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Let's leave the Kyoto Protocol behind and develop a workable plan of our own

By David Madden - posted Friday, 30 July 2004

Recent calls by Australia's Chief Scientist, Robin Batterham, for Australia to halve its greenhouse gas emissions by 2050 have reignited the debate about what we should do to tackle its high level of carbon emissions. Australia is the largest per capita producer of greenhouse gases in the industrialised world, emitting more than double the average rate for industrialised countries. And Australia's emissions are increasing.

With overwhelming scientific evidence that such emissions are driving an increase in global temperatures that will have a potentially devastating effect on the world, there is no time to waste.

Unfortunately, the debate about carbon emissions has been dominated by whether Australia should sign the Kyoto protocol. It is time to move on.


The Howard government was right not to sign Kyoto. There are fundamental flaws in the "targets and timetable" approach of the proposed international agreement.

Despite suggesting that a better alternative be developed, however, the Government has yet to produce a comprehensive plan to seriously address the nation's emissions problem. The uncertainties associated with climate change should not be an excuse for government inaction.

In a new book, Imagining Australia: Ideas for our Future I, with Macgregor Duncan, Andrew Leigh and Peter Tynan, present several ideas to help Australia meaningfully address this crucial environmental issue.

We propose that the Government implement an alternative to the Kyoto protocol based on a blueprint developed by two leading economists, Warrick McKibbin and Peter J. Wilcoxen. This blueprint would see the establishment of a domestic carbon emissions trading market. The market would consist of a fixed number of long-term emission permits, as well as short-term one-year permits.

The long-term permits would be auctioned off by government. The price of the short-term permits would be set by government based on prevailing information about the costs of climate change. Polluters would be able to buy short-term permits over and above perpetual permits as and when required.

The strength of this model is that allowing the price of the short-term permits to be adjusted enables policy to evolve as more information becomes available about the cost of climate change. It also ensures that firms would have incentives to investigate new technologies to reduce emissions.


We propose that the Government auction off long-term permits equal to 95 per cent of our 1990 emissions. This is less than Australia's specially negotiated Kyoto target, but by conforming to the average emission reduction target for developed countries we would show the world that our alternative plan was developed in good faith.

An emission trading system is an important first step, but to really address this problem we need to advance beyond fossil fuels. The swift development and widespread deployment of renewable energy and energy-efficient technologies requires leadership from the top.

The Government needs to make a national priority of rapid transition to renewable energy. At present the mandatory target for use of renewable energy is just two per cent, which provides little incentive for innovation. We need to be bolder.

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Article edited by Ian Miller.
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This article was previously published in the Sydney Morning Herald on 20 July 2004.

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About the Author

David Madden is a co-author of Imagining Australia: Ideas for our Future along with Macgregor Duncan, Andrew Leigh, and Peter Tynan. He has worked for the World Bank and the United Nations and is currently involved in the Democrat campaign for the US elections.

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Allen and Unwin - Imagining Australia
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