Innovation will ensure Australia adapts to low-carbon economy: Garnaut

The Government’s climate change adviser, Ross Garnaut, says the Gillard Government’s attempt to put a price on carbon is one of the most difficult policy struggles ever attempted, and warns if Australia fails to take action against global warming now, it will simply pay more in the future.

According to Garnaut, Australia can prosper in a low-carbon economy, just as it managed to survive the GFC relatively unscathed.

Likewise, he argued that new jobs will emerge as Australia slices its carbon emissions, just as new jobs emerged with the decline of Government protectionism.

“The story of an adjustment to a carbon price is a story of innovation,” Garnaut said in his “new intellectual home” of Melbourne last night.

Noting this is the fourth time Australia has moved toward pricing carbon, Garnaut said failing to legislate this time won’t end the debate about how to reduce emissions – “but may be the end of the debate about how to do it in a low-cost way.”

He argued that shortly after the scheme is implemented, people will wonder what the fuss is about, drawing parallels with the introduction of the “highly contentious” GST and the credibility of the then Labor Opposition’s promise to withdraw parts of the tax.

Garnaut argued that a carbon price, set at between $20 and $30 per tonne for three years from July next year, would have a stabilising effect on the economy.

He said if the Australian dollar remains high, the country can import permits which would reduce downward pressure on vulnerable sectors; and if the resources boom comes to an end, the nation can carry more of the emissions-cutting load.

Garnaut, whose recently updated report on Australia’s response to climate change said a carbon price was the most effective method to take action, said he had “regrettably concluded” that the case to take firm action had been strengthened by scientific evidence since his initial report several years ago.

He reiterated that Australia will be more affected by climate change than other countries, because it is already a hot and dry country, and located in a region of developing countries, which will have problems adapting to climate change.

Garnaut added there is no reason why carbon policy should be a matter of partisan policy, adding Australia stands out for the “modesty” of its bipartisan ambition to cut carbon emissions by 5% by 2020.

The comments come as Citigroup said it would need to see mine-specific data and run numbers to be convinced that mine closures will occur under a carbon price. A report commissioned by the Australian Coal Commission this week tipped widespread mine closures and jobs losses.

The bank said a $20 carbon price could deliver an earnings hit to coalminers of between 2-4%.

“Hypothetically, a carbon price might slightly bring forward closure of a highly ‘gassy’ and/or low-margin mine, but we would need to see mine-specific data and run the numbers to be convinced,” the report said.

The Government has also revealed plans for a $12 million advertising campaign for its carbon tax policy, which is currently under discussions with the Greens and cross-benchers. The independents have criticised the Government’s ad plans, with independent MP Tony Windsor saying this morning that a deal could be impossible to reach.