Beyond Garnaut, Towards Reality

According to the final Garnaut Climate Change Review Report, "the failure of our generation on climate change mitigation would lead to consequences that would haunt humanity until the end of time." No argument there. As well, the language around the science and need for action is very strong and it clearly defines the threat of climate change to Australia.

But although Garnaut has famously described the situation we face as one of "diabolical" complexity, it’s actually even more complex than he has suggested.

Garnaut defines the problem well, but the Garnaut solution rests on a cost benefit analysis — the cost of doing something about the emissions compared with sitting back and feeling the heat.

"The review examines analytically whether and how much mitigation is justified," he states. "We can do this by comparing the costs of mitigation with the benefits of climate change avoided by mitigation". Going about it this way, Garnaut (like Stern before him), finds "the costs of action are less than the costs of inaction".

Thank goodness. But is this approach really the most useful way of looking at the public policy solutions? Why, for example, is the massive change required to confront this issue considered merely as a "cost", when no change of the size we need could fail to have transformational opportunities associated with it, opportunities that are indirect, parallel and not immediately obvious?

Garnaut is virtually silent on those. Once he has established that it is economically sensible to avoid dangerous climate change, the review turns to possible action. Crucially, the Garnaut Review recognises we must "end the linkage between economic growth and emissions of greenhouse gasses".

Garnaut’s economics leads to a focus on the "primacy of the integrity of market institutions in designing the approach to mitigation and adaptation". As of the last few weeks, suddenly the words integrity and market institutions seem mismatched when used in the same sentence.

An Emissions Trading Scheme (ETS, now to be known as a Carbon Pollution Reduction Scheme or CPRS) is discussed in great detail. In turn, "The role of complementary measures is to lower the cost of meeting the emissions reduction trajectories of the ETS by correcting for market failures". There are some specific complementary measures recommended including "green credits" for low income households, a climate change policy institute, $3 billion for low emissions R&D and commercialisation, use of the Building Australia fund for energy infrastructure and a "limited case" for feed-in tariffs for solar electricity for households.

This, however, is not a comprehensive plan to decarbonise the Australian economy.

The problem with many of these economic approaches that privilege a narrowly defined economic outlook is that they purport to be based on hard realities — the truth is that in attempting to determine the amount of mitigation we can afford, they act as if avoiding climate change were a luxury.

The maximum effort to reverse climate change needs to be the non-negotiable foundation of our approach, and we should be using a framework that acknowledges that.

Putting Garnaut and this economic perspective to one side for a moment, it is worth contemplating how else we might examine the problem and solutions.

Consider the perspective offered by an ecologically sustainable development (ESD) approach, which acknowledges the fundamental dependence of humans on the environment (see for example the UN’s "Brundtland Report"). It is an approach which values ecosystem survival and the conservation of biodiversity, equity between and within generations, the precautionary principle and the internalisation of external costs (including improved valuation, pricing and incentive mechanisms) — principles already enshrined in Australian legislation including the Commonwealth Environment Protection and Biodiversity Conservation Act (1999).

How do these complex concepts help us in defining the problem of climate change in public policy terms and in looking at what is to be done?

A sustainability perspective looks at how to reduce total resource use (not just the outputs of greenhouse gas emissions) and improve economic, social and environmental outcomes. As such it offers a more comprehensive set of analytical tools with which to investigate the set of intertwined social, environmental and economic issues we’re dealing with.

A concrete example: from a broad sustainability view, the problem of car dependency in the transport sector is not merely one of tailpipe CO2 emissions, but also congestion, accidents, air pollution, space used for roads, noise, the environmental impacts of paved surfaces, such as storm water pollution, and the inequity of access to public transport as well as other social and health impacts. Sustainability requires us to see the interconnections between (at least) transport, environment and health (as in the 1999 WHO Europe Charter on transport, environment and health).

For example, there is growing evidence of a correlation between sprawl, a lack of physical activity and major health problems such as obesity, diabetes and depression. This perspective immediately changes the economics of reducing emissions from transport. The cost of obesity alone was estimated to be $3.8 billion in Australia in 2005.

This kind of "joined up thinking" about wider systems involved in the problem suggests that policies which support a shift from car use to walking, cycling and public transport will have significant public health benefits in both social and financial terms, as well as reducing greenhouse gas emissions. The IPCC refers to such positive outcomes of policy change as "co-benefits" and states there is "high agreement and much evidence that mitigation actions can result in near-term co-benefits (eg improved health due to reduced air pollution) that may offset a substantial fraction of mitigation costs".

Compare that with the Garnaut Review’s conclusion on transport that "zero-emission road vehicles will become economically attractive and be the most important source of decarbonisation from the transport sector". While this may be true in the case of freight, the focus of the analysis on mitigation without consideration of co-benefits means the policy prescriptions are not the most beneficial overall. Garnaut’s future world supports business as usual with better technology — not changes that will maximise benefits to Australians’ quality of life.

While the Garnaut Review could not possibly have comprehensively analysed every policy area where reducing greenhouse gas emissions is necessary, it’s significant that the "zero-emission road vehicles" statement appears to be made without reference to any actual modelling of the options to reduce emissions from transport. What is the potential emissions reduction in Australia from a substantial shift from motor vehicle trips to walking, cycling and public transport?

To take a simple example, let’s say Australia invested substantially in infrastructure, cycling proficiency training and other capacity building programs to support cycling so that by 2020, 8 per cent of trips were by bike (up from approximately 2 per cent currently — not unrealistic given recent experience in Portland, Oregon). All these trips will be zero-emission.

What would be the consequences of such an approach for Australia’s greenhouse gas emissions? What would be the consequences for household expenditure on transport? Or for the health budget due to the improved levels of physical activity undertaken by these cycle commuters? The answer, of course, is that no one knows because this kind of modelling is not undertaken. The question is, why not?

Fortunately, while we may be short of sophisticated modelling, a number of organisations are considering the opportunities of decarbonising the economy to create and enhance economic, social and environmental benefits.

A CSIRO report for the Dusseldorp Skills Forum and the Australian Conservation Foundation Growing the Green Collar Economy has outlined ways that we can use workforce training and education to promote sustainable economic development. Similarly, the Australian Manufacturing Workers’ Union recognises that the "industry policies and investment needed to sustain a healthy manufacturing industry are the same as those required to tackle climate change". Their report proposes a comprehensive set of industry policies to help create jobs and assist communities affected by a shift to a clean energy economy.

Meanwhile KPMG together with Ecos Corporation recently produced a report for the Brotherhood of St Laurence on a national energy efficiency program to assist 3.5 million low-income households which would create jobs and reduce the burden of energy bills on those least able to afford them. Research for Greenpeace has shown how increasing our use of renewable energy will create thousands of jobs in regional Australia and could establish Australia as a renewable energy exporter.

More of these opportunities will become available but only if we start looking for them.

Did the Garnaut’s Review miss these opportunities because of its terms of reference? In part the Review’s task was to:

"recommend medium to long-term policy options for Australia, and the time path for their implementation which, taking the costs and benefits of domestic and international policies on climate change into account, will produce the best possible outcomes for Australia".

This assignment appears to have been interpreted in the final report as simply ascertaining, to quote Garnaut, what strategy provides the "greatest excess of gains reduced risks of climate change over the costs of mitigation."

There is no acknowledgment or investigation of the enormous opportunities that must necessarily accompany the huge changes that are being considered, only their costs. Moreover, there are complex interactions between wellbeing, equity, economic structure and emissions that deserve examination.

Climate change is indeed a "diabolical policy problem" and it needs be considered in a way which attempts to understand the complex interactions between the social, environmental and economic dimensions of decarbonising the economy and of the overall sustainability problem.

In Garnaut’s view, the cause of Australia’s current wealth (or at least what there was a few weeks ago) was in large part due to the market transformations of the Hawke/Keating era (including the ending of protectionism). He sees positive outcomes from those decisions all over the economy. To tackle our rising greenhouse gas emissions, we need similarly radical economic transformation. We need a positive vision, like California, like Sweden, like London…