Leslie Nielson, Economics Section
Australia’s greenhouse gas emissions
Australia’s greenhouse gas emissions have risen steadily
between 1991 and 2008. This graph, drawn from Australia’s
Greenhouse Gas Inventory, illustrates this trend.
Australian greenhouse gas
emissions, megatonnes, CO2e - Text version
Targets and emissions pricing
Both major political parties have agreed that Australia should
aim to reduce its greenhouse gas emissions by at least 5 per cent,
compared to the level of such emissions in 2000, by 2020. The
Australian Greens are seeking a reduction in Australia’s
greenhouse gas emissions of 40 per cent on 1990 levels by
2020. As the above graph shows, Australia’s emissions levels
were slightly higher in 1990, than in 2000.
In recognition of the difficulties in legislating a price on
emissions, such an approach was deferred until at least 2012 by the
previous Government. The Australian Greens support placing an
interim price on greenhouse emissions via an emissions tax, until
an emissions trading scheme is established (see separate
brief).
Current policy trends
The recent trend in Commonwealth emissions control policy has
emphasised:
- the mandated expansion of the amount of electricity generated
by renewable means (see separate brief)
- the development of emissions offsets, where various methods of
absorbing carbon dioxide are encouraged (such as forestry and soil
carbon). A further feature of this approach is the development of
internationally tradable emissions offset credits based on these
efforts
- energy efficiency measures, such as the encouragement of lower
energy consumption in the building sector
- the imposition of fuel emissions standards in the transport
sector and emissions standards applying to significant emitters,
such as proposed coal fired power stations
- the provision of financial incentives to the private sector to
reduce its emissions. These reductions would be
‘purchased’ by the public sector
- continued funding of research and development activities on the
prevention of greenhouse gas emissions (such as carbon capture and
storage), and
- continued participation in international climate change
negotiations (see separate brief).
Effectiveness
As helpful as these approaches to emissions control may seem,
they have been widely criticised as being inadequate to meet the
current targets. Further, they represent perhaps the most costly
way of reducing, or preventing, such emissions. It may be far less
expensive for the overall economy if a price was placed on these
emissions via either an emissions trading scheme or an emissions
tax, with the private sector being left to find the best way to
reduce emissions.
What’s happening overseas?
Australia’s emissions control policies should be assessed
against the broad policy approaches of major trading partners or
other developed countries or regions. Some key developments
are:
- while the United States has not enacted comprehensive emissions
control legislation at the federal level, various groups of US and
Canadian states/provinces are either operating their own emissions
trading schemes, or are preparing to do so. Further, the US
Environmental Protection Agency has announced that it will directly
regulate greenhouse gas emissions from major emitters
- the European Union (with some additional countries) has
implemented an emissions trading scheme. Plans are underway to
expand that scheme. The EU has also made substantial progress to
sourcing at least 20 percent of its overall energy needs (including
liquid fuels) from renewable sources. Individual EU countries
already impose a wide range of environmental taxes
- both China and India are dramatically expanding their renewable
energy capacity (mainly wind and solar) and implementing various
energy efficiency measures (such as building, fuel and appliance
energy efficiency standards). In particular, China is retiring
older, less efficient industrial and power generation plants. Both
are implementing emissions trading schemes on a regional basis, as
is Japan. and
- New Zealand has just expanded its emissions trading scheme,
though it will not include all economic sectors until 2015. New
Zealand’s emissions reduction target is between 10 and 20 per
cent compared to 1990 levels, if there is a comprehensive global
emissions control agreement.
Library publications and key documents
L Nielson, Emissions control: your policy
choices, Background note, Parliamentary Library, 10 May
2010,
http://www.aph.gov.au/library/pubs/BN/eco/EmisisonsControl.pdf
The Climate Institute, ALP pips Coalition
on policy but pollution up and credibility down for both,
media release, 19 August 2010,
http://www.climateinstitute.org.au/index.php?option=com_content&view=article&id=721:alp-pips-coalition-on-policy-but-pollution-up-and-credibility-down-for-both-as-power-price-paranoia-paralyses-policy-progress&catid=39:media-releases&Itemid=36
Department of Climate Change and Energy
Efficiency, National Greenhouse Gas Inventory: accounting for
the KYOTO target, Australian National Greenhouse Accounts,
Commonwealth of Australia, May 2010,
http://www.climatechange.gov.au/~/media/publications/greenhouse-acctg/national-greenhouse-gas-inventory-2008.ashx
ClimateWorks Australia, Low Carbon Growth
Plan for Australia, ClimateWorks Australia, March 2010,
http://www.climateworksaustralia.com/Low%20Carbon%20Growth%20Plan.pdf