More than the market needed to stop the world warming

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To keep global warming to below 2 degrees centigrade by 2100, much more mitigation efforts than just market based mechanisms will be needed, writes Dr Ted Christie.

“Sustainable energy is the golden thread that connects economic growth, social equity, and a climate and environment that enables the world to thrive.”

~ UN Secretary-General, Ban Ki-moon (September 2012)

ON 27 SEPTEMBER 2012, in an address titled "Innovations for a Changing Climate", Ban Ki-moon, raised a warning that

“Time is running out on our ability to limit the rise in global temperature to 2 degrees centigrade [by 2100]."

Agreement for achieving this goal had been reached by the international community in 2010.

The recent change of federal government in Australia has led to media comment on action for climate change focussing on new federal legislation to repeal the carbon tax of the previous Labor government and the decision to replace it with the ‘Direct Action’ plan of the new Coalition government. The ‘Direct Action’ plan does not include a carbon tax or an ETS.

In the Federal Parliament on 18 November 2013, Mark Butler – opposition spokesman for Environment, Climate Change and Water – confirmed that Labor will move legislative amendments to ensure that the carbon tax is replaced by an ETS.  

The problem of the focus for media attention on the carbon tax is that it is drawing public debate away from what is the most significant issue — what mitigation efforts should be set to ensure average global temperatures do not increase by more than 2OC by 2100.  

Current action taken to reduce emissions by the Coalition and Labor simply reflect legal obligations imposed on Australia following its ratification of the Kyoto Protocol — to comply with the legally binding 5% CO2 emission reduction target set for the period 2013-2020.

A federal agency, the Climate Change Authority reviews Australia’s national emission reduction goals and progress towards meeting them. On 30 October 2013, a Draft Report by the Authority on emission reduction targets stated that Australia's commitment to cut emissions by 5% from 2000 levels by 2020 would leave Australia lagging behind other comparable countries like the United States.

 Fast-forwarding to 2020 and beyond, what differences exist between LNP and Labor emission reduction targets?

At the UN climate conference in Doha, Qatar, In December 2012, the then Federal Labor government pledged Australia’s commitment to reduce emissions for 2013-2020 would be consistent with Kyoto’s unconditional 2020 target of 5% below 2000 levels.

 But, Australia also pledged to retain the option to reduce its GHG emissions, within its 2020 target, of 5% to 15%, or 25% below 2000 levels, subject to certain conditions being met — for example major developing economies committing to substantially restraining their emissions and advanced economies taking on commitments comparable to Australia’s.

A major step, independent of Kyoto, was taken by Australia's then Federal Labor Government, in November 2011. Legislation was introduced for action directed towards meeting a long-term target to reduce Australia’s GHG emissions to 80% below 2000 levels by 2050:  Clean Energy Act 2011 (Cth), section 3(c).

In October 2013, the new Federal Environment Minister Greg Hunt stated that the Government would not make any change to cut its emissions by 5% from 2000 levels by 2020

“...until it gauges the international response at the next UN Climate Summit, due to be held in Paris in September 2015."

He said emission reduction targets would be

“...based on how the world is tracking”

at the end of 2015.

The centrepiece of the Coalition policy is the Direct Action Plan and its “Emissions Reduction Fund” — a market-based mechanism for reducing CO2 emissions; funds are to be provided to businesses as incentives to reduce emissions.

A significant distinction between the market-based mechanisms of the Coalition and Labor is that it is only the ETS of Labor that gives effect to the polluter pays principle — a generally recognized principle of international environmental law that the polluter should bear the cost of measures to reduce pollution.

The UN climate conference at Doha agreed on a new, universal climate agreement for all developing and developed countries to replace the Kyoto Protocol. It is to be drafted by 2015 and planned to come into force by 2020. Binding emission reduction targets in the new agreement from 2020-2050 will largely determine the long-term global temperature rise and the climate change impacts that can be avoided.

A key issue in drafting the new climate agreement is to understand how effective a 5% CO2 emission reduction target will be for ensuring that global temperatures do not increase by more than 2OC by 2100?

Victoria University climate scientist Professor Roger Jones has calculated that if the rest of the world took no action and Australia reduced emissions through to 2020 – and then did nothing else – Australia's 5% emission reduction target would, at best, cut global temperature rise by 0.0038 degrees by 2100.

Australia’s currently contributes around 1.5% of global CO2 emissions. If we assumed all countries in the world where human use activities emitted CO2 reduced their emissions by 5% – like Australia plans to – then using a basic “compound proportion” analysis for the above scenario, the global temperature rise would be cut by 0.25 degrees.

This figure should only be seen as rough estimate, however it does provide a springboard to understand why tougher emission reduction target are needed to “bite into” climate change in a way that shouts to the world that government is serious about limiting global temperature rise to 2OC by 2100.

Support for tougher targets comes from the “Draft Report” of Australia’s Climate Change Authority. The “Draft Report” states that Australia's 5% CO2 emission reduction target for 2020 was 'substantially inadequate'. An emission reduction target of 15% by 2020 was considered the minimum. For 2020-2030, emission reduction targets in the range 35-50% or 40-50% were proposed.

The opinion of the United Nations Partners on Climate Change – a grouping of 38 UN organizations all sharing a common interest in climate change – is that governments could slow and reverse existing emission trends, and ultimately stabilize atmospheric GHG levels; but stronger climate change policies need to be adopted. The most ambitious target assessed – to stabilize GHG levels at 445-490 ppm – could limit global mean temperature increases to 2-2.4°C above pre-industrial levels. Achieving this target would require global CO2 to peak by 2015 and to fall to 50-85 per cent of 2000 levels by 2050.

What are some of the longer-term emission reduction targets proposed by 'industrialized nations'?

EU leaders have committed to transform Europe into a highly energy-efficient, low carbon economy by progressively setting GHG emission reduction targets through to 2050. For 2020, the emission reduction target is 20% below 1990 levels. This is to be implemented though legislation. For 2050, the EU objective is an emission reduction target of 80-95% below 1990 levels

'...as part of efforts by developed countries as a group to reduce their emissions by a similar degree.'

At the Copenhagen Climate Change Summit in December 2009, President Obama gave an action commitment by announcing GHG emission reduction targets in the range of: 17% below 2005 levels by 2020; 42% below 2005 levels by 2030; and 83% below 2005 levels by 2050.  In June 2013, President Obama recommitted the United States to meet the GHG emission reduction target of 17% below 2005 levels by 2020.

As a signatory in 1998, Canada ratified the Kyoto Protocol in 2005. In December 2012, Canada applied its legal right and withdrew from Kyoto. Canada is the first nation to pull out of Kyoto. Part of Canada’s reasons for withdrawing was because of the costs for compliance with emission reduction targets.

Climate change has been described as the greatest market failure the world has ever seen. The predominant global approach presently taken to reduce CO2  emissions is the market-based mechanism — the ETS.

The UN Secretary-General has made it quite clear that addressing climate change is critical to achieving sustainable development. If future CO2 emission reduction targets are to increase beyond the existing 5% Kyoto reduction target, the questions of sustainable development and cost-effectiveness of actions taken are crucial in drafting the new climate agreement.

The concept of sustainable development emerged following the publication of “Our Common Future” (‘The Brundtland Report’) by the United Nations World Commission on Environment and Development in 1987. Sustainable development has now become a significant unifying concept for contemporary decision-making for global environmental management and protection.  

A sustainable solution evaluates and balances the multiple and competing objectives for sustainability – ecological, economic, social and cultural – equitably and is not weighted in favour of one objective. The goal is to secure as much available value as possible for Government, industry and the community.

Finding a sustainable solution for climate change in the new universal climate agreement not only requires consideration of climate change-effective emission reduction targets, but also for mitigation measures to limit emissions in cost effective ways.

(Image via simonkneebone.com)

Speaking at a Business Leaders' Forum in Brisbane, Origin Energy CEO Grant King said the carbon price, initially set at $23 a tonne, was too low to change Australia's emissions.

He continued:

“If we really wanted a carbon price to substantially change carbon usage in Australia, it needed to be set at $40-60 a tonne and that was never politically achievable.''

The Treasury in Australia has modelled two policy scenarios in which carbon was priced out to 2050: a 5% emission reduction target on 2000 levels by 2020, then an 80% reduction by 2050. Alternatively,  a 25% emission reduction target on 2000 levels by 2020 then an 80% reduction by 2050. In 2050, the projected carbon price per tonne of CO2 for each scenario was $130 and $275.   

The observations made by the Origin Energy CEO, together with the Treasury modelling outcomes on carbon price, create a degree of uncertainty on cost-effectiveness of market-based measures, alone, for limiting emissions beyond Kyoto — an era when emission reductions will need to be far greater than today’s 5% target.

In these circumstances, a comparative, independent evaluation between the ETS and the ‘Direct Action’ plan, for both their climate change- and cost-effectiveness must be seen as a high priority for determining their future application in Australia.

It is clear, in order to achieve much greater emission reduction targets, an “energy mix” will be needed.  The energy mix” should incorporate both “Kyoto national measures” renewables, energy efficiency measures, CO2 sequestration technologies and advanced and innovative environmentally sound technologies, afforestation and reforestationas well as market-based mechanisms such as the ETS. The appropriate 'energy mix' will have to be cost-effective and consistent with sustainability.

The challenge for visionaries from UN Member States to draft the new, universal climate agreement has been clearly posed by the UN Secretary-General:

Climate change is the single greatest threat to sustainable development. Yet, too often, one important fact gets lost amid the fear: addressing climate change is one of our greatest opportunities.”  

Already, there are positive signs that opportunities are being taken up. The launch by the UN Secretary-General of the 'Sustainable Energy for All' initiative in September 2011 aims to achieve objectives such as doubling energy efficiency rate and doubling of the share of renewable energy in the world’s energy mix by 2030.

Under the UN Secretary-General’s leadership, Member States at the Rio+20 Conference in Brazil in June 2012, agreed on measures for implementing sustainable development and addressing climate change, including promoting more sustainable agriculture, improving energy efficiency, addressing ocean acidification and enhancing strategies that integrate disaster risk reduction and climate change adaptation into decision-making.

However, following the UN Climate Change Conference that ended in Warsaw, Poland, on 23 November 2013, a new dimension of uncertainty has emerged for mitigation actions to reduce emissions and to achieve sustainability. Global agreement was not reached on a timetable for national commitments that would set clear GHG emission reduction targets for all nations for the first time, from 2020.

Instead, a last-minute compromise deal reached for drafting the new climate agreement will mean that all countries will now treat mitigation similarly. The aim will be for countries to prepare “contributions” — rather than for some countries being asked for specific reduction targets or commitments. These "contributions" might be targets but could be other efforts to cut emissions.  

The time-table for the draft text is the UN Climate Change Conference in Peru in 2014.

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