Garnaut Review 2011

Notes

The final report of the Garnaut Climate Change Review (referred to throughout this book as ‘the 2008 Review’) was published by Cambridge University Press in 2008. The update to the Review, commissioned in November 2010, produced a series of eight papers on developments since 2008 and two supplementary notes, released between February and May 2011. Their titles are as follows:

Update papers (released in February and March 2011)

1: Weighing the costs and benefits of climate change action

2: Progress towards effective global action on climate change

3: Global emissions trends

4: Transforming rural land use

5: The science of climate change

6: Carbon pricing and reducing Australia’s emissions

7: Low emissions technology and the innovation challenge

8: Transforming the electricity sector

Supplementary notes (released on 31 May 2011)

A 10-year plan for carbon pricing revenue
Governance arrangements for Australia’s carbon pricing scheme

These materials underpin this book and provide further discussion and detail supporting the analysis. A number of commissioned reports also support the 2008 Review and the update.

Unless otherwise stated, all dollar amounts in this book are in Australian dollars.

Introduction

T. Breusch and F. Vahid 2008, Global temperature trends, report prepared for the 2008 Review; T. Breusch and F. Vahid 2011, Global temperature trends—updated with new data March 2011, report prepared for the Garnaut Review 2011 update.

It is quite a challenge now simultaneously to respect objective truth and to assert that there is no warming trend. A respected member of the Australian Academy of Social Sciences rose to this challenge in criticism of update paper 1, and a retiring senator for South Australia and former finance minister in criticism of update paper 2. The former’s case depended on disputing the reliability of the data, and ignored the observation of glaciers, sea-level rise and changes in locations of plants and animals that do not depend on measurement of temperature. The latter seems not to have felt the need to provide any support for an argument that runs against strong intellectual authority. See D. Aitken 2011, ‘Reflections on Ross Garnaut’s Cunningham Lecture’, Dialogue 30(1): 67–71; J. Thompson, ‘Minchin ups stakes in carbon war’, ABC Online, www.abc.net.au, 11 March 2011.

See R. Garnaut with D. Llewellyn-Smith 2009, The Great Crash of 2008, Melbourne University Publishing, Melbourne.

Chapter 1: Beyond reasonable doubt

This chapter also draws on update paper 5.

A number of studies have analysed the level of agreement among scientists that climate change is due largely to human activities, and the credibility of scientists taking different positions on climate change. Professor Murray Goot, Department of Politics and International Relations, Macquarie University, conducted a review of the extent to which the major studies demonstrated agreement among credible scientists. The review found that a range of types of evidence demonstrated that most scientists accept that human activity is a significant factor contributing to rising global temperatures. The results of the review are detailed in the following reports prepared in 2011 by Murray Goot for the Garnaut Review 2011 update: Anthropogenic climate change: expert credibility and the scientific consensus; The ‘scientific consensus on climate change’: Doran and Zimmerman revisited; and Climate scientists and the consensus on climate change: the Bray and von Storch surveys, 1996–2008.

See, for example, Climate Commission 2011, The critical decade: climate science, risks and responses, Department of Climate Change and Energy Efficiency, Canberra.

Created in 1988 by the World Meteorological Organization and the United Nations Environment Programme, the Intergovernmental Panel on Climate Change publishes comprehensive scientific reports about global climate change. The first review of the state of knowledge on various aspects of climate change was completed in 1990 and the latest, the Fourth Assessment Report, was released in 2007. These and other reports are prepared to inform parties to the United Nations Framework Convention on Climate Change so that climate change policy decisions are based on the best available science. Intergovernmental Panel on Climate Change 2010, Understanding climate change: 22 years of IPCC assessment, World Meteorological Organization, Switzerland.

Recent trends in carbon dioxide emissions from fossil fuel combustion are described in the following: International Energy Agency 2010, CO2 emissions from fuel combustion; T.D. Keenan and H.A. Cleugh (eds) 2011, Climate science update: a report to the 2011 Garnaut Review, CAWCR Technical Report No. 036; M.R. Raupach and P.J. Fraser 2011, ‘Climate and greenhouse gases’, in H.A. Cleugh, M. Stafford Smith, M. Battaglia and P. Graham (eds), Climate change: science and solutions for Australia , CSIRO Publishing, Melbourne, pp. 27–46.

J.G. Canadell, C. Le Quéré, M.R. Raupach, C.B. Field, E.T. Buitenhuis, P. Ciais, T.J. Conway, N.P. Gillett, R.A. Houghton and G. Marland 2007, ‘Contributions to accelerating atmospheric CO2 growth from economic activity, carbon intensity, and efficiency of natural sinks’, Proceedings of the National Academy of Sciences 104(47): 18866–70; T.D. Keenan and H.A. Cleugh (eds) 2011, Climate science update: a report to the 2011 Garnaut Review, CAWCR Technical Report No. 036; C. Le Quéré, M.R. Raupach, J.G. Canadell, G. Marland, L. Bopp, P. Ciais, T.J. Conway, S.C. Doney, R. Feely, P. Foster, P. Friedlingstein, K. Gurney, R.A. Houghton, J.I. House, C. Huntingford, P. Levy, M.R. Lomas, J. Majkut, N. Metzl, J. Ometto, G.P. Peters, I.C. Prentice, J.T. Randerson, S.W. Running, J.L. Sarmiento, U. Schuster, S. Sitch, T. Takahashi, N. Viovy, G.R. van der Werf and F.I. Woodward, 2009, ‘Trends in the sources and sinks of carbon dioxide’, Nature Geoscience 2: 831–36; M.R. Raupach and J.G. Canadell 2008, ‘Observing a vulnerable carbon cycle’, in A.J. Dolman, R. Valentini and A. Freibauer (eds), The continental-scale greenhouse gas balance of Europe, Springer, New York, pp. 5–32.

IPCC 2007, Climate Change 2007: The physical science basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, S. Solomon, D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. Miller (eds), Cambridge University Press, Cambridge; T.D. Keenan and H.A. Cleugh (eds) 2011, Climate science update: a report to the 2011 Garnaut Review, CAWCR Technical Report No. 036; National Oceanic and Atmospheric Administration 2011, Carbon dioxide concentration trends, US Department of Commerce.

IPCC 2007, Climate Change 2007: The physical science basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, S. Solomon, D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. Miller (eds), Cambridge University Press, Cambridge, p. 5.

World Meteorological Organization 2011, ‘2010 equals record for world’s warmest year’, Press Release No. 906.

P. Pall, T. Aina, D.A. Stone, P.A. Stott, T. Nozawa, A.G.J. Hilberts, D. Lohmann and M.R. Allen 2011, ‘Anthropogenic greenhouse gas contribution to flood risk in England and Wales in autumn 2000’, Nature 470(7334): 382–85.

S.K. Min, X. Zhang, F.W. Zwiers and G.C. Hegerl 2011, ‘Human contribution to more-intense precipitation extremes’, Nature 470(7334): 378–81.

A.J.E. Gallant and D.J. Karoly 2010, ‘A combined climate extremes index for the Australian region’, Journal of Climate 23(23): 6153–65.

D. Abbs 2009, ‘The impact of climate change on the climatology of tropical cyclones in the Australian region’, CAWCR Technical Report.

M.A. Bender, T.R. Knutson, R.E. Tuleya, J.J. Sirutis, G.A. Vecchi, S.T. Garner and I.M. Held 2010, ‘Modeled impact of anthropogenic warming on the frequency of intense Atlantic hurricanes’, Science 327: 454–58; T.R. Knutson, J.L. McBride, J. Chan, K. Emanuel, G. Holland, C. Landsea, I. Held, J.P. Kossin, A.K. Srivastava and M. Sugi 2010, ‘Tropical cyclones and climate change’, Nature Geoscience 3: 157–63.

B.C. Bates, P. Hope, B. Ryan, I. Smith, and S. Charles 2008, ‘Key findings from the Indian Ocean Climate Initiative and their impact on policy development in Australia’, Climatic Change 89: 339–54; W. Cai and T. Cowan 2006, ‘SAM and regional rainfall in IPCC AR4 models: can anthropogenic forcing account for southwest Western Australian rainfall reduction?’, Geophysical Research Letters 33: L24708; W. Cai, A. Sullivan and T. Cowan 2009, ‘Climate change contributes to more frequent consecutive positive Indian Ocean Dipole events,’ Geophysical Research Letters 36: L19783; CSIRO 2010, Climate variability and change in south-eastern Australia: a synthesis of findings from Phase 1 of the South Eastern Australian Climate Initiative; P. Hope, B. Timbal and R. Fawcett 2010, ‘Associations between rainfall variability in the southwest and southeast of Australia and their evolution through time’, International Journal of Climatology 30(9): 1360–71.

I.M. Held and B.J. Soden 2006, ‘Robust response of the hydrological cycle to global warming’, Journal of Climate 19: 5686–99.

T.D. Keenan and H.A. Cleugh (eds) 2011, Climate science update: a report to the 2011 Garnaut Review, CAWCR Technical Report No. 036.

See W. Cai and T. Cowan 2006, ‘SAM and regional rainfall in IPCC AR4 models: can anthropogenic forcing account for southwest Western Australian rainfall reduction?’, Geophysical Research Letters 33: L24708; CSIRO and Australian Bureau of Meteorology 2007, Climate change in Australia: technical report 2007, CSIRO, Melbourne.

Western Australian Water Corporation inflow data for major dams (excluding the Stirling, Wokalup and Samson Brook dams) show that annual inflow averaged 338 gigalitres between 1911 and 1974, 177 gigalitres between 1975 and 2000, 92.4 gigalitres between 2001 and 2005, and 57.7 gigalitres between 2006 and 2010, with annual inflow in 2010 dropping to 6.2 gigalitres.

C.M. Domingues, J.A. Church, N.J. White, P.J. Gleckler, S.E. Wijffels, P.M. Barker and J.R. Dunn 2008, ‘Improved estimates of upper-ocean warming and multi-decadal sea-level rise’, Nature 453: 1090–93; M. Ishii and M. Kimoto 2009, ‘Reevaluation of historical ocean heat content variations with an Xbt depth bias correction’, Journal of Oceanography 65: 287–99; S. Levitus, J.I. Antonov, T.P. Boyer, R.A. Locarnini and H.E. Garcia 2009, ‘Global ocean heat content 1955–2007 in light of recently revealed instrumentation problems’, Geophysical Research Letters 36: L07608.

Estimates of global average sea-level rise based on observations up to 2009 are presented in J.A. Church and N.J. White 2011, ‘Changes in the rate of sea-level rise from the late 19th to the early 21st century’, Surveys in Geophysics doi: 10.1007/s10712-011-9119-1.

Developments since the 2007 IPCC Fourth Assessment Report in understanding of future sea-level change, including the contribution from icesheets on Greenland and Antarctica, are discussed in J.A. Church, J.M. Gregory, N.J. White, S. Platten and J.X. Mitrovica 2011, ‘Understanding and projecting sea-level change’, Oceanography 24(2): 84–97.

For further details and a comparison of studies, see update paper 5, p. 23; S. Rahmstorf 2010, ‘A new view on sea level rise’, Nature Reports Climate Change 4: 44–45.

W.T. Pfeffer, J.T. Harper and S. O’Neel 2008, ‘Kinematic constraints on glacier contributions to 21st-century sea-level rise’, Science 321(5894): 1340–43.

W. Steffen, A. Burbidge, L. Hughes, R. Kitching, D. Lindenmayer, W. Musgrave, M. Stafford Smith and P.A. Werner 2009, Australia’s biodiversity and climate change, CSIRO Publishing, Canberra.

Secretariat of the Convention on Biological Diversity 2009, Scientific synthesis of the impacts of ocean acidification on marine biodiversity, Montreal, Technical Series No. 46.

P. Leadley, H.M. Pereira, R. Alkemade, J.F. Fernandez-Manjarres, V. Proenca, J.P.W. Scharlemann and M.J. Walpole 2010, Biodiversity scenarios: projections of 21st century change in biodiversity and associated ecosystem services, Technical Series No. 50, Secretariat of the Convention on Biological Diversity, Montreal; T.M. Lenton, H. Held, E. Kriegler, J.W. Hall, W. Lucht, S. Rahmstorf and H.J. Schellnhuber 2008, ‘Tipping elements in the earth’s climate system’, Proceedings of the National Academy of Sciences 105(6): 1786–93.

E. Kriegler, J.W. Hall, H. Held, R. Dawson and H.J. Schellnhuber 2009, ‘Imprecise probability assessment of tipping points in the climate system’, Proceedings of the National Academy of Sciences, 106(13): 5041–46.

CSIRO and Australian Bureau of Meteorology 2007, Climate change in Australia: technical report 2007, CSIRO, Melbourne; IPCC 2007, Climate Change 2007: The physical science basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, S. Solomon, D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. Miller (eds), Cambridge University Press, Cambridge.

C. Tarnocai, J.G. Canadell, E.A.G. Schuur, P. Kuhry, G. Mazhitova and S. Zimov 2009, ‘Soil organic carbon pools in the northern circumpolar permafrost region’, Global Biogeochemical Cycles 23: GB2023.

A recent study ranked a number of tipping points high in both understanding and certainty of projections (for example, the Arctic tundra/permafrost, snow and glacier melt and tropical coral reefs). The authors of the study concluded that while the existence of potentially irreversible tipping points can be anticipated with high confidence, specific thresholds cannot yet be predicted with adequate precision and advance warning. This presents a significant management challenge and a high risk that critical thresholds could be breached. See P. Leadley, H.M. Pereira, R. Alkemade, J.F. Fernandez-Manjarres, V. Proenca, J.P.W. Scharlemann, M.J. Walpole 2010, Biodiversity scenarios: projections of 21st century change in biodiversity and associated ecosystem services, Technical Series No. 50, Secretariat of the Convention on Biological Diversity, Montreal.

J.L. Lean and D.H. Rind 2008, ‘How natural and anthropogenic influences alter global and regional surface temperatures: 1889 to 2006’, Geophysical Research Letters 35: L18701.

Chapter 2: Carbon after the Great Crash

This chapter also draws on update papers 3 and 5.

The ‘Platinum Age’ of the early 20th century is so named because global economic growth in this period has been and is expected to continue to be more extensive and stronger than in the ‘Golden Age’ of the 1950s and 1960s. I used this term in December 2006 in a paper titled ‘Making the international system work for the Platinum Age’ for a seminar at the University of Queensland in honour of the 80th birthday of economic historian Angus Maddison. See also R. Garnaut 2011 ‘Making the international system work for the Platinum Age of Asian growth’, in S. Armstrong and V.T. Thanh (eds), International institutions and Asian development, Routledge, New York, pp. 25–48; R. Garnaut and Y. Huang 2007, ‘Mature Chinese growth leads the global Platinum Age’, in R. Garnaut and Y. Huang (eds), China: linking markets for growth, Asia Pacific Press, Australian National University, Canberra.

See, for example, D.I. Stern and F. Jotzo 2010, ‘How ambitious are China and India’s emissions intensity targets?’, Energy Policy 38(11): 6776–83.

International Energy Agency 2007, World energy outlook 2007; International Energy Agency 2010, World energy outlook 2010.

pitt&sherry 2010, Carbon emissions index, November 2010 issue.

The international treaty that sets general goals and rules for confronting climate change. It has the goal of preventing ‘dangerous’ human interference with the climate system. Signed in 1992, it entered into force in 1994, and has been ratified by all major countries of the world.

M. Meinshausen, N. Meinshausen, W. Hare, S. Raper, K. Frieler, R. Knutti, D. Frame and M. Allen 2009, ‘Greenhouse-gas emission targets for limiting global warming to 2°C’, Nature 458(7242): 1158–62.

See, for example, M. den Elzen, M. Meinshausen and D. van Vuuren 2007, ‘Multi-gas emission envelopes to meet greenhouse gas concentration targets: costs versus certainty of limiting temperature increase’, Global Environmental Change 17(2): 260–80.

See, for example, M.H. England, A.S. Gupta and A.J. Pitman 2009, ‘Constraining future greenhouse gas emissions by a cumulative target’, Proceedings of the National Academy of Sciences 106(39): 16539–40.

J.A. Lowe, C. Huntingford, S.C.B. Raper, C.D. Jones, S.K. Liddicoat and L.K. Gohar 2009, ‘How difficult is it to recover from dangerous levels of global warming?’, Environmental Research Letters 4(2009): 1–9; R. Monastersky 2009, ‘Climate crunch: a burden beyond bearing’, Nature 458(2009): 1091–94; J. Nusbaumer and K. Matsumoto 2008, ‘Climate and carbon cycle changes under the overshoot scenario’, Global and Planetary Change 62(1–2): 164–72; S. Solomon, G.K. Plattner, R. Knutti and P. Friedlingstein 2009, ‘Irreversible climate change due to carbon dioxide emissions’, Proceedings of the National Academy of Sciences 106(6): 1704–09.

M.R. Allen, D.J. Frame, C. Huntingford, C.D. Jones, J.A. Lowe, M. Meinshausen and N. Meinshausen 2009, ‘Warming caused by cumulative carbon emissions towards the trillionth tonne’, Nature 458(7242): 1163–66.

The Convention on Biological Diversity is convening an expert group meeting in London in mid-2011 to work on defining climate-related geoengineering and assessing the potential impacts of geoengineering on biodiversity and associated ecosystem services. See Convention on Biological Diversity 2011, Call for experts on climate-related geo-engineering as it relates to the convention on biological diversity, notification, Montreal.

United Nations Environment Programme and World Meteorological Organization 2011, Integrated assessment of black carbon and tropospheric ozone: summary for decision makers.

Chapter 3: What’s a fair share?

This chapter also draws on update paper 2.

Prime Ministerial Task Group on Emissions Trading 2007, Report of the Task Group on Emissions Trading, Commonwealth of Australia, Canberra.

Pew Center on Global Climate Change 2010, Sixteenth session of the conference of the parties to the United Nations Framework Convention on Climate Change and sixth session of the meeting of the parties to the Kyoto Protocol, Mexico; J. Morgan 2011, Reflections on the Cancun Agreements, World Resources Institute, Washington DC.

D. Bodansky and E. Diringer 2010, The evolution of multilateral regimes: implications for climate change, Pew Center on Global Climate Change; Global Subsidies Initiative, K. Lang (ed.), Increasing the momentum of fossil-fuel subsidy reform: developments and opportunities, IISD-UNEP Conference Report, Geneva.

The contraction and convergence approach has figured in the international climate change debate since being developed by the Global Commons Institute in the United Kingdom during the 1990s. The approach has been promoted by India and discussed favourably in Germany and the United Kingdom. Reports by Nicholas Stern and the Commission on Growth and Development in 2008 supported variations on this general approach pointing to the need for all countries to aim for equal per capita emissions over the long term.

Productivity Commission 2011, Emission reduction policies and carbon prices in key economies: methodology working paper.

Productivity Commission 2010, Study into emission reduction policies in key economies: Productivity Commission background paper; Productivity Commission 2011, Emission reduction policies and carbon prices in key economies: methodology working paper.

Chapter 4: Pledging the future

This chapter also draws on update paper 2.

J. Range, ‘REC seller predicts a price rise’, The Australian, 3 May 2011.

UN Framework Convention on Climate Change 2011, Compilation of economy-wide emission reduction targets to be implemented by parties including in Annex I to the Convention, Subsidiary Body for Technical Advice and Subsidiary Body for Implementation, United Nations; UN Framework Convention on Climate Change 2011, Compilation of information on nationally appropriate mitigation actions to be implemented by parties including in Annex I to the Convention, Ad Hoc Working Group on Long-Term Cooperative Action under the Convention, United Nations.

Government of India, Planning Commission 2011, Interim report of the expert group on low carbon strategies for inclusive growth.

Excludes land use, land-use change and forestry. World Resources Institute 2011, Climate analysis indicator tool, version 8.

Data analysis based on various World Economic Forum global competiveness reports. See, for example, K. Schwab 2011, The Global competitiveness report 2010–2011, World Economic Forum.

C. Huhne 2011, Fourth carbon budget: oral ministerial statement, 17 May. The previous target under the third carbon budget was 35 per cent.

China’s first such plan that incorporates an emissions intensity target in addition to an energy intensity target. Climate change mitigation policies and outcomes for the five-year plans for 2006–2010 and 2011–2015 are discussed in W. Jiabao 2011, Report on the work of the government, delivered at the Fourth Session of the Eleventh National People’s Congress on 5 March 2011; The Climate Group 2011, Delivering low carbon growth: a guide to China’s 12th five year plan.

During a speech at the Australian National University in March 2011, National Development and Reform Commission Vice Chairman Xie Zhenhua outlined fiscal interventions including cancellation of value-added tax rebates and application of electricity price surcharges for enterprises with high levels of energy use. A National Development and Reform Commission circular released in May 2010 stated that enterprises with high electricity use in certain industries, including aluminium, steel and cement, would be subject to surcharges of RMB 0.1 per kilowatt hour or RMB 0.3 per kilowatt hour, depending on levels of electricity use. These surcharges are equivalent to costs of around $19 and $57 respectively per tonne of carbon dioxide equivalent. Estimates are based on exchange rates current at May 2011 and a carbon intensity of energy of 0.745 tonnes carbon dioxide per megawatt hour. Provincial governments are responsible for implementation of the surcharges. National Development and Reform Commission 2010, Circular on abolishing preferential electricity price for high energy-consuming enterprises, NDRC No. 978 2010; International Energy Agency 2010, CO2 emissions from fossil fuel combustion 2010.

The Climate Group 2011, Delivering low carbon growth: a guide to China’s 12th five year plan; Department of Climate Change and Energy Efficiency 2011, Status of global mitigation action: current targets and policies in key countries, update of paper released by Multi-Party Climate Change Committee in November 2010, Department of Climate Change and Energy Efficiency, Canberra.

In relation to Annex I developed countries. Note that the following countries have higher emissions per person: Qatar (55.5 tonnes of carbon dioxide equivalent per person), United Arab Emirates (38.8) and Bahrain (25.4).

See, for example, Committee on America’s Climate Choices 2011, America’s climate choices, National Academy of Sciences.

Massachusetts Institute of Technology 2010, The future of natural gas: an interdisciplinary MIT study, interim report.

See, for example, World Resources Institute 2010, US climate action in 2009–10, Washington DC. Information on carbon pricing measures in countries other than the United States and China is drawn from An overview of international climate change policies, produced by the Department of Climate Change and Energy Efficiency for the Multi-Party Climate Change Committee.

Chapter 5: Correcting the great failure

This chapter also draws on update paper 6.

N. Stern 2007, The economics of climate change: The Stern Review, Cambridge University Press, Cambridge.

See the 2008 Review and Australian Treasury 2008, Australia’s low pollution future: the economics of climate change mitigation, Australian Government, Canberra.

CDC Climat Research 2011, Tendances Carbone 58: 1.

US Government 2010, Technical support document: social cost of carbon for regulatory impact analysis under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, US Government.

UK Committee on Climate Change 2008, Building a low-carbon economy—the UK’s contribution to tackling climate change: the first report of the Committee on Climate Change, The Stationery Office, London.

H. Hotelling 1931, ‘The economics of exhaustible resources’, Journal of Political Economy 39(2): 137–75.

R. Garnaut 2011, Governance arrangements for Australia’s carbon pricing scheme, supplementary note.

Australian Government 2008, Carbon Pollution Reduction Scheme: Australia’s low pollution future, Commonwealth of Australia, Canberra.

Chapter 6: Better climate, better tax

This chapter also draws on update paper 6.

R. Garnaut 2011, A 10-year plan for carbon pricing revenue, supplementary note.

See the 2008 Review, p. 248 and Australian Treasury 2008, Australia’s low pollution future: the economics of climate change mitigation, Australian Government, Canberra.

S. Hatfield-Dodds 2011, Assessing the effects of using a share of carbon price revenues for targeted tax reform: a report to the Garnaut Review 2011 Update, CSIRO Energy Transformed Flagship, Canberra.

K. Henry 2010, Australia’s future tax system: report to the treasurer, Commonwealth of Australia, Canberra.

Australian Treasury 2011, 2011–12 Budget, Commonwealth of Australia, Canberra.

The Australian Bureau of Statistics has announced that it would implement a recommendation to produce more frequent (monthly rather than quarterly) estimates of the CPI if funding becomes available.

See, for example, Australian Treasury 2008, Australia’s low pollution future: the economics of climate change mitigation, Australian Government, Canberra; US Government 2010, Technical support document: social cost of carbon for regulatory impact analysis under Executive Order 12866, Interagency Working Group on Social Cost of Carbon, US Government; European Commission 2010, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: analysis of options to move beyond 20% greenhouse gas emission reductions and assessing the risk of carbon leakage, European Commission, Brussels; Grattan Institute 2010, Restructuring the Australian economy to emit less carbon: main report, Grattan Institute, Melbourne.

R. Garnaut 2011, Governance arrangements for Australia’s carbon pricing scheme, supplementary note.

R. Garnaut 2011, A 10-year plan for carbon pricing revenue, supplementary note.

Chapter 7: The best of times

This chapter also draws on update papers 2 and 6.

Commonwealth of Australia 1985, Reform of the Australian tax system: draft white paper, Canberra.

?Statement by Business Council of Australia to National Taxation Summit?, The Age, 2 July 1985.

M. Franklin, ‘Julia Gillard rejects need to contain China’, The Australian, 27 April 2011.

G. Kraehe 2011, ‘Australian manufacturing—an industry sector under siege’, address to the National Press Club, Canberra.

B. Packham, ‘Gillard government under growing pressure over fears of job losses under carbon tax’, The Australian, 15 April 2011.

G. Stevens 2011, Remarks at the Victoria University public conference on the resources boom: understanding national and regional implications, Melbourne.

W. Swan 2011, Treasurer’s economic note: back in the black; our patchwork economy; the carbon scare campaign; coming up. The chairman of Bluescope Steel has commented that numbers like these do not take into account increases in the carbon price over time, or the effects on carbon pricing on the costs of other inputs, notably electricity. Systematic accounting for these influences does not seriously qualify the implications of the treasurer’s note over the period to the introduction of a principled approach to assistance to the trade-exposed industries. Some members of the business community have expressed interest in moving to a principled approach to assistance administered by an independent authority like the Productivity Commission in various face-to-face meetings with me.

This quote was part of the following statement: ‘So the reality is we have to do two things at once: we have to cut carbon emissions and at the same time find ways to meet the increasing energy needs of emerging and developing economies. The sheer size of projected energy demand means that we will have to use many different sources. Each source has different costs and environmental impacts.’ J. Nasser, Address to the Melbourne Mining Club, 9 May 2011.

Australian Government 2010, Australia’s emissions projections 2010, Department of Climate Change and Energy Efficiency, Canberra.

C. Schwartz 2010, ‘The Australian Government Guarantee Scheme’, Reserve Bank of Australia Bulletin, March quarter 2010, pp. 19–26.

See K. Anderson and R. Garnaut 1985, ‘Australia’s trade growth with developing economies’, The Developing Economies 23(2): 121–37.

Chapter 8: Adapting efficiently

This chapter also draws on update papers 1, 4 and 5.

International Energy Agency 2007, World energy outlook 2007; International Energy Agency 2010, World energy outlook 2010.

For more information on this assessment, see the 2008 Review, p. 102.

F. Cimato and M. Mullan 2010, Adapting to climate change: analysing the role of government, Defra Evidence and Analysis Series No. 1, UK Department for Environment, Food and Rural Affairs.

K. Henry 2010, ‘Chapter E: Enhancing social and market outcomes’, Australia’s future tax system: report to the treasurer, Commonwealth of Australia, Canberra.

R. Ben-David 2010, Convincing regulators of the need for climate change adaptation. Really?, presentation at the Climate Change Adaptation Workshop, Water Services Association of Australia, 25–26 October 2010.

Productivity Commission 2011, Australia’s urban water sector, draft report.

P. Doherty 2009, ‘Climate change/cultural change: the challenge for the future’, keynote lecture, 2009 Festival of Ideas, University of Melbourne, 15 June.

Department of Climate Change 2009, Climate change risks to Australia’s coast: a first pass national assessment, Australian Government, Canberra.

Department of Climate Change and Energy Efficiency 2010, Developing a national coastal adaptation agenda: a report on the National Climate Change Forum, Australian Government, Canberra; Coasts and Climate Change Council 2010, Report to Minister Combet—executive summary, Department of Climate Change and Energy Efficiency, Canberra.

Department of Climate Change 2009, Adapting to climate change in Australia: An Australian Government position paper, Australian Government, Canberra.

National Emergency Management Committee 2011, National Strategy for Disaster Resilience: building our nation’s resilience to disasters, available at www.coag.gov.au.

W. Steffen, A. Burbidge, L. Hughes, R. Kitching, D. Lindenmayer, W. Musgrave, M. Stafford Smith and P.A. Werner 2009, Australia’s biodiversity and climate change: summary for policy makers, CSIRO Publishing, Canberra.

Chapter 9: Innovation nation

This chapter also draws on update papers 4 and 7.

Z. Shi 2011, ‘Can Australia save the world?’, Focus International 2: 14–16.

International Energy Agency 2011, Global gaps in clean energy and RD&D: updates and recommendations for international collaboration, report for the Clean Energy Ministerial, France.

Jagdish Bhagwati has called for ‘subsidising the purchase of environment-friendly technologies by the developing countries. J. Bhagwati 2006, ‘A global warming fund could succeed where Kyoto failed’, Financial Times, 16 August.

R. Garnaut 2011, A 10-year plan for carbon pricing revenue, supplementary note.

Productivity Commission 2007, Public support for science and innovation, Productivity Commission research report overview. See also T. Cutler 2008, Venturous Australia: building strength in innovation, review of the National Innovation System for the Department of Innovation, Industry Science and Research, Victoria.

P. Hearps and D. McConnell 2011, Renewable energy technology cost review, Melbourne Energy Institute.

See, for example, B. Balagopal, P. Paranikas and J. Rose 2010, What’s next for alternative energy?, The Boston Consulting Group.

Department of Climate Change and Energy Efficiency 2011, Quarterly update of Australia’s National Greenhouse Gas Inventory: September 2010, Commonwealth of Australia, Canberra.

P. Hearps and D. McConnell 2011, Renewable energy technology cost review, Melbourne Energy Institute.

See, for example, P. Hearps and D. McConnell 2011, Renewable energy technology cost review, Melbourne Energy Institute; CSIRO 2011, Concentrating solar power—drivers and opportunities for cost-competitive electricity, National Research Flagships, Newcastle; Geoscience Australia and ABARE 2010, Australian energy resource assessment, Canberra.

See CSIRO 2011, Concentrating solar power—drivers and opportunities for cost-competitive electricity, National Research Flagships, Newcastle.

S. Derby 2011, ‘Green pressure: the industry is in reverse from producing unwanted vehicles’, IBISWorld Industry Report C2811: Motor vehicle manufacturing in Australia, IBISWorld, Melbourne.

R. Lache, D. Galves and P. Nolan 2010, Vehicle electrification: more rapid growth; steeper price declines for batteries, Deutsche Bank Industry Update, 7 March.

P. Hearps and D. McConnell 2011, Renewable energy technology cost review, Melbourne Energy Institute.

Chapter 10: Transforming the land sector

This chapter also draws on update paper 4.

The World Bank in April 2011 reported a US Department of Agriculture assessment showing that the use of corn for biofuels in the United States increased from 31 per cent of total corn output in 2008–09 to a projected 40 per cent in 2010–11. World Bank Poverty Reduction and Equity Group 2011, Food price watch: April 2011, World Bank.

G. Fischer, E. Hizsnyik, S. Prieler, M. Shah and H. van Velthuizen 2009, Biofuels and food security, OPEC Fund for International Development, Vienna.

The International Food Policy Research Institute projected food security scenarios up to 2050 using a number of different scenarios for population and income growth and climate change. The study found that food prices are likely to rise between 2010 and 2050 as a result of growing incomes and population, with additional price increases due to the negative productivity effects of climate change. G.C. Nelson, M.W. Rosegrant, A. Palazzo, I. Gray, C. Ingersoll, R. Robertson, S. Tokgoz, T. Zhu, T.B. Sulser, C. Ringler, S. Msangi and L. You 2010, Food security, farming, and climate change to 2050: scenarios, results, policy options, International Food Policy Research Institute, Washington DC.

The Australian Government’s most recent estimates of national greenhouse gas emissions under the accounting rules that apply for the Kyoto Protocol are provided in Department of Climate Change and Energy Efficiency 2011, National Greenhouse Gas Inventory: accounting for the Kyoto target, December quarter 2010, Department of Climate Change and Energy Efficiency, Canberra.

Department of Climate Change 2008, Carbon Pollution Reduction Scheme green paper, Commonwealth of Australia, Canberra, pp. 119–21.

Parliament of the Commonwealth of Australia, House of Representatives 2011, Carbon Credits (Carbon Farming Initiative) Bill 2011, Commonwealth of Australia, Canberra.

Unless otherwise indicated, references in this chapter to CSIRO analysis relate to the following report: CSIRO 2009, An analysis of greenhouse gas mitigation and carbon biosequestration opportunities from rural land use, CSIRO, St Lucia, Queensland.

See, for example, T.D. Keenan and H. Cleugh 2011, Climate science update for the Garnaut Review, CAWCR Technical Report No. 036.

See, for example, M. Alchin, E. Tierney and C. Chilcott 2010, Carbon capture project final report: an evaluation of the opportunity and risks of carbon offset based enterprises in the Kimberley–Pilbara region of Western Australia, Bulletin 4801, Department of Agriculture and Food, Western Australia; CSIRO 2009, An analysis of greenhouse gas mitigation and carbon biosequestration opportunities from rural land use, CSIRO, St Lucia, Queensland; J. Sanderman, R. Farquharson and J. Baldock 2010, Soil carbon sequestration potential: a review for Australian agriculture, report prepared for the Department of Climate Change and Energy Efficiency by CSIRO; G.B. Witt, M.V. Noël, M.I. Bird and R.J.S. Beeton 2009, Investigating long-term grazing exclosures for the assessment of carbon sequestration and biodiversity restoration potential of the mulga lands, final report for the Department of the Environment, Water, Heritage and the Arts by the University of Queensland.

S. Heckbert, J. Davies, G. Cook, J. McIvor, G. Bastin and A. Liedloff 2008, Land management for emissions offsets on Indigenous lands, CSIRO Sustainable Ecosystems, Townsville.

P.J. Whitehead, P. Purdon, P.M. Cooke, J. Russell-Smith and S. Sutton 2009 ‘The West Arnhem Land Fire Abatement (WALFA) project: the institutional environment and its implications’, in J. Russell-Smith, P. Whitehead and G.D. Cooke 2009 (eds), Culture, ecology and economy of fire management in north Australian savannas: rekindling the Wurrk tradition, CSIRO, Collingwood.

Department of Climate Change and Energy Efficiency 2011, National inventory report 2009, vol. 2, Australian Government submission to the UN Framework Convention on Climate Change, Commonwealth of Australia, Canberra, p. 99.

Australian Academy of Technological Sciences and Engineering 2011, New power cost comparisons: levelised cost of electricity for a range of new power generating technologies, ATSE, Melbourne.

Planting and regenerating forests and woodlands can provide carbon sequestration and improve biodiversity, particularly where locally suitable native species are used. However, landholders could respond to a carbon price by favouring forests comprising a single species over biodiverse forests because lower establishment costs and higher carbon sequestration rates can make them more profitable. A study looking at southern Australia found that at a carbon price of $10 per tonne of carbon dioxide, higher carbon sequestration rates in single species plantings would lead to profits that were $7 per hectare higher than with biodiverse plantings. This example shows that incentives for biodiversity conservation that accompany the carbon price incentive could allow biosequestration activities to deliver additional biodiversity benefits at relatively low cost. See N.D. Crossman, B.A. Bryan and D.M. Summers 2011, ‘Carbon payments and low-cost conservation’, Conservation Biology 25, doi: 10.1111/j.1523-1739.2011.01649.x.

The Commonwealth, state and territory governments have established a range of incentive mechanisms to help protect and enhance biodiversity. Auction-based programs such as BushTender and EcoTender in Victoria have helped in expanding conservation activities on private land at relatively low cost to government. Landholders make bids based on the costs of management actions, and bids are assessed against cost and environmental benefit criteria. Landholders whose bids deliver best value for money are offered contracts and then receive periodic payments. Incentive programs can be designed to give landholders flexibility to sell biodiversity and carbon services in separate markets, and this can reduce overall costs to government. See Department of Sustainability and Environment 2008, BushTender: Rethinking investment for native vegetation outcomes. The application of auctions for securing private land management agreements, Department of Sustainability and Environment, East Melbourne; M. Eigenraam, L. Strappazzon, N. Lansdell, C. Beverly and G. Stoneham 2007, ‘Designing frameworks to deliver unknown information to support market-based instruments’, Agricultural Economics 37: 261–69.

Chapter 11: Electricity transformation

This chapter also draws on update paper 8.

W.S. Jevons 1895, The coal question: an inquiry concerning the progress of the nation, and the probable exhaustion of our coalmines, Macmillan, London, p. 349.

Australian Bureau of Statistics 2010, Consumer price index, Australia, Dec 2010, cat. no. 6401.1, ABS, Canberra.

Current regulatory period revenues are forecast in regulatory determinations. Values in this paragraph are from Australian Energy Regulator 2010, State of the energy market 2010.

Data are based on the National Electricity Market, which excludes Western Australia and the Northern Territory.

Victoria has a private transmission network, but planning is carried out by a not-for-profit agency, the Australian Energy Market Operator. New transmission projects are competitively tendered and not subject to economic regulation.

Organisation for Economic Co-operation and Development 2008, Household behaviour and the environment: reviewing the evidence, OECD, Paris.

Energy Supply Association of Australia 2010, Electricity gas Australia 2010, ESAA, Melbourne.

When the system is at the point of shedding load, the price must be set at the price cap of $12,500 per megawatt hour. Or, after the equivalent of 7.5 hours of price cap in a week, an administrative price cap applies of $300 per megawatt hour.

Faced with large maintenance outlays and limited prospects for future revenue, owners will rationally cut back on maintenance and accept a higher risk of outage which will be traded off against the value of peak capacity. This is an intended outcome.

Australian Bureau of Statistics 2006, Household expenditure survey 2003–04, cat. no. 6530.0, ABS, Canberra.

Australian Treasury 2008, ‘Chapter 6: Mitigation scenarios—Australian results’, Australia’s low pollution future: the economics of climate change mitigation, Australian Government, Canberra.

Prime Minister’s Task Group on Energy Efficiency 2010, Report of the Prime Minister’s Task Group on Energy Efficiency, Canberra.