By Dr Anthony Horton
To date, climate change has barely rated a mention in the 2016 Australian Federal double dissolution election campaigns, and we don’t know when or if it will feature at all. I want to use this opportunity to bring a particular aspect of climate change – carbon pricing – to people’s attention and highlight just why it needs to be taken very seriously. According to the United Nations Global Compact (UNGC) initiative, the minimum internal carbon pricing policy that all countries should implement by 2020 is US$100 per tonne. This means in view to keeping global warming below 2°C as negotiated in the historic Paris Agreement following the 2015 United Nations conference on climate change, to which Australia was a signatory, all business producing emissions must be charged for each tonne of CO2 they release into the atmosphere.
The proposal for a universal US$100 per tonne minimum internal carbon price by 2020 was included in an announcement by UNGC on their website on April 22 this year, the same day the historic Paris Climate Agreement was signed by more than 165 United Nations member countries at UN Headquarters in New York. The UNGC believes that the US$100 per tonne minimum price is critical to prompting innovation, unlocking investment and shifting market signals towards the maximum 2°C average warming pathway.
This price reflects the enormity of the universal emissions reduction task we face in coming years, and therefore pricing carbon should not simply be viewed as a revenue stream. According to World Bank Group figures, approximately 75% of the emissions reductions covered by Government-implemented carbon pricing mechanisms including emissions trading schemes (ETSs) around the world last year were priced below US$10 per tonne.
In January this year the International Monetary Fund (IMF) stated that carbon pricing mechanisms should be central to a Government’s climate change response. According to the IMF, such mechanisms have key advantages over regulatory based emissions reduction measures. These advantages include being more effective from an environmental perspective and that they can facilitate a wide range of mitigation options. The international Organisation for Economic Co-operation and Development (OECD) researched carbon pricing in 41 member countries that represent 80% of the world’s energy use and emissions last year, and concluded that 70% of those emissions were priced below EUR5 (US$5.60) per tonne. The OECD argues that such a price is well below the true climate related cost of those emissions and that there is barely any policy driven price incentive to reduce emissions at that price.
Internal carbon pricing is becoming a widely used investment decision-making tool by businesses around the world (including a small number of Australian businesses), assisting them to move to lower carbon business models. As there is currently no government regulated carbon pricing mechanism in Australia, the small number of Australian businesses that have an internal carbon price do it on the basis of the need to have one in the markets in which they conduct business outside Australia. If the ALP forms Government following the election on July 2 and implements their proposed ETS policy, or the current Government introduces an ETS by tweaking the ERF, businesses that conduct their operations within Australia will also need to determine their internal carbon price.
Determining an internal carbon price is a good thing for Australian businesses for two reasons. Firstly they could then participate in the Australian ETS (and other worldwide emissions trading schemes the Australian one is linked up to). Secondly, having an internal carbon price could open up new international trade and investment opportunities. In previous articles I have discussed the move by some very well known international brands to look at their supply chains and to choose suppliers based on whether they have an internal carbon price.
Given the rate at which ETSs are being implemented around the world, it is likely that most countries will have one in the very near future, and therefore an internal carbon price will become part of normal business operations. In the lead up to the double dissolution election on July 2, a lot of attention is being given to jobs and growth, and of course these are important. I believe that both the ALP and the current Government need to embrace the potential jobs and growth that can arise from investments in emissions reductions and innovation under an ETS. Of the few Australian and numerous international businesses that have disclosed they currently have an internal carbon price, more than 94% are based in jurisdictions that have mandated a carbon price, have scheduled the implementation of a carbon price, or are considering the implementation of a carbon price.
As the world’s largest corporate sustainability initiative, the UNGC supports businesses to:
- Conduct their operations in a responsible manner by aligning with ten principles of human rights, labour, environment and anti-corruption
- Take strategic actions to progress societal goals including the UN Sustainable Development Goals, with an emphasis on collaboration and innovation
The UNGC’s ten principles are derived from the Universal Declaration of Human Rights, the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development and the United Nations Convention Against Corruption.
That we have already had three weeks of the 2016 Australian Federal double dissolution election campaign and climate change has barely rated a mention is a sad indictment. And yet conversations being had in other contexts show great public concern for the growing environmental impacts climate change. There is no shortage of discussion on social media platforms such as Twitter regarding the current status of the bleaching of the Great Barrier Reef – which has made international news on high profile platforms including The New York Times. The lack of a reasoned scientifically based discussion of what Australia is going to do to acknowledge the realities and address the inherent challenges of climate change leaves us wondering when and if such a discussion will be held by politicians, and whether the media will challenge the respective parties to do so. We know that climate change can’t be solved within one term of Government in Australia, however we should expect Governments that act on our behalf to acknowledge and address the challenges that climate change presents now and for future generations.
The importance of carbon pricing goes beyond the role it plays in reducing emissions. Australian voters need to understand that carbon pricing and its implementation can facilitate innovation and investment, and that a cohesive pricing structure is critical. The Government elected by the Australian people on July 2 needs to implement a price that is consistent with the enormity of the task of reducing emissions to align with the maximum 2°C average warming agreement so Australia can play its rightful part in reducing global emissions into the future. Our country’s leaders must ensure we as a nation adequately acknowledge the realities of climate change and address the inherent challenges that climate change presents. Climate change is an issue that simply can’t be left for future generations to battle. This is why Australian voters should be getting stirred up about carbon pricing.
This article was originally published on theclimatechangeguy.com.au.
About the author: Anthony Horton holds a PhD in Environmental Science, a Bachelor of Environmental Science with Honours and a Diploma of Carbon Management. He has a track record of delivering customised solutions in Academia, Government, the Mining Industry and Consulting based on the latest wisdom and his scientific background and experience in Climate/Atmospheric Science and Air Quality. Anthony’s work has been published in internationally recognised scientific journals and presented at international and national conferences, and he is currently on the Editorial Board of the Journal Nature Environment and Pollution Technology. Anthony also blogs on his own site, The Climate Change Guy.
One very good reason Dr there has been silence from the Wyella will disappear, $100 sides of lamb Coalition is, an ABC poll last week asked, should there be a carbon tax introduced because of climate change?….64% responded yes…thats yes. Coalition very very quiet,
Labor since hinting at the reintroduction of the carbon pricing, have gone quiet. No doubt this poll will encourage them to start talking. It was a bloody great idea and Abbott turned it into a one of the great lies since Washington didn’t chop down a cherry tree.
The electorate is waking up thankfully.
Professor John “Charlie” Veron, the world’s foremost expert on coral reefs, said “Now, I’ve spoken recently with Greg Hunt. He rang me up. In that conversation I was gobsmacked by his lack of understanding. Like I was talking to a schoolkid. He’s emailing me now, and including staff, which is surprising because they reveal how ignorant he is. He politicises everything, which makes him very difficult to communicate with.”
https://www.thesaturdaypaper.com.au/news/politics/2016/06/04/the-real-story-the-great-barrier-reef/14649624003332
KL, Greg Hunt confines his expertise to ‘walri’.
Here’s the link.
http://loonpond.blogspot.com.au/2014/10/in-which-pond-goes-hunting-walri.html#.V1QYcmdJmZ8
As for ‘politicises everything’, I can’t believe that they have no appreciation of how stupid they come across. Both sides BTW.
A ‘carbon tax’/ETS should perhaps be but one of a suite of amelioration measures that need be put in place to effectively reduce carbon pollution.
There is an informative discussion on this video by Kevin Anderson (Professor of Energy and Climate Change at the School of Mechanical, Aerospace and Civil Engineering at the University of Manchester and Deputy Director of the Tyndall Centre for Climate Change research)
(particularly from 50 min to 55 min): https://www.youtube.com/watch?v=90FLu4a0tqE
Anderson suggests that a wartime like measure such as ‘carbon allocation rationing’ would be internationally more effective than a carbon tax – as it applies equally to the biggest polluters (the wealthy top 10%) as it does to the lesser polluting low income populace – the other 90%.
He posits that carbon tax levied at a sufficiently high rate to deter the wealthy top 10% (the world’s biggest emitters) would hit the poor (the lowest emitters) disproportionately hard;
while a lower rate carbon tax levied at a rate the poor can afford presents little pollution deterrent to the relatively wealthy top 10%.
Nationally a high rate of carbon tax can be applied, as compensation can be directed at low income groups; but internationally such a compensation arrangement is politically near impossible;
just consider the political ramifications in transferring carbon tax proceeds from a wealthy nations top 10% polluters to a poorer nation as compensation to its low income citizens.
Anderson further states:
If the US top 1% were to limit their carbon emissions to the level of the ‘average’ European, total world carbon emissions would effectively be reduced by 30%.
His message is that the most immediate, practical and effective reduction of co2 emissions can be achieved by changing the consumption habits of ~10% of the worlds population – the most wealthy 10% are responsible for ~50% of the world’s annual co2 emissions.
Top 1% of US emitters have co2 footprint 2,500x that of the bottom 1%
ie ~3.4 million wealthy people emit 2,500x more co2 than ~70 million poor people.
The Coalition is doing its best to ignore global warming. The ALP is fiddling at the margins. The Greens are the only Australian political Party likely to gain representation in the upcoming election whose climate change policies are consistent with halting global warming at 2ºC – the point at which science estimates we have a 50/50 chance of avoiding runaway warming. Although Anthony Horton seems not to have noticed, the Greens are certainly talking about the importance of addressing this issue. Unfortunately, apparently only about 10% of the population are likely to pay attention on election day. So, post-election the Australian government will continue to pursue climate change policies inadequate for the task at hand.
JohnB mentions the climate scientist Kevin Anderson who is definitely someone to be listened to on this topic. Anderson recognizes the immensity of the problem. To achieve stabilization at the 2ºC threshold of warming global GHG emissions need to plateau about now (they aren’t) and thereafter first world emitters (that includes us) must begin to decrease their emissions by a precipitous 9% p.a. until mid-century. Last time I looked there was strong disagreement over whether this was politically or economically possible. Anderson’s argument in favor of direct rationing recognizes the fact that a market driven carbon-pricing mechanism sufficient to achieving this drastic rate of change is socially unacceptable and probably politically impossible. Ironically while mention of carbon pricing is still viewed as political dynamite by Australia’s geriatric political duopoly, we are arguably already past the point where an ETS is relevant as a component of a suite of effective climate change policies.