates in regard to climate science merely serve to remind us of how important the task ahead is.

“Unfortunately the debate is not, as I write, about the details of the policy process; rather, it is focussed on the clamour and noise of personal politics and a more fundamental questioning of the science underpinning our thinking about climate change. Unproductive, and unlikely to lead to good policy.

“Hopefully over the coming months we will move on, and the work of Ross Garnaut and his team will receive the attention it deserves.”

Rob Murray-Leach, CEO, The Energy Efficiency Council

“[Professor] Garnaut’s Update Paper Eight Transforming the electricity sector finally brought public attention to an issue that is critical to keep energy affordable in Australia.

“Network companies are planning to spend over $39 billion over five years on the grid, and this is the main reason that energy prices are rising. While some of this investment is essential, if we invested in reducing peak demand we could significantly reduce expenditure on poles and wires. For example, the Townsville Solar Cities projects reduced peak demand on Magnetic Island by 20 per cent, deferring a $17 million investment on an undersea cable.”

Matthew Wright, Executive Director, Beyond Zero Emissions

“Professor Garnaut’s reviews on the economics of climate change have been a driving force for climate policy debate in Australia. In terms of the updated review, it seems that [Professor] Garnaut’s blunt assessment of the worrying state of climate science has not flowed through to his policy recommendations. In his carbon pricing paper [number six, titled Carbon pricing and reducing Australia’s emissions], moving beyond the miniscule 5 per cent by 2020 reduction target was not addressed.

“Professor Garnaut’s recommended starting carbon price of $20–30 per tonne of carbon would only see a switch to gas-fired power in the electricity sector, which is not a long-term solution. If this eventuates, Australia will be stuck with stranded gas power assets for the next 60 years and investment decisions that delay the inevitable transition to renewable energy sources.”

The update papers

1. Weighing the costs and benefits of climate change action examines whether the benefits of climate action exceed the fiscal cost. The paper concluded in the affirmative – while climate action costs will initially be high, they do not outweigh the benefits of taking this action. This paper emphasised ‘action’ as climate change mitigation, rather than adaptation.
2. Progress towards effective global action on climate change reviews changes in the international climate mitigation regime that occurred in Copenhagen and Cancun. Lamenting that a much hoped for global agreement was not achieved, Professor Garnaut suggests in this paper that Australia can play a large role in moving the world towards this goal. Specifically, Professor Garnaut said that introduction of an Australian carbon price would likely assist the United States and Canada in following suit.
3. Global emissions trends highlights that carbon emissions the world over are rapidly increasing. Without mitigation, global emissions will double between 2005 and 2030 projects Professor Garnaut in this paper. Taking into consideration the different emissions profiles of developed and developing nations, Professor Garnaut recommends that mitigation efforts in developing countries will need to be stronger earlier, and mitigation efforts in developing countries will need to be established sooner than once may have seemed necessary.
4. Transforming rural land use details how, simultaneously, the rural sector is a major source of emissions, whilst possessive of capacity to play a significant role in Australia’s mitigation efforts via biosequestration. Professor Garnaut iterates in this paper that stronger science-based knowledge needs to be generated in order to maximise the climate mitigation potential of rural land.
5. The science of climate change describes how scientific research indicating that the global climate is increasing has been strengthened since the release of the original 2008 update. However, Professor Garnaut writes, public confidence in the science has weakened in Australia and some other countries since 2008.
6. Carbon pricing and reducing Australia’s emissions mounts the argument for a carbon pricing mechanism in Australia. Some specifications of the carbon pricing mechanism that Professor Garnaut proposes include:

A starting price should be between $A20 and $A30 per tonne of carbon dioxide equivalent, rising at 4 per cent per annum.
Floating the price on the market (without caps or floors) in mid-2015.

1. Low-emissions technology and the innovation challenge stipulates that low-emission technology research and development requires a massive financial boost. Professor Garnaut writes that this finance needs to be sourced from both the public and private sectors and should be channelled into commercialising low-emissions technologies and expanding relevant high-level education. On a policy level, Professor Garnaut highlights the need to remove regulatory and legal barriers that currently stymie low-emissions technology innovation.
2. Transforming the electricity sector details how the carbon pricing mechanism proposed in Update Paper Six would revolutionise the electricity sector such that a switch from coal to less emissions-intensive forms of electricity generation would take place. In response to the anticipated argument that such a switch would raise the price of electricity, Professor Garnaut writes that with or without a carbon price, a significant amount of investment in generation capacity will be required in the years ahead and this would also raise electricity prices. Professor Garnaut also highlights that electricity price effects from the introduction of a carbon price on low- and middle-income consumers can be offset by an efficiency-raising tax and social security reform and supplementary measures.

Appeared in issue: EcoGeneration - July/August 2011 EcoGeneration — July/August 2011