Australian Labor Party
About the inquiry
The Senate Select Committee on Climate Policy has thoroughly
examined the Carbon Pollution Reduction Scheme Bill 2009, related bills,
climate change science and the overall Government response to climate change.
The Committee heard ten days of evidence and 188 witnesses,
in Canberra and in five state capitals, with a number of these witnesses
appearing multiple times. We heard from witnesses representing Government
departments, industry associations, businesses, trade unions and community
organisations, and including leading scientists and economists. This included
more than 100 witnesses representing mining, industry, farming, energy supply,
financial and commercial interests.
The committee received over 8,000 submissions from
organisations and individuals (not counting more than 6,000 form letters).
The Economics Committee is also currently concluding an
inquiry into the Carbon Pollution Reduction Scheme Bill 2009 and related
Bills as introduced into the Senate and is due to report at the same time as
this Select Committee Inquiry.
This is in addition to inquiries examining related issues of
energy sustainability and supply including the Government's solar rebates
scheme, feed-in tariffs, and fuel and energy issues.
There is no weight to any arguments that there has not been
adequate opportunity for the Senate to examine the Carbon Pollution Reduction
Scheme (CPRS) bills or for the Australian community to present their views to
We would like to thank the Committee's Secretariat for their
work in ensuring the smooth running of the hearings. We thank all those who
appeared before the Committee and made submissions. We believe that the
Committee's work has once again highlighted the necessity of taking strong,
effective action on climate change.
We are not surprised that the Committee has been unable to
make a unanimous report to the Senate. It became evident during the hearings
that there is a deep division within the Committee: between the majority of
members, who believe that urgent action is needed to combat dangerous climate
change in Australia, and the Liberal and National Senators, who do not.
The Liberal and National Senators either do not believe in
the reality of the threat posed by dangerous climate change to Australia or
they believe that Australia should wait for an international agreement on
emissions reduction before taking any action. The incapacity of the Liberal and
National parties to reach agreement on a way forward in tackling climate change
has been detrimental to Australia's ability to take action on climate change.
It is unfortunate that the leader of the opposition, Mr
Turnbull, has been unable to convince the Coalition parties that it is in the
national and global interest to adopt a realistic and progressive approach to
the global challenge of climate change. Political leadership is needed from Mr
Turnbull to stare down the climate sceptics and deniers within the coalition.
So far he has not been up to the task and he has allowed this sceptical
attitude towards the well founded theory of anthropogenic climate change,
supported by the great majority of the world's respected scientists, to inhibit
the coalition from developing a sound policy that takes responsible action to
tackle climate change. Climate change is the greatest political, economic,
environmental and social challenge facing the world and political leaders must
not abdicate their responsibility to future generations for political
expediency and personal political gain.
Within the majority of the Committee that supports action,
however, there are also differences – between the Labor Senators, who support
the CPRS bills as proposed by the Government; the Greens Senator, who supports
much higher, and in our view unachievable, targets and opposes some particular
aspects of the scheme; and the Independent Senator, who believes we should be
pursuing a different scheme and strategy to reduce emissions.
Summary of Government Senators' position
Government senators believe that the urgency of the
situation in which Australia finds itself, after a decade of inaction on
climate change, requires that a decision must be made by the Parliament, this
year. It is in the interests of the environment, the economy, and future
generations that we put in place a scheme that will enable Australia to reduce
its greenhouse gas emissions before irreversible damage is done to our
environment and our economy. We also believe that an emissions trading scheme
is the best way to do this, because it is a scheme based on market mechanisms
rather than taxation or Government regulation.
We believe that the targets for cutting emissions set out in
the CPRS are the most realistic and attainable targets for Australia at this
time, and will, if put into legislation, enable Australia to go to the UN
Climate Conference in Copenhagen in December in a strong position to argue for
an international agreement to cut global emissions to the degree necessary to
stabilise the Earth's climate before the warming of the planet becomes
irreversible and catastrophic.
The CPRS is the Government's central policy that will drive
the economic transition required to tackle climate change, but it is not the
only part of the Government's response. The CPRS will be part of a
comprehensive strategy to tackle climate change that includes a range of
measures. The Parliament will shortly consider an expanded Renewable Energy
Target that will take Australia's renewable electricity generation to 20% by
2020. The design of the Renewable Energy Target (RET) was agreed between the
Commonwealth and state governments after detailed consultation with industry,
including extensive modelling of the costs and benefits of the expanded target.
This measure is an important complement to the CPRS and should have been
implemented years ago.
Alongside the CPRS, the Government is also proposing a $2.7
billion Climate Change Action Fund to help businesses make the transition to a
low-carbon economy. We believe that that the Government should fast-track
detailed design of the Climate Change Action Fund once the CPRS legislation has
been passed by the Parliament in order to help Australian businesses play their
full part in creating the low-pollution jobs of the future.
We are aware that the transition from the New South Wales
Greenhouse Gas Reduction Scheme may adversely affect certain electricity
generation projects that use waste coal mine methane. The committee affirms its
support for the Government to continue to work with the governments of New
South Wales and the Australian Capital Territory to clarify transitional
arrangements for such projects, noting that a carbon price is essential for the
ongoing support of electricity generation from low-emission sources.
Australia's carbon pollution needs to be reduced from as
many sources as possible. While agriculture has been excluded from the CPRS
until no earlier than 2015, we believe the Government should closely monitor the
impact of the CPRS on the agriculture sector, including processing industries,
to ensure that any perverse outcomes are addressed. We welcome the Government's
establishment of a ministerial roundtable to look at policy options for
reducing carbon pollution in the agriculture sector, and believe that the
Government should continue to fund research into reducing agricultural carbon
pollution and preparing the agriculture sector for the impacts of unavoidable
Emissions reductions from the land sector will play an
important part in reducing Australia's total human-induced carbon pollution. We
welcome the Government's efforts to improve international land sector rules in
a post-2012 agreement, to provide a stronger, long-term basis for an international
climate change response which recognises the full mitigation potential of the
We also welcome the Government's ongoing commitment to fund
research into soil carbon and biochar, and to explore the role that soil carbon
might play in the international post-2012 outcome.
In the light of these considerations, we therefore do not
support any of the recommendations supported by some or all of the other
members of the Committee. We believe that all of these recommendations suffer
from one of two deficiencies. Either they deal with matters which the
Government is already proactively addressing, or they propose actions which
would impose further and unacceptable delays in the implementation of an
emissions trading scheme.
We acknowledge that the measures contained in the Government's
proposals are far-reaching and will involve substantial changes for many
Australian industries, businesses and individuals. We point out, however, that
we have now had many years of debate on this issue, particularly since the
transparent policy development process undertaken by the Government following
on from the Garnaut Review. This process saw the Green Paper, White Paper and
Exposure Draft Legislation released for business and community consultation
before the legislation was brought into Parliament. We have also had two recent
Senate inquiries and the most comprehensive modelling ever undertaken by
Treasury on the impacts of both action and inaction.
It is therefore impossible to argue with any credibility for
further delay, on the basis of a lack of consideration and consultation on
behalf of the Government. It is our firm view that, based on the evidence to
this committee and other Senate inquiries, the case for the Government's
approach has been well made. We believe that the time for more reports, more
modelling, more debate, has passed, and that the time for action in the
national interest is upon us.
Australia needs to act on climate change
There is an overwhelming consensus among climate scientists,
both in Australia and internationally, that climate change caused by human
activity is posing a major and rapidly escalating threat to the Earth's
physical environment, to the economies of every country, and ultimately to the
sustainability of human life on this planet.
The Committee went to great pains to hear from all points of
view among the scientific community. We did not hear or receive one piece of
testimony from a scientist with qualifications and experience in the field of
climate science which dissented from this view. The "climate sceptics"
had a golden opportunity at the Committee's hearings to challenge this
consensus, and they were not able to produce one qualified climate scientist to
Instead we heard from a retired geologist and an engineer.
With due respect to these witnesses, we do not believe that their testimony
presented any effective scientific challenge to the views of the overwhelming
majority of qualified climate scientists. The points they made have been
refuted many times by climate scientists, and were refuted again at our
Australia is uniquely vulnerable to the effects of
escalating climate change. The Garnaut Review found that, if greenhouse gas
emissions continue unchecked during the first half of this century, the
resultant rise in temperature will have a severe impact on Australia's
environment and economy.
By mid-century, unless action is taken, rising temperatures
and declining rainfall will result in major declines in agricultural production
across the country, and output from irrigated agricultural output in the
Murray-Darling Basin will halve. We will also see the destruction of the Great
Barrier Reef by mid-century. Australia's alpine environments will largely cease
to exist. Rising sea levels will destroy many beaches and severely affect
coastal communities. Australia's tourist industry and the communities which
depend on it would be devastated. Tropical diseases and pests would spread
across large areas of Australia, further reducing agricultural production and
endangering animal and human health.
At the last election, both major parties promised to
introduce an emissions trading scheme to reduce Australia's carbon pollution.
Mr Turnbull, when he was Environment Minister in the Howard Government, supported
an emissions trading scheme. He told the National Press Club in May 2008: "The
emissions trading scheme is the central mechanism to decarbonise our economy."
Since then he has steadily retreated from this position, apparently under
pressure from climate sceptics in his own party and from the National Party.
Nevertheless, the Australian people voted overwhelmingly in 2007 for parties
committed to an emissions trading scheme. Every poll shows that the Australian
people continue to support strong action against climate change. The Government
has a mandate to act on this matter, and should do so without further delay.
The Australian people will judge harshly those parties or individual
legislators who place our country's economic and environmental future at risk
by obstructing action on such a vitally important issue.
The Rudd Government's CPRS sets realistic and attainable
targets for reducing Australia's greenhouse gas emissions, targets which will
enable Australia to act independently, while providing leadership and working
to achieve an international agreement on reducing emissions. The current scheme
is in fact similar to the model put forward by the former Government's Prime
Ministerial Task Group on Emissions Trading headed by Dr Peter Shergold, and adopted
as policy by the Howard Government.
The current scheme, like that proposed, but not acted on, by
the previous Government, seeks to reduce greenhouse gas emissions in a way
which minimises the impact on employment, investment and the standard of living
of the Australian people. It seeks to do so at the lowest cost to the economy.
Treasury modelling demonstrates that it is possible to take
strong action to reduce carbon pollution while preserving growth in incomes and
employment across the economy. The Government, as part of its consultation
processes with business and the community, announced some changes to the
scheme, which we welcome. Our view is that the Government's scheme as it now
stands will ensure robust growth in the Australian economy and should be passed
by the Senate.
Deferral of action and claims of unilateralism
We do not accept the view that Australia should wait until
there is an international agreement on climate change before taking action. We
also reject the view that Australia will be alone in taking such action. A
global agreement to cut greenhouse gas emissions is the most desirable way to
proceed. Nevertheless, other countries are acting in advance of such an
agreement, and so should we.
When Australia's scheme comes into effect, we will be
joining many other countries which are implementing such a scheme. Many
countries already have in place domestic policies and measures which seek to
reduce their greenhouse gas emissions.
A number of the major economies have set emissions reduction
targets and have in place, or are developing emissions trading schemes as their
central emissions mitigation policy. Other developed economies are already
adapting to a carbon-constrained future. The countries of the European Union
have centres of expertise in fuel-switching, using biomass in coal-fired
electricity generation, and are working with developing countries through the
Clean Development Mechanism under the Kyoto Protocol. Carbon prices feature in
all major investment decisions relating to plant and infrastructure in Europe.
Europe is adding significant new wind energy capacity each year.
Important research is being undertaken around the world on
carbon capture and storage technology, not only for the coal industry but for
other high-emission industries where there is limited or no capacity to reduce
carbon emissions through changes to the production processes.
We reject the view, frequently expressed by some members of
the Committee and also by some witnesses, that because Australia is responsible
for only 1.5% of the world's greenhouse gas emissions we can afford to wait
until there is an international agreement. Australia is in fact in the top 20%
of emitters in absolute terms.
If all the countries which emit less than Australia were to
follow this logic and do nothing, that would mean that 20% of the world's
greenhouse gas emissions would continue unchecked. As a wealthy country with
one of the world's highest per capita levels of greenhouse gas
emissions, Australia has an obligation to act.
Developing countries such as China and India have made it
clear that they are not willing to make the sacrifices necessary to reduce
their emissions unless the developed countries do so as well. Ethically, we
cannot argue with that view, since the current climate crisis was caused by the
unrestrained consumption of fossil fuels by the developed countries – not least
Australia. Even if we did not accept the logic of that position, it remains a
political fact. The Indian High Commissioner recently said specifically that
India will not act if Australia does not.
Evidence from the Department of Climate Change demonstrates
that, far from acting unilaterally, Australia is in fact lagging behind many
countries in dealing with greenhouse gas emissions. (We have presented this
information as an appendix to this report.)
Our targets are realistic and attainable
Many people are calling for higher targets than those
contained in the scheme proposed by the Government. We listened carefully to
the evidence presented by environmentalist groups and others who hold this
view. Our view, however, is that the targets set out in the CPRS are the
highest which are realistically attainable in Australia in the current
circumstances while maintaining economic growth, job creation, improved
standards of living and a reductions in greenhouse gas emissions that meets
meaningful environmental goals.
Australia is a heavily carbon-dependent economy, and that
cannot be changed overnight, or even in a few years. If there is an international
agreement to reduce emissions by 25% by 2020, Australia will be bound by that
agreement and will take steps to meet our international commitments.
We point out again that this urgency has been imposed on
Australia by the failure to act on climate change over the decade 1997-2007,
when the previous Government was in office. Those who were responsible for that
inaction are in no position now to criticise the current Government for
deciding to take decisive action.
Why we support the Carbon Pollution Reduction Scheme
Some critics of the CPRS assert that Australia should adopt
an alternative approach to reducing emissions such a carbon tax, an "emissions
intensity" approach or a hybrid model. We listened carefully to arguments
on this issue. We are not persuaded that any of them are superior, either in
terms of the outcome delivered or in terms of the impact on the Australian
economy. To abandon the CPRS now and switch to some other model would entail
years of further delay, for no clearly demonstrated benefit. Emissions trading
emerging as the dominant policy for reducing carbon pollution around the world.
By introducing an emissions trading scheme, Australia is joining a growing
group of countries that have developed or are developing similar schemes.
Abandoning the CPRS and adopting some other approach would
isolate us from the emerging world consensus about the best way to deal with
the challenge of climate change. Australia's international climate change
obligations are all framed in terms of quantity reductions in emissions. For
that reason, the CPRS involves setting a quantitative target for emissions
reductions. Under other approaches such as the McKibbin-Wilcoxen model or a
carbon tax, the Government would not be able to control directly the volume of
emission reductions or provide support to the community and business.
The most established emissions trading scheme is the
27-member European Union Emissions Trading Scheme, introduced in 2005. The
EU-ETS is currently in its second phase (which runs from 2008 to 2012). In the
United States, President Obama has confirmed he is committed to the
introduction of a cap-and-trade emissions trading scheme to reduce greenhouse
gas emissions by 80% below 1990 levels by 2050. A draft Bill to establish an emissions
trading scheme is progressing through the US Congress. The New Zealand
parliament passed legislation in September 2008 introducing a mandatory
national cap and trade emissions trading scheme. The New Zealand Government is
currently reviewing the design of its emissions trading scheme, but has
reaffirmed its commitment to emissions trading.
The Opposition has argued that Australia should wait until
after the United States has passed emissions trading legislation, because it
will be the "benchmark" for emissions trading schemes around the
world. We reject this view. The CPRS has been designed to suit Australia's
economy and to allow our scheme to link with other schemes internationally. It
will form part of a network of linked emissions trading schemes around the
Some have asserted that the current US draft bill provides
more assistance to emissions-intensive trade-exposed industries than the
Australian scheme does. This is incorrect. The Waxman-Markey draft bill has set
a hard cap on allocations to these industries at 15% of total permits in 2014.
The number of permits that will be allocated to these industries over
subsequent years will be directly linked to the decline in the US cap on
emissions, with no provision for increased allocations in relation to growth in
these industries. The Waxman-Markey bill does not give more certainty to
trade-exposed firms than does the Carbon Pollution Reduction Scheme.
The CPRS legislation provides sufficient flexibility to the
Minister to set the scheme caps and gateways by regulation after agreement is
reached at the UN Climate Conference in Copenhagen. In addition, the Australian
scheme – including levels of assistance to trade-exposed industries – will be
periodically reviewed in light of international developments.
The scheme will not damage the Australian economy
Opposition members of the Committee argued that the CPRS
will cause unacceptable damage to the Australian economy, particularly to
export industries and to carbon-intensive industries such as coal-mining,
electricity generation and cement manufacturing. We do not share this view.
Although we acknowledge that the necessity to reduce greenhouse gas emissions
poses serious challenges to these and other industries, we believe that with
appropriate assistance all these industries, and the economy as a whole, will
adapt to the requirements of a carbon-constrained economy, and that the economy
as a whole will continue to have robust growth.
We note that Treasury modelling presented to the Committee
showed that the Australian economy will continue to grow strongly as we reduce
carbon emissions. It also showed that the earlier Australia acts, the lower the
cost of action will be. Conversely, the longer we delay, the more damage we
risk to the Australian economy. We know from the Treasury modelling that many
of Australia's key industries will become more, not less, competitive, in a
We accept the evidence put before the Committee that when
the CPRS is in place, average annual GNP growth will only be one tenth of one
percent less than it would be if no action was taken to tackle climate change.
In all scenarios modelled by Treasury, total employment in the economy grows
strongly over the years to 2020 and 2050 with the CPRS. We also note the CSIRO's
modelling, which concluded that achieving a rapid transition to sustainability
would have little or no impact on national employment.
Critics of the Government's scheme have been very selective
in their use of the economic evidence put before this and other inquiries into
the Carbon Pollution Reduction Scheme. While they have been quick to highlight
claims made by some industry lobbyists that the scheme will damage some
industries, they have ignored testimony from industries which will benefit from
In particular they have ignored the witnesses who noted that
the Scheme will stimulate a rapid growth in "green jobs," not only by
creating new industries but through the "greening" of traditional
industries. Dr Heinz Schandl of the CSIRO told the Senate Economics Committee
The number of jobs will grow, both in business-as-usual and
in a scenario which takes into consideration all the things that have been
described in the green paper that would happen in the emissions trading scheme.
Overall, the number of jobs will increase over the next two decades—2.5 to 3.3
million new jobs, and 230,000 to 340,000 of these new jobs are in those sectors
which we have identified as high-impact sectors, with regard to resource use,
energy use and emissions.
On 4 May, the Government introduced a range of measures to
respond to the global recession, including a global recessional buffer applied
to the free permits for emissions-intensive trade-exposed industries, a
one-year delay to the start of the scheme, and a one-year fixed price period.
We welcome these measures, which provide further transitional support to allow
businesses to adjust to a carbon-constrained economy.
Climate policy and employment
On 22 May, the Minerals Council of Australia released a
report it had commissioned from Concept Economics; the aim of which was to "address
the lack of sub-sector and local community impacts and to provide a realistic
picture of the impact of the proposed ETS on economic activity and jobs at a local
level in regional Australia – focusing on the employment impact in the minerals
The report gained widespread media coverage, much of it alarmist and highly
The source of much of the inaccurate reporting of the
Minerals Council report was a media release issued by the Minerals Council on
the evening before the release of the report. According to the media release:
The Concept Economics modelling shows that 23,510 direct jobs
will be lost across Australia's minerals industry by 2020 and 66,480 by 2030.
The 2020 figure represents an 11% drop in overall employment in the minerals
sector while the 2030 result is a 24% increase.
However the report itself says:
It is estimated that there will be approximately 23,510 less
people employed in the Australian minerals industry due to the imposition of
the proposed ETS than would have otherwise been the case. This
represents a fall in employment of 11% relative to the reference case.
The Chief Executive Officer of the Minerals Council, Mr.
Mitchell Hooke was questioned about this apparent definitional confusion during
a hearing of the Senate Economics Legislation Committee held in Canberra on 29
Senator PRATT—Mr Hooke, you have reported on your website a
growth of about 86,000 jobs from 2008 to 2020. Is that the business as usual
case that Dr Fisher was using?
Dr Fisher—I am unaware of what is on the Minerals Council
website. My reference case is the reference case that is generated by our
Senator PRATT—What were the numbers in your reference case?
Mr Hooke—Pretty damned close.
Dr Fisher—I do not know what those numbers are now.
Senator PRATT—If I take 86,000 jobs minus 23,000 jobs I have
still got a growth of about 63,000 jobs in that period across the sector.
Mr Hooke—Let us go back and do them, since you have directed
the question to our work, which is a bit hard for Dr Fisher. We had the
National Institute of Labour Studies give us an estimation of what numbers of
jobs we would need to create if we were to maintain market share. As a 2020
Vision project analysis we said, 'If we were to meet projected global demand by
2020 and Australia was to increase its supply, what level of supply would we
need to increase and what would that mean in terms of jobs? ' They came out
with a figure of 86,000. Back then it was on about 120,000-plus people we
employed. When you put that 86,000 on a projected basis on top of the 142,000,
which is an increase over the last five years of some 60,000-odd jobs already,
and then you look at what Dr Fisher has done and you say, 'If there's an 11%
fall relative to the reference case' and you add the figures together, they are
actually not far off being similar.
Senator PRATT—That goes back to the point. What has been
reported in the media are massive job losses, but we keep losing the tagline
relative to what would otherwise have been the case, which is that 86,000 jobs.
Mr Hooke—That is our work. You asked me how it related to Dr
Fisher's work. I am saying it is approximate. You cannot put words into Dr
Senator PRATT—No, but whatever your relative baseline is we
are still looking at growth across the sector.
Mr Hooke—With great respect, we are not suggesting this is
scorched earth. We know we are going to continue to grow.
While there remains some uncertainty about just what the
Minerals Council's employment reference case is, on the conservative side it
appears to be aggregate employment growth of around 80,000 new jobs in the
minerals sector to 2020 in a business as usual scenario.
It is clear from the exchange above and from any reasonable
reading of the Minerals Council report that, contrary to alarmist predictions
of major job losses in the minerals sector relative to today, employment in the
minerals sector in the period to 2020 is likely to grow by the order of 55,000
to 60,000 jobs. Applying the multiplier adopted by the Minerals Council in its
report, total employment in regions reliant on mining and processing would
grow, at a conservative estimate, by a further 110,000 jobs.
It is misleading to present potential future jobs that are
not created in one sector of the economy as "jobs lost". To do so not
only offers a misleading picture of the effects of an ETS, but fails to take
account of the fact that capital and employment moves between industries and
regions all the time. Indeed, the available evidence suggests that the recent
mining boom resulted in significant movement of labour from all over the
country into regions with high levels of mining activity, resulting in skill
shortages in other industries and regions.
The capacity of the labour market to adapt to structural
change appears to be ignored in much of the debate about the CPRS. In the
decade to November 2007, employment in rural industries dropped by almost
100,000; employment in manufacturing dropped by almost 50,000 and employment in
the wholesale trade dropped by 35,000. Yet over this period the unemployment
rate fell from 8.5% to 4%. These sectoral changes were brought about by a range
of factors – public policy, drought, changed capital flows, international
competition, to name just a few – all of which bring about structural change in
the wider economy and result in the relative share of employment changing from
one sector to another.
While not everyone will welcome these changes, there are
many actions governments can take to cushion the transitional effects of such
changes. The Government is taking such action, providing very substantial
assistance to the mining industry, especially coal mining, to adjust to change
in the relative price of their products. The Government is providing $100
million to accelerate the deployment of commercial scale carbon capture and
storage projects through the Global Carbon Capture and Storage Institute and
$2.4 billion in Commonwealth funding for carbon capture and storage that will
help leverage $1 billion in industry funding and a further $500 million in
state government funding. In addition, the Government has outlined $750 million
in transitional assistance targeted at those "gassy" coal mines that
will incur higher than normal carbon price liabilities.
Throughout the inquiry, Coalition Senators and others have
sought to downplay and ridicule the very significant growth in jobs throughout
the economy that will occur as a result of the transition to a low carbon
economy. However, many witnesses and submitters to this and other Senate
Committee inquiries touching on this subject have spoken of the potential for
jobs growth under an ETS regime and a mandatory renewable energy target:
There are very significant opportunities for enterprise and
employment, provided a signal is sent to assure people who might be prepared to
make those investments and take people on—that there is a future for them. I do
think there is going to be a transition, and I do think there is going to be
some time where communities go through some changes, but there have to be huge
chances for employment.
I think the Clean Energy Council estimated that around 50,000
jobs were required just for the 20% renewable energy target.
The model actually has rapid growth in green jobs...
A number of witnesses noted that much of the growth in
employment would result from a greening of traditional industries, rather than
jobs growth in necessarily new low carbon industries:
In the main we do not see there is a dramatic shift from blue
collar skills to "green collar" skills. A tradesperson doing
maintenance on a wind turbine for a wind generation farm would have the same
skill sets to do a gear box on a coal crusher.
The number of jobs will grow, both in business-as-usual and
in a scenario which takes into consideration all the things that have been
described in the green paper that would happen in the emissions trading scheme.
Overall, the number of jobs will increase over the next two decades—2.5 to 3.3
million new jobs, and 230,000 to 340,000 of these new jobs are in those sectors
which we have identified as high-impact sectors, with regard to resource use,
energy use and emissions.
The committee heard that in the United Kingdom, business is
much more positive about the prospect of employment growth:
It is of no surprise that the CBI [Confederation of British
Industry] should be an advocate for economic instruments to reduce greenhouse
gas emissions across the UK economy, and it is of no surprise to see them argue
for greater clarity and a longer term framework for public policy to reduce
emissions, because the CBI wants to see UK business position itself to be a
winner from the technological and business innovation associated with coping
with climate change.
The Chief Scientist for Australia, Professor Penny Sackett,
in a speech to participants in the 2009 Science Meets Parliament on 17 March
2009, outlined the contribution science will make to the creation of new jobs
and new technologies, leading to new jobs throughout the economy:
Thanks to investment made over the last many, many decades in
basic and applied research, nearly every area of science and technology can
contribute. Mathematicians will continue to refine the algorithms that solve
the complex set of equations that describe the Earth system. Marine scientists
will collect more data on the impact of climate change on the oceans, in
particular the role of our southern oceans in the great circulatory system of
the planet that differentially distributes heat to coastlines around the world.
Biologists and ecologists will monitor the effect on plant
and animal life, and propose ways for reducing the negative impacts where
possible. Astronomers and space scientists will study the natural greenhouse
effect on other planets and monitor changes in the earth with remote sensing.
Physicists and electrical engineers will improve solar energy solutions already
in massive use in the United States, Europe and elsewhere, and no doubt invent
some of their own.
Mechanical engineers, aerodynamicists and material scientists
will refine the windmills that already provide 20% of Denmark's power. In some
countries, the production of nuclear energy will increase. Microbiologists and
geneticists will work to develop crop varieties that are more adaptable to the
Architects and building engineers, together with individual
citizens and businesses, will work on efficiency measures that will decrease
the end use of energy, thereby reducing costs, saving CO2 emissions, and
increasing comfort. Forestry scientists and agriculturalists will improve land
management techniques to increase the ability of the land to absorb carbon.
Chemists and industrial scientists will refine techniques for
coal and gas-fired electricity generation to reduce emissions. More efficient
and portable fuel cells will be developed and put into routine use. Engineers
and technologists will work feverishly to test whether carbon geosequestration
can be effectively applied at the massive industrial scales required.
More high voltage DC power lines will be installed to
transport large amounts of energy over long distances more efficiently. All of
these things can happen and need to happen immediately. For the medium term,
soil scientists and agronomists will be examining how carbon can be stored in
soils, including the possible use of biochar to act as a carbon sink and
improve land productivity. Electrical engineers and software scientists will be
developing smart power grids that can put power where it is needed when it is
Second- and third-generation biofuels will be investigated as
an alternate fuel source by biochemical engineers. And in the longer term
still, geologists and geoengineers will study deep geothermal "hot rock"
energy while theoretical and experimental physicists continue to work on
nuclear fusion as alternate source of energy. Can this all be done? In fact,
much of it is already being done around the world in regions that have realised
the social and economic advantages of leading the transition to the new
We note that a number of reports and forecasts, produced
both in Australia and overseas, that present a very positive future for job
creation under the Government's climate policy settings, provided that the
necessary supporting measures are implemented.
In a June 2008 report to the Dusseldorp Skills Forum,
the CSIRO examined the skills, innovation and workforce dimensions of the
transition to a low carbon economy with a particular focus on labour market
effects involved in achieving meaningful cuts in greenhouse emissions. Key
results of the research include:
Well designed policies can substantially decouple economic growth
from environmental pressure, so that living standards continue to increase at
current rates (avoiding blockages that might otherwise occur), while Australia's
national greenhouse emissions are reduced over time.
Achieving a transition to sustainable greenhouse emissions levels
would have little or no impact on national employment, with projected increases
in employment of 2.5 to 3.3 million jobs over the next two decades.
Employment in sectors with high levels of emissions will also
grow strongly, with projected increases of more than 10% over ten years. This
will add 230,00 to 340,000 new jobs - in addition to normal labour turnover –
in the transport, construction, agriculture, manufacturing and mining sectors.
Employment in construction and transport services is expected to grow faster
than the national average.
The report also concludes that the transition to a
low-carbon economy will require a large-scale mobilisation of skills and
training, and that attention must be paid to both incentives for environmental
performance and the skills required to deliver this performance.
We reject the gloomy and at times deliberately misleading
prognoses for employment bandied about by those who are opposed to taking
action on climate change or who seek to protect the competitive advantage
having no carbon price confers on existing technologies over new, emerging
technologies in which a carbon price is effectively embedded.
The economic implications of not passing the CPRS
Delaying action on climate change is economically
irresponsible. Delay will have a range of negative effects on the Australian
economy, including deterring investment decisions and delaying business
planning decisions, where the price of carbon is a feature of those decisions.
In 2007, the Shergold Report expressed the fear that "waiting
until a truly global response emerges before imposing an emissions cap will
place costs on Australia by increasing business uncertainty and delaying or
losing investment." Evidence before the Committee indicates this fear was
Business is fully cognisant of these difficulties,
understands that they affect a wide range of both low-carbon and emission
intensive industries, and expects the Australian Parliament to take action to
resolve them this year:
The issue that we face is that there is a strong political
will and popular will to have Australia act on climate change. In view of that
we assess that business needs to know for investment certainty reasons and
business planning reasons—it needs to get a better picture of what that policy
direction will be in order to make investments. This applies in for example the
renewable area; it applies in the electricity generation area; it applies in a
whole lot of area... Our position is that we ought to have legislation this
Emission intensive industries need the benefit of a
framework within which they can acknowledge their carbon liabilities. In
particular, the business community is concerned that a failure to act could
have adverse implications for the security of Australia's electricity supply:
We think that in order to secure ongoing electricity supply
in Australia we need to make investments very soon. That has been quite
apparent for some time.
Those with an interest in the development of low carbon
industries are also concerned that business opportunities will be missed if the
Australian Parliament fails to provide a framework to guide investment
decisions in those industries:
In many ways, if Australia does not get on board this train
soon, we will be left behind. Our tragic history is one of coming up with the
good ideas, but allowing that to go overseas for jobs and profit. We have seen
that in solar technology and other technologies.
The dangers of uncertainty for business were clearly
identified by the submission of the Australian Bankers Association (ABA) to the
Climate change has considerable economic, social,
environmental and business risks. Continuing uncertainty is disrupting the
efficiency of existing markets as well as creating difficulties with regards to
financing terms and investment decisions. Australia needs leadership and early
action to provide business, investment, operational and market certainty. It is
important for Australia to take action now and minimise the impacts of
The ABA also clearly identified business opportunities that
will be lost if action is not taken now:
Climate change also presents considerable opportunities.
Trading, product creation and ancillary services (including risk consulting,
funds management, legal and accounting) should be developed as export services
regionally and globally. ... It is important for Australia to take action now and
take advantage of the opportunity to position itself as a 'carbon hub' within
the Asia-Pacific region.
Australian businesses know that climate regulation is
inevitable. But ongoing uncertainty about what form that regulation will take
is imposing real costs today. Uncertainty is the enemy of investment, and
therefore of job creation. Electricity generation investments are not being
made because the future price of carbon cannot be factored in. Low pollution
jobs are not being created today because businesses can't be certain about the
climate policy framework. We are holding back the inevitable transformation of
the economy – and that means it will be more costly later.
Ongoing uncertainty about how carbon will be priced will
have a deadening effect on our industrial innovation and competitiveness.
Australia will lack a coherent framework to guide the economy through the
transition to a low carbon economy. Rewards could be distorted – industries of
the future will struggle to get off the ground while those that must adapt will
put off essential changes.
Australia will take on binding commitments at Copenhagen and
will need a policy that is tailored to our economy to fulfil those commitments.
The alternatives to introducing emissions trading are a distant second-best and
much more costly. Once again, business is fully cognisant of this:
Our position is that, if we do not see a carbon price signal
emerge fairly quickly, we will be inundated with other forms of regulation that
will cost the economy more than if we had a market based approach.
Without the CPRS in place, Australia would need to adopt
other measures to meet the targets that Australia will agree to at Copenhagen.
Business-unfriendly measures like complex additional project approval processes
or regulating emissions levels industry-by-industry will raise the cost of
reducing Australia's emissions – and those costs will be borne by all
Australians through higher prices and a lower standard of living.
The solution is to give Australian industry every
opportunity to adapt swiftly and seamlessly to the reality of a
carbon-constrained future. Passage of the CPRS legislation will encourage
industry to continue to improve its performance in relation to emissions and to
take advantage of emerging opportunities in a carbon-constrained environment,
while supporting emissions-intensive trade-exposed (EITE) industries to enable
them to maintain their competitiveness through the transition.
1.1 That the Senate pass the CPRS bills without delay and without
1.2 That the Government fast-track detailed design and roll-out of
the Government's proposed Climate Change Action Fund once the CPRS legislation
has been passed by the Parliament, in order to help Australian businesses play
their full part in creating the low-pollution jobs of the future.
That the Government continue to work with the NSW and ACT Governments to
clarify, as a priority, transitional arrangements for power generation projects
from waste methane which may be affected by the possible cessation of the NSW
GGAS and similar programmes.
Senator Doug Cameron
ALP, New South Wales
Senator David Feeney
Senator Mark Furner
Senator Louise Pratt
ALP, Western Australia
Appendix: Domestic Climate Change Policies of Major Economies
Note on interpreting greenhouse gas
Analysis of global
emission trends is hampered by the lack of comprehensive high-quality data.
Reliable annual national figures are available for carbon dioxide (CO2)
emissions from fossil fuel use. Data for other sources of CO2
(particularly deforestation) and for other greenhouse gases (such as methane
and nitrous oxide) are much more limited. 2000 is the most recent year for
which a complete set of emissions data is available, so it serves as the
baseline for comparing national emissions in this document.
In 2000 Brazil's total greenhouse gas emissions totalled
2,313.8 Mt CO2-equivalent (CO2-e), comprising 5.7% of global emissions, making
it the 5th largest emitter. Fifty-nine% of Brazil's greenhouse gas emissions in
2000 were from deforestation. Brazil's CO2 emissions (not including land use,
land use change and forestry) grew by around 70% between 1990 and 2005.
ranks relatively low in energy-related carbon emissions as it derives the
majority of its energy from hydropower and biomass.
Brazil's high usage of biofuels stems from its concerns about energy security
after the first oil crisis.
domestic mitigation policies include a tax incentive for buyers of cars with
low-powered engines, production and use of ethanol and sugar-cane bagasse (the
fibrous residue remaining after sugarcane stalks are crushed to extract their
juice), development of a natural gas industrial market, and use of alternative
energy sources for power generation. Mandatory efficiency standards for
household appliances, lighting products and motors; appliance and lighting
standards were enacted in 2001.
On 1 December 2008, Brazil announced targets to reduce
annual deforestation rates with an ultimate goal of limiting the annual
deforestation rate to around 5,500 square kilometres by the end of 2017.
On 13 April 2009, the Brazilian Environment Ministry
announced measures that will make operational licenses for new fossil fuel
power stations contingent upon commitments to offset a portion of the stations'
emissions by planting trees. This follows wide-spread criticism from
environmental groups of Brazil's 10-year energy plan, published in January
2009. The plan aims to increase domestic generation capacity by building 68
fossil fuel power stations, mainly run on coal and oil, to prevent future power
shortages. This expansion would reportedly cause a near tripling of Brazil's
emissions from the energy sector by 2017.
In 2000 Canada's greenhouse gas emissions totalled 765.5 Mt
CO2-e, comprising 1.9% of global emissions, making it the 11th largest emitter.
Canada's CO2 emissions (not including land use, land use change and forestry)
grew by around 27% between 1990 and 2005.
Canada is projected to exceed its Kyoto Protocol target of
94% of 1990 emissions levels (2007 emissions were 126% of 1990 levels).
Canada has publicly stated that it is unlikely to meet its target through
domestic measures, but it will not purchase international credits through the
Protocol's flexibility mechanisms to do so.
The Government has set a long-term domestic target of
reducing emissions by 20% from 2006 levels by 2020, and by 60 to 70% of 2006
levels by 2050.
In October 2006, Canada announced its intention to introduce
a domestic emissions trading scheme by January 2010, based on reducing the
emission-intensity of major industrial sectors including electricity, oil and
gas, iron and steel, cement, and chemicals and fertilizer.
Development of the proposed scheme has now been halted, and Canada is now
working with the United States to develop a co-ordinated approach. At the G8
Environment Ministers Meeting in Siracusa, Italy, in April 2009, Canada's
Environment Minister Jim Prentice announced that Canada will have a suite of
emissions reduction policies in place in time for the Copenhagen round of
Several Canadian provinces have also joined North American
regional emissions trading schemes (see United States section) and one
province, Alberta, has its own scheme. Starting in July 2007, Albertan
facilities that emit more than 100,000 tonnes of greenhouse gases a year are
required to reduce their emissions intensity by 12% under the Climate Change
and Emissions Management Amendment Act. Companies have three ways to meet their
reductions: they can make operating improvements; buy Alberta-based credits; or
contribute to the Climate Change and Emissions Management Fund.
In 2000 China was the 3nd largest greenhouse gas emitter in
the world behind the United States and the EU (27), accounting for 4,771 Mt
CO2-e or 12% of global emissions. Since then, China has overtaken the US as the
world's largest emitter: the European Environment Agency estimated China's
emissions were 14% higher than those of the United States in 2007.
China's National Climate Change Program released in 2007
outlines steps China would take to address climate change. Strategies include
increasing research and development; improving energy efficiency and building
construction; developing renewable and nuclear energy; increasing forest cover,
improving industrial policy and agriculture; and, improving institutions and
policies. The current 11th Five-year Plan focuses on reducing energy intensity
(energy per unit of GDP), with a target of 20% reduction within 5 years. China's
renewable energy law which came into effect on 1 January 2006 aims to increase
the share of renewable energy in the energy mix from one% (currently) to 15% by
2020. These measures are not equivalent to a Kyoto Protocol-style target .
Of China's 4 trillion yuan November 2008 economic stimulus
package responding to the global financial crisis, approximately 1.5 trillion
yuan targets green themes, including rail, water infrastructure, low emissions
vehicles, and environmental improvement. However, the bulk of the package is
devoted to infrastructure projects which will boost cement, steel and glass
production, all major sources of China's emissions.
In 2000, the EU contributed approximately 12% to global
emissions, or 4,894.7 Mt CO2-e, with Germany, the UK and France the largest
emitting member states.
Under the Kyoto Protocol, the EU (comprising its then 15 member states) signed
up to an eight% reduction target (i.e. 92% of 1990 level emissions) and with
the use of flexibility mechanisms is likely to meet this target.
The EU considers that global warming must be limited to no
more than 2oC from pre-industrial levels, and supports a global goal of 50%
reductions from 1990 emissions by 2050, with developed countries contributing
by reducing their emissions 60 to 80%.
The EU is committed to cutting EU emissions by 20% on 1990
levels by 2020 or 30% if comparable efforts are made by other developed
countries. The Climate Action and Renewable Energy Package, agreed in December
2008, sets out the contribution expected from each Member State to meeting the
EU target and proposes a series of measures to help achieve them: revising the
European Union Greenhouse Gas Emission Trading Scheme (EU ETS), establishing
emission reduction targets for non-ETS sectors (agriculture, building and
transport), adopting an EU-wide renewable energy target (20% of energy to come
from renewable energy sources by 2020), and increased demonstration of CCS
On January 28 2009, the European Commission proposed 3.5
billion Euros for investment in CCS with 1.25 billion Euros assigned to the
direct funding of eleven projects across the Union. The direct funding will
focus on the coal fired power plants located in Germany, Poland, The
Netherlands, Spain and the United Kingdom.
The EU Emissions Trading
Scheme (EU ETS)
The EU ETS is a mandatory cap and trade emissions trading
scheme covering 27 nations in the EU and around half of all EU emissions
(approximately 10,000 installations in the energy and industrial sectors). The
scheme commenced in 2005 and is now in second phase (2008-2012).
Revisions to the design of the scheme were agreed as part of
the climate and energy package and will take effect in Phase III (2013-2020),
including: expanded coverage to additional industrial sectors and aviation;
phase out of free allocations to electricity generators; a higher level of
permit auctioning; and increased limits on the use of Kyoto Protocol
In 2000 France's greenhouse gas emissions totalled 535.4 Mt
CO2-e, comprising 1.3% of global emissions, making it the 14th largest emitter.
France's CO2 emissions (not including land use, land use change and forestry)
grew by around 8% between 1990 and 2005.
France has one of the lowest CO2 rates of any
OECD nation, with up to seventy-eight% of its electricity coming from nuclear
France's target under the EU 'bubble agreement' is to limit emissions to 1990
levels over the 2008-2012 period. Based on latest projections, France's
domestic emissions will be one percentage point over 1990 levels, so France is
likely to purchase international credits to meet its target.
France has not announced a specific 2020 target as its
contribution to the EU's collective 2020 target.
In addition to participating in the EU ETS, France's climate
change policies include a target for an average reduction in energy intensity
of its economy by 2% per year between 2005 and 2015 and 2.5% thereafter up to
2030. France has also set a long term target to reduce emissions by 75% on 1990
levels by 2050.
In addition, France has a target to source 10% of its energy
from renewable sources by 2010. This renewable energy policy is supported by a
feed-in tariff mechanism for photovoltaic, hydro, biomass, sewage and landfill
gas, municipal solid waste, geothermal and offshore and onshore wind, and by a
tender system for large renewable projects.
In 2000 Germany's emissions totalled 1006.4 Mt CO2-e and
accounted for 2.5% of global emissions, making it the 9th largest emitter.
Between 1990 and 2005 Germany's CO2 emissions (not including LULUCF) decreased
This drop in emissions is almost solely due to the collapse of East German
industry after 1996.
Under the EU's 'bubble arrangement' to meet its collective
Kyoto Protocol target, Germany's target is to reduce its greenhouse gas
emissions to 79% of 1990 levels by 2012. It is projected to achieve a further
2% below this target.
Germany has domestic targets to reduce its emissions (in
addition to its role in the EU ETS) from 1990 levels by 40% by 2020 and 80% by
On 13 February 2009, Germany's Ministry for the Environment,
Nature Conservation and Nuclear Safety released 'New thinking – new energy',
outlining the initiatives it needs to take to cut emissions by 40% below 1990
levels by 2020. These initiatives focus on energy efficiency and increased
renewable energy uptake. The document also outlines the conditions under which
Germany expects it could meet its emissions targets beyond 2020, including: a
global emissions trading scheme linked to the EU ETS; half of all coal-fired
power plants fitted with CCS; a 30% cut in transport emissions against a 2005
baseline; a 21% cut in power consumption against a 2005 baseline; and a 50%
share of renewable power in electricity production.
On 1 April 2009, the German Federal Cabinet adopted a draft
act on CCS. The act is designed to grant operators of CCS plants the "necessary
planning and investment security for pilot and demonstration plants."
Germany was the key proponent of the International Renewable
Energy Agency (IRENA), officially established in Bonn on 26 January 2009. To
date, 78 countries have signed the IRENA Statute, including 28 African, 27
European, 16 Asian and 7 Latin-American countries. The Prime Minister announced
Australia's intention to join IRENA on 17 May 2009.
In 2000 India's greenhouse gas emissions totalled 1,551.9 Mt
CO2-e, comprising 3.8% of global emissions, making it the seventh largest
emitter. India's CO2 emissions almost doubled between 1990 and 2005.
As the second largest beneficiary of CDM projects, India
considers hosting such projects to be the key role for developing countries in
global mitigation efforts. However India has also implemented a range of
policies focused on energy efficiency and increasing renewable energy including
removing subsidies and promoting technology upgrades and fuel-efficiency.
India has set a renewable energy goal of 10% of new power
generation capacity by 2010 and commenced a national hydropower initiative
aimed at producing an additional 50,000 MW of hydropower by 2012. India has
also introduced an afforestation policy which aims to increase forest and tree
cover across the country from the existing 23% to 33% by 2012.
India is a key member of the G77 and the 'G5' major
developing countries (with China, Brazil, South Africa and Mexico) and is
adamantly opposed to developing countries taking on binding international
climate change mitigation obligations. India is prepared to make a commitment
that its per capita emissions (currently under one tonne CO2) would never rise
above those of the developed world (approximately 11 tonnes CO2).
In 2000 Indonesia's emissions totalled 3066.3 Mt CO2-e and
accounted for 7.5% of global emissions, making it the 4th largest emitter.
Deforestation is the largest source of emissions in Indonesia: excluding land
use, land use change and forestry reduces Indonesia's total emissions to around
502 Mt CO2-e, representing 1.4% of global emissions. In 2000, Indonesia was the
world's largest emitter from the land use change and forestry sectors (2,563 Mt
CO2, 34% of global emissions from land use change and forestry). Indonesia's
CO2 emissions (not including land use, land use change and forestry) grew by
133% between 1990 and 2005.
On 29 May 2008 Indonesia announced a target to reduce energy
sector emissions 17% below 2006. However the target is dependent on separate
moves to shift the energy mix away from oil and on access to clean
Indonesia is a leader amongst developing countries on
international efforts on reducing emissions from deforestation and forest
degradation (REDD). Indonesia is working towards the development of a national
regulation framework for activities on REDD, which will underpin how REDD
activities in Indonesia are undertaken and financed. A growing number of REDD activities
are already being funded in Indonesia by a range of donor organisations
including countries, non government organisations and the private sector.
In June 2008 Prime Minister Rudd signed the Indonesia –
Australia Forest Carbon Partnership, with President Yudhoyono, formalising
Australia's cooperation with Indonesia on REDD. The Partnership includes
development of the world's first large-scale REDD demonstration activity, the
Kalimantan Forests and Climate Partnership.
At the Poznan Climate Change Conference in December 2008,
Australia and Indonesia made a joint submission on REDD which was well received
as a leading example of developing-developed country cooperation in UNFCCC
In 2000, Italy's emissions totalled 531 Mt CO2-e and
accounted for 1.3% of global emissions, making it the 15th largest emitter.
Italy's CO2 emissions (not including land use, land use change and forestry)
grew by around 14% between 1990 and 2005.
Italy's target under the EU 'bubble agreement' is to reduce
emissions by 6.5% on 1990 levels over the 2008-2012 period. Based on latest
projections, Italy's domestic emissions will exceed its target by 14 percentage
points, so Italy is likely to purchase international credits to meet its
Italy has not announced a specific 2020 target as its
contribution to the EU's collective 2020 target. Within internal EU
negotiations on its climate change and energy package Italy advocated strongly
for a number of provisions to be weakened as a result of the global financial
As current G8 President, Italy chaired the G8 Environment
Ministers Meeting in Sicily in April 2009, at which Australia was represented
by the Minister for Agriculture, Fisheries and Forestry, Tony Burke. Italy will
also host a Major Economies Forum meeting at leaders level in conjunction with
the G8 Summit in L'Aquila, Italy, from 8-10 July.
In 2000, Japan was the world's 8th largest emitter of
greenhouse gases, with emissions of 1,317 Mt CO2-e, approximately 3.2% of
Japan's emissions are currently 7.7 percent above 1990
levels. To meet its Kyoto target of a 6% reduction, Japan will need to reduce
emissions by 14 percentage points over the next four years. Japan has
introduced additional measures (see below) to reduce emissions to 0.8 1.8%
below 1990 levels. The remaining 4.2 5.2 percentage points would be made up
through carbon sinks and international credits.
Examples of additional measures are the promotion of
voluntary emissions reduction measures, improvement of energy-efficiency in
homes, complete energy efficiency in factories and offices, improvement of
fuel-efficiency in cars, promotion of emissions reduction measures in
small-to-medium sized enterprises, and promotion of measures for alternative
On 9 June 2008 former Prime Minister Fukuda announced a
domestic emissions reduction target of between 60 and 80% on current levels by
2050. Current Prime Minister Taro Aso affirmed Japan's commitment to be a
leader on climate change at a forum convened by the United Nations Secretary
General in September 2008.
Japan is expected to announce mid-term emission reduction targets in mid 2009.
The Japanese Government continues to face domestic criticism
that its climate change policies only cater to companies worried about
With elections to take place in September 2009, pressure is mounting on the
current Government to announce stronger targets after the main opposition
party, the Democratic Party of Japan (DPJ) recently tabled a bill calling for
cuts of 25% from 1990 levels by 2020 .
Former Prime Minister Fukuda announced in June 2008 the
experimental introduction of an ETS with the inclusion of 'as many sectors and
companies as possible'.
Japan has trialled emissions trading through a number of
schemes, including J-VETS (introduced in 2005) and more recently a voluntary
emissions trading scheme which began in October 2008 covering around 500
businesses. A number of regional schemes are also proposed, including by the
Republic of Korea
In 2000 the Republic of Korea's (ROK) greenhouse gas
emissions totalled 511.2 Mt CO2-e, comprising 1.25% of global emissions, making
it the 17th largest emitter. ROK's CO2 emissions have almost doubled between
1990 and 2005.
While ROK is not included in the UNFCCC's Annex I (developed country) grouping,
as an OECD member, it is expected to take on more ambitious climate policies
than most developing countries.
The ROK is showing an increased willingness to play a more
prominent role in international climate change action, mostly as a result of
the enthusiasm of President Lee Myung-bak. In September 2008, the ROK Government
tabled a framework legislation package on climate change that includes
provisions for an emissions trading scheme, greenhouse gas measurement and
reporting, and foundations for boosting clean technology and renewable energy.
At that time, President Lee announced plans to invest approximately AUD94
billion over the next five years towards initiatives including clean coal,
solar, fuel cell development and nuclear power. In January 2009, ROK announced
a plan to increase the share of renewable energy to a projected 11% share of
the energy mix by 2030. The ROK projects that energy-related emissions will
peak in 2016.
In February 2009, President Lee established a Green Growth
Commission to implement his national vision for "low carbon, green growth"
and to advise on the potential introduction of a cap and trade scheme in 2013.
Korea signed up as a founding member of the Global Carbon
Capture and Storage Institute (GCCSI) earlier this year.
In 2000 Mexico's greenhouse gas emissions totalled 670.8 Mt
CO2-e, comprising 1.6% of global emissions, making it the 12th largest emitter.
Mexico's CO2 emissions grew by around 35% between 1990 and 2005.
While Mexico is not included in the UNFCCC's Annex I (developed country)
grouping, as an OECD member it is expected to take on more ambitious climate
policies than most developing countries.
Mexico has recently taken a number of notable steps forward
on climate change. Mexico has committed to implementing specific activities
under its National Climate Change Strategy and Special Climate Change Program,
including an Inter-American Development Bank financed national study on the
economic impact of climate change (based on the Stern Review methodology),
measures to mitigate that impact, and climate change action plans in more than
10 states in Mexico.
In December 2008, Mexico announced it aims to cut emissions
by 50% on 2002 levels by 2050, making it one of the first developing countries
to commit to a long-term target. Mexico's 2009 'Special Program on Climate
Change' also includes a goal of reducing its emissions by 99 Mt CO2-e by 2012.
Recent media reports indicate that Mexico is also
considering implementing a domestic cap-and-trade system.
In 2000 Russia's greenhouse gas emissions totalled 1959.7 Mt
CO2-e: 4.8% of global emissions, making it the 6th largest emitter. Russia's
CO2 emissions (not including land use, land use change and forestry) decreased
by around 30% between 1990 and 2005.
Russia's emissions fell dramatically with the economic collapse of the early
1990s, however emissions have been on an upward trend since 2000. Russia has a
strong interest in the Kyoto Protocol's 'Joint Implementation' mechanism, under
which it can sell its excess Kyoto credits to other developed countries which
will fall short of their Kyoto targets.
Russia's domestic climate change policy is largely centred
on the energy efficiency elements of its National Energy Strategy which was
approved in August 2003. The Energy Strategy document outlines several main
priorities: an increase in energy efficiency and in renewable energy, reduced
impact on the environment, technological development, as well as an improved
effectiveness and competitiveness.
In June 2008, Russian President Dmitry Medvedev announced
the Government had approved funding for energy efficiency projects and
renewable energy and raised the possibility of regulations from 2010 aiming at
reducing consumption of natural gas in household heating. Medvedev indicated
efforts to boost energy efficiency could cut energy intensity in households and
industry by 40-50% but without specifying a time period.
Russia is also reportedly considering tax incentives for the development of
low-emission fossil fuel technology, and the removal of barriers to the
development of renewable energy.
Although Russia has not announced a 2020 target, it is
likely to argue strongly for conditions in a post-2012 outcome that would
ensure it continues to benefit from the emissions reductions that resulted
following its economic collapse in the 1990s – for example, continuation of
1990 or a similarly advantageous (ie – early) base year, and 'banking' of
credits for use in future commitment periods.
In 2000 South Africa's greenhouse gas emissions were 385.3
Mt CO2-e, accounting for 0.94% of global emissions and making South Africa the
world's 23rd largest emitter.
As a developing country, South Africa has emphasised that
sustainable development (including the creation of employment, alleviation of
poverty and provision of housing) sets the context for its climate change
policy response. It argues that mitigation efforts of developing countries will
depend on international funding and technology support.
In June 2008 South Africa released Long-Term Mitigation
Scenarios (LTMS) identifying scenarios for mitigation of climate change in
South Africa. This document recognises that South Africa is a high per-capita
emitter with relatively high emissions intensity figures. On a "business
as usual scenario", South Africa's emissions grow from 440 Mt CO2-e in
2003 to around 1600 Mt CO2-e by 2050.
The LTMS is considered as laying the foundation for the
development of a comprehensive national climate change policy. The policy is
expected to be finalised in late 2010 and would reflect any post 2012
commitments adopted by South Africa resulting from COP15 in December 2009.
In July 2008 the South African Cabinet announced a "peak,
plateau and decline" policy where greenhouse gas emissions stop growing by
2020-2025, stabilise for up to ten years and then decline in absolute terms. To
achieve these mitigation objectives, the Government plans to implement a number
of measures including:
accelerated energy efficiency (including mandatory targets) and
conservation measures across all sectors of the economy;
research and development funding focusing on carbon-friendly
increasing the price of carbon through an escalating CO2 tax or
an alternative market mechanism;
diversifying the energy mix away from coal and at the same time
shifting to cleaner coal;
setting targets for electricity generated from both renewable and
nuclear energy sources; and
exploring and developing carbon capture and storage (CCS) for
coal fired power stations and coal-to-liquid plants.
The next step in South Africa's policy development process
is the publication of a draft policy document in the form of a green paper in
In 2000 the UK's greenhouse gas emissions were 632.2 Mt
CO2-e. This comprised 1.6% of global emissions, making the UK the world's 13th
largest emitter. The UK has reduced its greenhouse gas emissions since 1990,
with CO2 emissions (not including LULUCF) falling by 5% between 1990 and 2005.
This reduction has mainly been driven by restructuring, especially in the
energy supply industry (national coal production virtually ceased and was
predominantly replaced by energy produced from gas); energy efficiency;
pollution control measures in the industrial sector and other policies that
reduced emissions of non-CO2 greenhouse gases.
On latest projections, UK emissions will be 7 percentage
points below its Kyoto Protocol "EU bubble" target of 87.5% of 1990
In October 2008 the UK announced a domestic commitment to
reduce emissions by 80% on 1990 levels by 2050. Further to this, on 20 April
2009 the UK released a mid-term emissions reduction target of 34% below 1990
levels by 2020. The UK has indicated that reductions are to be made at home and
has also suggested that it will toughen targets once a global agreement is in
The key piece of UK legislation on climate change is the UK
Climate Change Act 2008. The Act mandates the emissions reduction targets
listed above through a carbon budgeting system, which caps emissions over five
year periods all the way until 2050.
The UK intends to publish an energy and climate strategy by September 2009
which will set out policies on how the limits will be met for each of the
five-year carbon budget periods.
The Climate Change Act allows the UK to meet its carbon
budgets through the purchase of carbon credits corresponding to overseas
emissions reductions. The UK aims to meet the first three carbon budgets
without purchase of overseas credits outside of the EU ETS, reserving possible
credit purchase as a fallback option. In the 2009 Budget,
the UK announced over £1.4bn additional support for low-carbon sectors. Key
£375 million to support energy and resource efficiency in
businesses, public buildings and households over the next two years, and £70
million for decentralised small-scale and community low-carbon energy
£405 million to support low-carbon industries and advanced green
£525 million support to offshore wind through reform of the
Renewables Obligation. This is expected to support £9 billion of investment and
power up to 2.8 million homes
extending support for combined heat and power through climate
change levy exemptions, helping bring forward £2.5 billion of investment, and 3
GW of capacity by 2015
a new funding mechanism to support up to four carbon capture and
storage demonstration projects, and £90 million to fund detailed preparatory
On 23 April 2009, the UK announced that future coal-fired
power stations would only be built if fitted with CCS demonstration technology.
Within five years of CCS technology being independently judged as technically
and commercially feasible, all coal- fired power stations are to be retrofitted
with the technology.
The UK has a range of climate change initiatives implemented
over the last decade to contribute to achieving their emissions reduction
targets. Key measures include the climate change levy, emissions trading (as
part of the EU), and a carbon reduction commitment.
The Climate Change Levy is a tax on the use of non-renewable
energy in industry, commerce and the public sector. Climate Change Agreements
have been made with energy intensive industries (such as aluminium and paper
manufacturing) allowing them an 80% discount from the levy in exchange for
adopting targets for improving their energy efficiency or reducing carbon
The UK Emissions Trading Scheme, which commenced in 2002,
was the world's first economy wide greenhouse gas emissions trading scheme.
This scheme ended in December 2006 and the UK now participates in the EU ETS.
The Carbon Reduction Commitment aims to create incentives
for significant carbon abatement in non energy intensive sectors, such as large
commercial and public sector organisations, that are not covered by the EU ETS
or Climate Change Agreements. An introductory phase is due to start in January
UK power transmission network operator, National Grid,
recently pledged an emissions reductions target of 45% by 2020, with carbon
budgets implemented across all National Grid operations from 1 April 2009.
National Grid's efforts are designed to help the UK reach its 80% reduction
target by 2050 and 15% renewable energy target by 2020.
The US is officially the world's largest emitter of
greenhouse gases, though recent reports (see above) indicate that China has now
overtaken the US. US greenhouse gas emissions in 2000 were 6,442.8 Mt CO2-e,
comprising approximately 16% of global emissions. Between 1990 and 2005 US CO2
emissions (not including land use, land use change and forestry) grew by 20%.
President Obama has made climate change a priority for his
Administration - the President's 'New Energy for America' plan includes the
implement an economy wide cap and trade system;
fund the development and demonstration of a smart grid (energy
create 5 million new jobs by investing USD150 billion over the
next 10 years on clean energy research, development and demonstration,
including promoting energy efficiency, home insulation for 1 million homes
annually, and clean coal technologies;
USD3.4 billion for low-carbon emission coal power and industrial
establish a National Low Carbon Fuel Standard, and a new USD7,000
tax credit for purchasing advanced vehicles; and
put 1 million plug-in hybrid cars on the road by 2015.
The cap-and-trade system outlined in the plan is to reduce
carbon emissions by about 14% below 2005 levels by 2020 and 83% below 2005
levels by 2050 (equivalent to returning emissions to 1990 levels by 2020 and
80% below 1990 levels by 2050).
On 31 March 2009, the draft American Clean Energy and
Security Act of 2009 (the Waxman-Markey Bill) was released for discussion by
Henry Waxman, Chairman of the House Energy and Commerce Committee and Edward
Markey, Chairman of the Subcommittee on Energy and the Environment. On 21 May
2009 the House Energy and Commerce Committee voted 33-25 to approve a revised version
of the Waxman-Markey Bill (HR2454, the American Clean Energy and Security Act
The Waxman-Markey Bill proposes a suite of measures to
promote clean energy, improve energy efficiency, reduce greenhouse gas
pollution (including through the introduction of 'cap and trade' emissions
trading scheme) and support the transition to a clean energy economy.
The headline target for the draft Bill is US economy-wide
emission reductions of 20% on 2005 levels by 2020 (equivalent to a 8% reduction
on 1990 levels). In addition, the draft Bill proposes supplemental reductions
of 10% of 2005 emissions through reducing deforestation and preventing illegal
logging in developing countries. This is funded from revenue from auctioning
permits. With these supplemental reductions, the economy-wide goal is
equivalent to a 19% cut on 1990 levels.
On 19 May President Obama announced a new national policy
aimed at both increasing fuel economy and reducing greenhouse gas pollution for
all new cars and trucks sold in the US in 2012-2016 (requiring a 35.5 mpg
average in 2016).
There are three multi-state emissions trading schemes
currently under development in the US, which cover approximately 155 million
citizens or just over half of the US population. California also has a
well-developed ETS plan.
The Western Climate Initiative (WCI) includes seven US
states: Arizona, California, Montana, New Mexico, Oregon, Utah, and Washington
(approximately 59 million citizens); and four Canadian provinces (British Columbia,
Manitoba, Quebec and Ontario), with a goal of reducing emissions by 15% on 2005
levels by 2020 (approximately 33% below business as usual levels). The WCI's
design for a cap and trade program was released on 23 September 2008. The
design recommends a base program covering all six greenhouse gasses emitted
from the electricity sector, large stationary combustion sources, industrial
process and waste management emissions, and fossil fuel production and
The Regional Greenhouse Gas Initiative (RGGI) includes ten
US states: Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York,
Vermont, Massachusetts, Rhode Island and Maryland (approximately 57 million
Under the RGGI, an emission cap is set at current levels in 2009, and then
reduced 10% by 2019. The emission trading scheme is initially restricted to CO2
emitted from power stations. The scheme commenced in January 2009 and three
permit auctions have been held (1 September 2008, 17 December 2008 and 18 March
2009). The next auction is scheduled for 17 June 2009. RGGI participants will
be allowed to use international offsets once a threshold price has been
The Midwestern Greenhouse Gas Accord includes six US states:
Illinois, Iowa, Kansas, Michigan, Minnesota and Wisconsin (approximately 39
million citizens); and the Canadian province of Manitoba. The Accord was agreed
in November 2007 and will establish reduction targets and a multi-sector cap
and trade system, although no specific targets or design elements have been
Work is continuing on finalising targets for reducing emissions, and the design
of the scheme.
California is committed
to bringing down emissions to 1990 levels by 2020 (at least a 25% reduction
below BAU) and to 80% of 1990 levels in 2050. Plans for an ETS were released on
27 June 2008, and the scheme is due to commence in 2012. It will cover all six
Kyoto Protocol greenhouse gases and initially include power generators and oil
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