Saturday, February 09, 2013

We go above, beyond with emissions pledge

While increasing our carbon tax bill, at last December's climate change summit in Doha the Gillard government committed to cutting emissions by more than twice as much as comparable countries.

The headline story from the summit was that Canada, Japan, New Zealand and Russia walked away from the Kyoto Protocol.  Like the US and developing nations, these countries are now sitting outside the Kyoto tent while a new international agreement is negotiated to cover emissions after 2020.  But not much scrutiny was applied to those who stayed inside the tent, such as Australia.

With the EU, Norway and Switzerland, we remained a ratifying Kyoto party, and made commitments to cut gases between this year and 2020.

At the original 1997 Kyoto conference, Australia agreed to cap emissions at 108 per cent of 1990 levels.  Since then the green movement has pilloried Australia's emissions ambition.

Similar claims are now being made of the Gillard government's Doha commitment to cut emissions to 95 per cent of 1990 levels between now and 2020.

On the raw numbers, Australia's cuts seem lacklustre against the EU's commitment to cut emissions to 80 per cent, but that assumes we are all working off the same trajectory.  Unsurprisingly, we are not.

An analysis requires an assessment of emissions cuts made off our business-as-usual trajectory.

As the Treasury's own Strong Growth, Low Pollution carbon tax modelling shows, much of Australia's efforts to cut emissions won't occur locally.  Instead, Treasury modelling rightly assumes we will cut offshore where it is cheaper per tonne of emissions.  That leaves the trajectory of Australia's domestic emissions rising.

Once an analysis of the Doha commitments is completed off business-as-usual calculations, the extreme generosity of the government's commitment becomes clear.

Despite appearances that Europe's 80 per cent of 1990 emissions targets is more generous than Australia's 95 per cent, analysis of business-as-usual projections shows Europe's is only 23 per cent and Australia's 47 per cent off projections for 2020 emissions levels.

So Australia has offered to cut emissions by more than double the rate of Europe.

It's not the only hit we are taking for the team.  By signing up to Kyoto's extension, we have also adopted revised carbon accounting rules that increase Australia's methane footprint by 20 per cent.  The updated calculations also cut the footprint of some other, less significant gases.

Once the revision of all gases is factored in our national register, Australia's emissions profile increases by around 22 million tonnes of carbon dioxide-equivalent gases.

An increase of 22 million tonnes adds another $230 million to the nation's carbon tax bill this financial year, and will go up further when the carbon tax rate goes up on July 1.

It's another unwelcome feather in our cap:  in addition to having the world's largest, most broadly applied carbon tax, we can also add the most generous commitment to cut emissions, using a tax that is set to go up and up.

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