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.

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