Last week the report of the Prime Minister's Task Group on Emissions Trading was released. It is a responsible and measured road map to a low-emissions future for Australia that takes into account the local and global implications of what is the greatest economic challenge facing the world today.
The Australian Government recognises that global warming is caused by human action. We recognise that to mitigate the impact of this climate change the world needs massively to reduce those emissions in the course of this century.
Contrary to the rhetoric of our opponents, Australia is not a laggard in responding to climate change. Indeed if we are to measure our efforts by results, then the fact that we are one of the few developed countries that will meet its Kyoto target (of 108 per cent of 1990 level emissions by 2008-12) by its own domestic actions is proof enough.
In a number of vital areas of climate change policy, Australia is playing a leading role. Energy efficiency and forestry are two avenues for early action on climate change.
Early action is vital, because much of the big reductions in emissions will depend on technology yet to be fully developed. Doing more with less power is especially important. If the whole world were to replace incandescent light bulbs with more efficient lighting, we would save an amount of energy equal to five times Australia's annual demand.
So which country was the first to announce a phasing out of inefficient, incandescent lighting? Australia.
Deforestation is the second-largest source of greenhouse gas emissions after electricity generation. If we were only to halve the rate of deforestation we would cut global greenhouse gas emissions by 10 per cent. So which country is leading the charge to put forestry issues on the top of the climate change agenda with a $200 million Global Initiative on Forests and Climate? Australia again.
In the longer term, we know that to achieve the big reductions in global emissions needed to slow global warming, we will have to generate most, if not all, of our electricity from zero or near zero emission sources. A key developing technology for that effort is clean coal; the capture of carbon dioxide from coal fired power stations and its storing, or sequestration, safely under the ground. Where is the world's leading research and development taking place? Australia, the United States and the Netherlands.
So global action, global engagement is vital. That is where Kyoto has failed. New international arrangements are needed. Which country has been playing a leading role in bringing together collaboration between China, India and the US on climate change through, to give just one example, the Asia Pacific Partnership on Clean Development and Climate (AP6)? Australia.
But while we have done a lot, a great deal more needs to be done. A key element is putting a price on carbon, to encourage the development of low-emission technologies and a more efficient use of energy.
The best approach is through emissions trading; letting the market set the price so that the least cost abatement can be achieved. The report describes an emissions trading scheme for Australia that would be the most comprehensive in the world, covering about 75 per cent of all of the sources of emissions.
The report proposes that trading begin in 2011 (and no later than 2012) with the intervening years devoted to building the systems, including a national emissions register, necessary to ensure an efficient, reliable and accountable system. After all this will be a multibillion-dollar market, so the systems have to be right.
The report proposes that a long-term aspirational target be set next year after careful economic analysis of the local and global implications. That timing fits in well with the recent US proposal for 15 of the world's largest economies (including Australia) to work together in what is looking like an expanded version of the AP6 to develop a global emissions target in 2008 with national commitments of action that will enable us to reach it.
Climate change is the greatest economic challenge of our times. Recklessly set unilateral targets, such as Labor proposes, have the potential to drive our energy intensive industries offshore where carbon costs, and hence energy costs, are lower. We will export the jobs and the emissions with them. We will be poorer and the world no cooler.
The Howard Government has the cool heads and steady hands to ensure our response is both environmentally effective and economically responsible.
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