Garnaut Review - interim report now out

The interim report of the Garnaut Climate Change Review is now out and is required reading if you're interested in what an Australian emissions trading scheme will look like. The review was commissioned last year by Australia's State and Territory Governments (and the then federal opposition - now federal Government) to examine the impacts and opportunities of climate change. It will propose "a national framework for action, with recommendations for medium to long-term policy options to minimise the environmental and economic impacts of climate change".

From the press release:

“Contrary to the conventional wisdom which has dominated Australian debate over the past decade, comprehensive global efforts to reduce emissions will play to Australia’s strengths,” said Professor Garnaut. “It is in Australia’s interests for the world to adopt a strong and effective position on climate change mitigation.”...

The Report states that Australia’s interest in strong global action stems from its “exceptional sensitivity to climate change”, and its “exceptional opportunity to do well in a world of effective global mitigation”.

“We have many resources and skills that will allow us to convert strong global action into an economic opportunity,” said Professor Garnaut. “We have a first-rate skills base in areas related to innovation, management and financial services. We have rich renewable energy resources. We are among the world’s largest exporters of uranium and natural gas which can benefit from the low-emissions’ efforts of other nations. And our agricultural sector emits less than other developed countries. By contrast, Australia would be a big loser – possibly the biggest loser among developed nations – from unmitigated climate change. Australia is more vulnerable to climate change than most other developed nations as we are highly sensitive to climate variation, and we are surrounded by mostly developing nations, which are likely to be adversely affected by rising temperatures,” he said.

Professor Garnaut said that due to a sustained period of high economic growth – led by China and India – the world was moving towards high risks of dangerous climate change more rapidly than had been generally understood. “Faster emissions growth makes mitigation more urgent and more costly. The challenge is to end the linkage between economic growth and emissions of greenhouse gases,” he said...

The Interim Report states that Australia should make firm commitments this year to both 2020 and 2050 targets that reflected “similar adjustment cost to that accepted by other developed countries”.

“Australia should be ready to go beyond its stated 60 per cent reduction target by 2050 in an effective global agreement that includes developing nations,” said Professor Garnaut.

The Report also supports the development of bilateral and regional agreements to accelerate domestic and international action. “Unilateral and regional efforts under way in parallel [to global efforts] might make for a ‘messy’process, but it is one which has the highest chance of success in the short time available,” the Report says.

The Interim Report sets out some initial considerations for the design of Australia’s emissions trading scheme (ETS), due to come into effect in 2010. Further detail on the Review’s proposals for ETS design will be released in a discussion paper in mid March 2008. “The emissions trading scheme will need to be supported by measures to correct market failures or weaknesses related to innovation, research and development, to information, and to network infrastructure,” the Report says. “Steady, long-term policies are what Australia needs in order to provide the market certainty for making appropriately large reductions in emissions at the lowest possible costs to Australians’ standards of living,” said Professor Garnaut.

Submissions are invited on the Interim Report and any issues related to the Review by 11 April 2008.

Does car sharing have a place in Australia’s transport mix?

The Wall St Journal had an article last week on the emerging car sharing industry in the US.

Car sharing is designed for people who want access to a car for short trips occasionally without the expense of owning a car. You pay a membership fee and then hourly or daily usage rates that include petrol, insurance, etc. Its target market is urban dwellers who take public transport to work and need a car only occasionally to go shopping or visit friends. They tend to be in densely populated areas where levels of car ownership are lower and so you don’t have to walk far to get a car. Apparently companies are also targeting universities and small to medium businesses where employees need vehicles for meetings or site visits but the company doesn’t have its own fleet.

There are a number of car sharing companies in Australia. I’ve noticed quite a few setting up in my neighbourhood recently.

The personal advantages:

• Much cheaper than owning a car if you only need a car now and then.
• You don’t have to worry about parking, insurance, cleaning.
• Convenient (compared to renting a car) – you book online, and swipe a membership card to unlock the car and drive away. The idea is that there would be a car within a few blocks of where you live.

The environmental advantages:

• fewer cars, since this allows some people to avoid buying a car;
• the cars tend to be the most efficient on the market;

There’s also a benefit in densely populated areas that there’s a single car being used by 15 - 20 people in a week and occupying one parking spot, rather than 15 cars occupying 15 spots.

Essentially the savings and efficiency come from the fact that share cars, unlike most others, are not simply sitting idle for 90% plus of the time.

What do you think of the idea? Would you use it? Do you think it will take off?

Economic communicators contest

Are you an effective communicator of economic ideas?

The US Association of Private Enterprise Education is running a contest with a first prize of US$10,000. You need to submit a video and a written piece explaining an economic idea. (Oh, and it's not open to tenured academics).

Details here.