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Friday, July 15, 2011

4 Degrees or more? - Science into Policy: Securing a Clean Energy Future for Australia - speech by Greg Combet

In an early morning session on Thursday the Minister for Climate Change and Energy Efficiency, Greg Combet, addressed the Four degrees or more? conference and spoke on the scientific imperatives driving the Government to price carbon and outlined the Government's carbon pricing policy and addressed some of the consequences of that policy for science and innovation.

Despite the policy failing to match the emissions reductions that are needed to close the Global Emissions Gap to limit temperatures to 1.5 to 2 degrees Celsius of global warming, most of those present saw the policy as necessary first steps and were impressed with the multifaceted comprehensive features which will help to decarbonise the economy and drive innovation towards clean energy to adapt to the impacts of climate change.

Here is a transcript of his full speech.


Coming as it does in the week that the Prime Minister has announced the Australian Government's carbon pricing policy, this conference is particularly timely. I congratulate the organisers on the quality of their forecasting - or was it the quality of their intuition. In any event, I am delighted to be able to speak to you this morning about the key features of Australia's response to climate change.

This morning, I want to discuss the central role that science has played in the development of a responsible suite of policies to provide Australia with a Clean Energy Future. I will touch on the key elements of the evidence base and outline to you the key features of the Gillard Government's plan.

Put simply, this Plan encapsulates the Government's view that the best way for Australia to play its part in tackling the global challenge of climate change is to embark on an economic transformation that decouples prosperity and pollution.

It is more than a price on carbon - the Plan also encompasses renewable energy, energy efficiency and land measures, while embarking on a progressive reform of our taxation and payments arrangements that will see 90% of Australian households receiving some help to meet the impact of a carbon price. It is this holistic approach that will ensure success.

The Plan recognises the imperative for action while maintaining strong economic growth and providing new opportunities for industry.

But most significantly it will cut pollution in the cheapest and most effective way and drive investment in new clean energy sources such as solar, gas and wind.

Science into Policy

This conference has provided a timely opportunity to bring together globally recognised experts to build a picture of what Australia would look like with four degrees of warming.

This exchange of knowledge is at the forefront of bringing science to the public.

I understand that, over the last two days, there has been a lot of discussion about the impacts Australia and other countries would face in a four degree world.

In many instances, these impacts would exceed the ability of natural and human systems to adapt.

This is not being alarmist. It is a scientifically based assessment of where we could head. The science presented at this conference outlines the reality our children and grandchildren, and their grandchildren, will be faced with if we fail to respond. This is a key intergenerational equity issue.

The scientific evidence is in and the time for responding is now.

No responsible government can ignore this advice.

This is why the Prime Minister set out a comprehensive policy last Sunday.

What science is telling us

Climate change is on the national and international agenda because of science.

However, the complexity and volume of science, plus the noise created by those who seek to undermine it, means it can be difficult to comprehend the implications fully.

The Government established the Climate Commission specifically to cut through this complexity and provide the clearest advice possible to the Government, and all Australians, on the risks we face.

The Climate Commission recently delivered 'The Critical Decade' - a concise assessment of the latest climate change science.

The Key Messages of the report are clear:

    There is no doubt that the climate is changing. The evidence is overwhelming and clear.

    It is beyond reasonable doubt that human activities - in particular the burning of fossil fuels and deforestation - are triggering the changes we are witnessing in the global climate.

    With less than 1 degree of warming, the impacts of climate change are already being felt in Australia and around the world;

    The risks of future climate change - to our economy, society and environment - are serious and grow rapidly with each further increase in temperature;

    Minimising risks requires deep and ongoing transformational shifts to reduce greenhouse gas emissions;

    We need to begin now to make these transformations; to decarbonise our economy and move to clean energy sources.

This is the critical decade for action.

I do not accept this information with any sense of glee; instead it is with dismay that I accept the profound potential impacts of climate change, if we fail to act now.

For others it is difficult to accept the scientific facts - because once you accept them there is only one logical response - to act.

What a four degree world could look like

Australia, like every other nation on Earth, is committed to avoiding the impacts of dangerous climate change - internationally recognised as limiting warming to below two degrees.

There is no denying that even if we achieve this target we will still face significant impacts that will require us to adapt.

However, what is striking is the magnitude of changes we would face in a four degree world.

For many natural and human systems, the severity of impacts will not progress directly in line with temperature increases.

In a four degrees world we would see severe transformations in the environment we live in and in the way we live.

Reports from the Intergovernmental Panel on Climate Change, the Climate Commission, Professor Ross Garnaut and my Department tell us that with four degrees of warming:

  • World Heritage listed national treasures such as the Great Barrier Reef and Kakadu National Park, would effectively be lost;

  • Billions of dollars of coastal infrastructure would be at risk;

  • Australia's water security would be severely compromised; and

  • There would be major declines in agricultural production across much of the country.

From Science to a Clean Energy Future

It is clearly in Australia's national interest to continue to work to achieve the international goal of limiting warming to below two degrees. To do this, it is imperative that we play a responsible role in international action and that we do so by taking strong action at home.

This means we must actually reduce our emission of carbon pollution into the atmosphere.

To do this we have to drive reform across the economy. Because the Australian economy is so directly dependent on pollution, the only way to abate and reduce pollution is to transform our economy so that we can create a clean energy future.

While climate change science tells us we need to act, economic understanding tells us the most cost effective ways of acting.

Australia has an opportunity to move to a clean energy future and cut pollution before the task becomes more difficult and costly.

Transformational Shifts: Securing a Clean Energy Future

Australia generates more pollution per person than any developed country, including the United States. We produce significantly more pollution per person than India and China.

Australia's carbon pollution is high because our electricity is mainly generated by burning coal. Transport, mining, industry, farming and deforestation also contribute.

Our carbon pollution is continuing to grow at a rapid rate. Without action, it is expected to continue to grow by almost 2 per cent a year to 2020.

Reducing our carbon pollution means we have to produce and use energy in a cleaner, smarter way.

The Clean Energy Future Plan involves:

  • Introducing a carbon price and returning every cent to assist households, support jobs and tackle climate change;

  • Promoting innovation and investment in renewable energy;

  • Encouraging energy efficiency; and

  • Creating opportunities in the land sector to cut pollution and improve productivity, sustainability and resilience.

The Carbon Pricing Mechanism

Currently, releasing carbon pollution is free despite the fact that it is harming our environment.

Putting a price on carbon is the most environmentally effective and cheapest way to cut pollution.

This is a fact that is well recognised by economists from around the world, and respected institutions such as the OECD and the Productivity Commission.

A constraint on carbon pollution will drive innovation across the economy by:

  • finding new energy and carbon efficient ways of doing business;

  • investing in new low carbon products and processes, and

  • stimulating the scientific and engineering research that will provide all the energy that is needed to secure economic prosperity without carbon pollution.

Starting at a fixed price of $23 a tonne in 2012-13, and then moving to an emissions trading scheme in 2015, the carbon price will generate incentives to reduce pollution and invest in clean energy.

Why start with a fixed price?

The initial 3 year fixed price period will provide business and investment certainty. It will allow businesses time to get used to the new system, understand their obligations and start planning ways of reducing their pollution.

It will be the start of a new approach to driving growth and maintaining Australia's economic potency while minimising the environmental risks of climate change.

An orderly transition

Modelling from the Commonwealth Treasury shows Australia's economy will continue to prosper with a carbon price.

Compared to structural factors such as the exchange rate or our terms of trade, pricing carbon will have a relatively small effect on the size and growth rate of the Australian economy.

And only our very largest emitters of carbon pollution will be required to pay for the pollution they create: around 500 businesses in all

A carbon price will not apply to petrol, light vehicle business transport and off-road fuel use for agriculture, fisheries and forestry industries.

Stability and continuity through new institutions

To ensure that Australia progressively reduces carbon pollution into the future the government will establish two new independent bodies that will oversee the transition to a clean energy future.

Just as with other major reforms, the establishment of competent, well respected institutions is a prudent way to create the stability and continuity that progressively reducing our nation's carbon pollution requires.

A new independent Climate Change Authority will track Australia's pollution levels and provide independent advice to the Government on the performance of the carbon price and other initiatives. It will be chaired by former Reserve Bank Governor and Treasury Secretary, Bernie Fraser.

A new Clean Energy Regulator will ensure that the system for pricing pollution works and develops on the basis of evidence.

As we move towards a clean energy future, these institutions will provide the bedrock of the rigorous analysis and guidance that effective policy development and implementation will need.

Anticipated impact

The carbon price will cause a modest overall increase in prices. It is expected to result in an increase of 0.7% in the CPI, meaning on average - an increase in costs of around $9.90 a week for households in 2012-13, while assistance will average $10.10 per week.

And the Commonwealth Treasury predicts that employment will continue to grow after a carbon price. By 2020, while our carbon pollution will have reduced, national employment is projected to increase by 1.6 million jobs.

Australia will have reduced carbon pollution while maintaining our economic strength and competiveness.

Why the government is looking to compensate households.

The Government will ensure that those Australians that need help the most, particularly pensioners and low and middle income households, will get assistance for the cost of living impact of the carbon price.

While the modelling shows that the impact on the cost of living is in fact quite modest, the Government will ensure households are provided with the support they need to transition to a low carbon future.

Even though the carbon price is levied only on the 500 biggest polluters, we know they will pass some of those costs onto households. It is right for the government to ease the burden.

More than half the money raised by a carbon price will be used to help households with increases in the cost of living. This assistance will be fair and permanent and it will be targeted at low and middle income households.

  • Over four million households will be better off compared to their average price impact;

  • Almost six million households will be assisted to meet their average price impact;

  • Around eight million households will get some assistance.

This assistance will be delivered through tax cuts, higher Family Tax Benefit and increases in pensions and allowances. In 2012, people will pay less income tax because the Government will more than triple the tax free threshold and free over 1 million people from submitting tax returns. An Essential Medical Equipment Payment of $140 per year will provide further assistance for around 110,000 eligible people in Australia who face additional and unavoidable electricity costs owing to medical conditions or disabilities.

Households that improve their energy efficiency can help the environment and save money. Because households that do use less energy will still get to keep all of their tax cuts and payment increases, the carbon price will still provide them with a financial incentive to do their bit for the environment.

Industry support

The Government has carefully designed a number of measures to support jobs and competitiveness as we move to a clean energy future.

A Job and Competitiveness Program worth $9.2 billion over the first three years of the carbon pricing mechanism will support local jobs and production, and encourage industry to invest in cleaner technologies.

The assistance over the first three years will be provided to companies that produce a lot of carbon pollution but are constrained in their capacity to pass through costs in global markets.

Assistance will be provided to around 40 to 50 of these 'emissions-intensive trade-exposed' industrial activities, such as steel, aluminium, cement and zinc manufacturing. Businesses producing over 80 per cent of the manufacturing sector's emissions are expected to be eligible for assistance under this program.

The most emissions-intensive and trade-exposed industries will be eligible for a 94.5 per cent shielding from a carbon price; while a second category of assistance will provide an initial shielding of 66 per cent.

The government will also drive innovation in manufacturing and other industries through a new $1.2 billion Clean Technology Program - to help directly improve energy efficiency and support research and development in low pollution technologies.

Promote innovation and investment in renewable energy

To reduce carbon pollution and reduce the risk presented by climate change, Australia needs to transform its energy sector.

Achieving this transformation must be driven by more than just a carbon price.

The government remains committed to achieving 20 per cent of Australia's electricity supply coming from renewable sources by 2020.

Together with a carbon price it is anticipated the renewable energy target will continue to drive around $20 billion in renewable energy investment by 2020.

To further promote a clean energy future and help drive the necessary investment in renewables, a new $10 billion Clean Energy Finance Corporation will be established to drive innovation through commercial investment in clean energy through loans, loan guarantees and equity investments.

Investments will focus on renewable energy, energy efficiency and low emissions technologies, and the transformation of existing manufacturing businesses to re-focus on meeting demand for inputs for these sectors.

A new, independent statutory body, the Australian Renewable Energy Agency (ARENA), will be created to coordinate around $3.2 billion in existing grant funding programs supporting research, development and demonstration of new renewable energy technologies.

Together, these programs will drive the biggest expansion in the clean energy sector in Australia's history, building a critical mass of renewable energy, energy efficiency and low-emissions generation projects.

Encourage energy efficiency

Australia can reduce carbon pollution by improving energy efficiency across Government, business and households. Small actions can mean a big difference overall, and simple improvements to the way we do things also enable us to save money. That's why energy efficiency is a key part of the Government's plan for a clean energy future.

As the Prime Minister's Task Group on Energy Efficiency reported last year:

'Energy Efficiency is Australia's untapped energy resource - a means to improve the productivity of the economy as well as an important element in moving towards a prosperous low-carbon future.'

The Government will be supporting households to use energy more wisely by providing advice, including through the Living Greener website, which provides information on how households can save money by improving their energy efficiency.

The Low Carbon Communities program is being expanded to $330 million to fund projects to help low income households, local governments and community organisations save energy.

The Remote Indigenous Energy Program will provide around 55 remote indigenous communities with funding to install renewable energy systems, reducing reliance on diesel for electricity generation.

Creating opportunities in the land sector to cut pollution

The fourth element of the Clean Energy Future Plan will create economic opportunities for farmers and land managers who reduce pollution or store carbon in the landscape.

Agriculture, land use change and forestry account for around 20 per cent of Australia's carbon pollution.

As part of the Clean Energy Future Plan, the Government will initially invest around $1.7 billion in a new ongoing Biodiversity Fund and other land sector measures.

The Biodiversity Fund will be established for landholders that undertake projects to restore or protect bio diverse carbon stores. Activities including reforestation and revegetation in areas of high conservation value, action to prevent the spread of invasive species and management and protection of bio diverse ecosystems will be supported.

Under the Carbon Farming Initiative landholders who store carbon, such as in trees or the soil, and those who reduce emissions from farming practices, such as nitrous oxide or methane emissions, will create credits for each tonne of carbon pollution stored or reduced.

These credits will be able to be sold onto domestic and international carbon markets, providing a significant revenue stream to regional and rural Australia.

The Carbon Farming Initiative will also provide new economic opportunities for Indigenous Australians to work on country and participate in customary land management obligations. The new Indigenous Carbon Farming Fund will support Indigenous participation in the Carbon Farming Initiative.

The challenge ahead

I would like to take a moment to reflect on what this package is really delivering Australia:

    A structural reform that will allow us to make bigger transformations in the future, that will fundamentally change our economy, create the environment for innovation and ensure Australia's future prosperity.

The size of the challenge we have set ourselves is substantial.

The Government has committed to an unconditional 5 per cent reduction on 2000 levels by 2020; up to a 15 per cent reduction in the context of an international agreement where major economies agree to substantially restrain carbon pollution and advanced economies take on reductions comparable to Australia; and by 25 per cent, under strict conditions including global action capable of stabilising greenhouse gases at 450 ppm or lower.

While 5 per cent may sound small it is actually a 23 per cent decrease compared to business as usual. And it stacks up to be a tough target to achieve.

On a range of indicators, the 5 per cent target is comparable to the unconditional pledges of other advanced economies. For example, it represents an 11 percentage point reduction from Australia's Kyoto target; the EU's unconditional 20 per cent target is a 12 percentage point reduction from the EU Kyoto target.

In 2020, without a carbon price, Australia's emissions are projected to reach around 680 million tonnes of pollution. If Australia achieves even a 5 per cent reduction on 2000 levels by 2020, we will have saved around 160 million tonnes of pollution in that year - the equivalent of taking 45 million cars off the road.

To achieve this target you need a whole of the economy framework such as this, which can be adjusted through time to meet changing circumstance.

The Clean Energy Future Plan provides Australia with the means to meet this challenge in the most economically efficient way.

Other major emitters are watching Australia's domestic action with interest. By taking action to reduce our own emissions, we lend momentum to international negotiations and put ourselves in a better position to complement and promote strong mitigation action by other countries.

Over 40 per cent of global emissions come from economies that, like Australia, individually represent less than five per cent of the global total. If these countries were all to decide not to limit their emissions, our 450 ppm or lower national interest goal would be unachievable.


I would like to conclude by reflecting on the continuing role that science has to play in deliverying a clean energy future. There are two critical scientific pathways that are essential to the delivery of our policy.

First, there will be a continuing need for climate scientists to investigate the causes of global warming, and to monitor the effects of carbon pollution on our environment. The fear-mongers will continue to play upon the uncertainty and doubt that lingers in parts of our community. Scientific argument is the best weapon to defeat those who disrespect the science, who, for a variety of political and financial reasons, continue to erode public confidence.

Second, science will drive the innovation needed to deliver a clean energy future. And every part of scientific endeavour is relevant to that task. Pure and applied research in both the hard and soft sciences, backed up by cooperation from industry and government, will be critical to delivering continued economic prosperity while breaking the nexus to carbon pollution.

I expect that the four degrees conference will reconvene somewhere else in the world over the coming years, as science works to keep governments honest. It is my hope that you and your successors attending conferences such as these will begin to see the benefit of your endeavours, as Australia and other countries move to clean energy futures.


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