Australian Financial Review
Tuesday 1/5/2007 Page: 8
Ross Garnaut, the head of the states' inquiry into the economics of climate change advocates a market-based approach to greenhouse gas abatement, and warns against governments favouring options such as carbon sequestration, nuclear energy or wind energy. The Australian National University professor says the cheapest solution to climate change would be a global 'cap and trade' regime in which a decision was made on total global emissions and quotas were allocated between countries and then traded internationally.
Mr Garnaut argues that although Australia could potentially be a big loser among rich countries from global warming, it has a strong interest in galvanising international support for a global effort to control greenhouse emissions and could benefit from the development of an efficient global regime, especially if energy-intensive exporters such as Alcoa are compensated so their international competitiveness is not adversely affected by differences in countries' greenhouse regimes. However, he expresses reservations about the Business Council of Australia's argument that industry should be given emission permits free of charge, preferring to see the money raised from auctioning permits directed to financing tax cuts or tax reform.
Mr Garnaut concedes nuclear power and sequestration of carbon dioxide in thermal power as well as renewable technologies such as wind energy potentially have a place in reducing greenhouse gas emissions, but warns governments against trying to guess which technologies are going to be 'great winners' or granting public research funding to vested interests. He says with the right incentives and investment in research and development, industry will find cheaper and diverse ways of producing the same things with less emissions, while an eventual move towards targeting the emissions of energy users rather than energy exporters will see a more balanced quota distribution system based on population emerge.
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