Saturday, 7 November 2009

Co-author of Global Climate Change - Australian Law and Policy and a Visiting Fellow in UWA's Law School, David Hodgkinson , believes governments have several options for mitigating climate change.

There are a number of policy instruments available to governments to deal with the climate change problem - to mitigate the effects of climate change.  At the moment the instrument of choice appears to be emissions trading. The European Union's emissions trading scheme (ETS) has been up and running since 2005, a number of regional initiatives exist in the US and Australia, of course, proposes to introduce its ETS, the Carbon Pollution Reduction Scheme (CPRS), in 2011.

In June, the US House of Representatives passed a comprehensive Climate Change Bill at the heart of which is an ETS. The legislation has been described as ‘the most ambitious energy and climate change legislation ever introduced in Congress'.  The Bill now goes to the Senate for its consideration.

At more than 1,400 pages, the proposed US legislation - which addresses clean energy, energy efficiency and the transition to a clean energy economy as well as setting up an ETS - is more comprehensive that the CPRS legislation, although direct comparison is perhaps unfair given the broader scope of the US effort.  It can be said, though, that US greenhouse gas emission reduction targets are stronger  than those of Australia; the US ETS covers about 85 per cent of national emissions (versus 75 per cent for Australia) and US assistance for emissions-intensive, trade-exposed industries is less than that offered under the CPRS.

The other main instrument available to governments to mitigate climate change is a carbon tax, and it is interesting to note that there hasn't been a real debate in Australia on the merits of an ETS versus a tax.  In March I attended a pre-Kyoto international scientific congress on climate change hosted by the International Alliance of Research Universities (IARU) in Copenhagen. While my main purpose in attending the conference was to gain support for a convention for persons displaced by climate change I was struck by a conference theme which emerged over the three days - declining interest in emission trading schemes and increasing interest in carbon taxes.

A carbon tax sets a price on carbon, and emitters choose how much to emit; an ETS sets a total quota for emissions, and emitters - the market - work out the price. A carbon tax, unlike an ETS, does not involve a quantitative target. Just as any discussion of domestic emissions trading schemes takes account of linking those schemes internationally - on the basis that climate change, as a global problem, requires a global solution - so too any discussion of domestic carbon taxes as an alternative climate change mitigation strategy to emissions trading must take account of how such taxes can be implemented as part of an international carbon taxation system.

Yale's William Nordhaus, perhaps the most prominent economist advocating a carbon tax over an ETS, spoke in Copenhagen. He favours a domestic tax which is internationally harmonised, the revenues from which would be collected and retained domestically. Such a tax would fit naturally into domestic taxation systems; would be designed to raise the price of carbon, with participating countries using the revenues according to individual, domestic priorities; and countries would agree only to guarantee that their domestic carbon price would not fall below the level of the international standard.

One of the advantages of a price-based system is that, using the Nordhaus approach, it makes it easier for countries, developed and (especially) developing, to become parties to a universal climate change agreement that does not involve quantitative targets.

No matter the choice of instrument or instruments to address the climate change problem, the longer we - Australia, the US, human beings - delay taking action on climate change, the more difficult the task becomes. Time is short - as James Garvey ( The Ethics of Climate Change ) notes:

I am hopeful. I'm not at all sure that our governments or our corporations will do the right thing, but I sometimes surprise myself with the thought that maybe the rest of us will, the worldwide majority now in favour of action on climate change ... Human beings eventually do the right thing ... But it would be very good, wouldn't it, if we could get a move on...

I mentioned earlier the March, 2009 IARU scientific congress in Copenhagen. In the report of the congress released a couple of weeks ago the IARU makes a similar point to Garvey's:

The nature of the climate change challenge demands visionary and innovative thinking ... in 2009 society cannot precisely determine the "right" or the "best" pathway all the way to 2050 and beyond. There will be technological, societal and value changes in the future that will cause the trajectory to change. There should be no penalty for not getting it absolutely right the first time. The most important task is to start the journey now.

The US journey toward significant action on climate change began last month when the House passed the Climate Change Bill. Questions were raised during debate over that Bill as to whether the US should be moving to enact significant climate change legislation ahead of the Copenhagen Climate Change Conference in December; similar questions have been raised in Australia.  It's said that passage of the Bill provides President Obama, who supported the legislation and lobbied for its passage, with a real opportunity and a stronger case to assert US leadership on climate change. A leading climate change academic argues that the credibility of the US as a participant in international climate change negotiations, let alone as a leader, in shaping the international regime is dependent upon the United States' demonstrated willingness to take actions at home.

The New York Times editorialised on 1 July that ‘[t]he world is waiting for the United States, after years of indifference, to take a strong leadership role'.  Put another way, as the great Bill McKibben asks, ‘can Obama change the climate?'

David Hodgkinson is a Visiting Fellow in the Law School at The University of Western Australia. He is also a member of The Hodgkinson Group, Aviation and Climate Change Advisors; Special Counsel with law firm Clayton Utz; and Executive Director of EcoCarbon, Inc. He is the co-author of the book Global Climate Change: Australian Law and Policy (LexisNexis/Butterworths, 2008) and the general editor of Climate Change Law and Policy in Australia.

David also leads an international project team which is working on a draft convention for persons displaced by climate change.


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