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PM - Climate change to cut global growth: report

[This is the print version of story http://www.abc.net.au/pm/content/2006/s1777031.htm]


PM - Monday, 30 October , 2006 18:15:00
Reporter: David Mark
MARK COLVIN: A report by a highly respected economics professor on the effects of climate change will be released officially in Britain in the next few hours, but already extensive briefings on its contents have politicians talking about massive change.

The report by the former Chief Economist of the World Bank, Sir Nicholas Stern, says the world's growth could be cut by one-fifth unless drastic action is taken now.

The UK Treasury commissioned the report, which has ended up in suggesting, in effect, spending billions now to avoid losing trillions later.

Sir Nicholas Stern says spending just one per cent of global gross domestic product would be enough to tackle the problem. Failure would cost up to $9-trillion.

Millions of people could lose their homes and livelihoods because of drought and rising waters. There would be water shortages for one billion people, and 40 per cent of the world's animals could be wiped out.

In a short time I'll be speaking to Australia's Environment Minister, Ian Campbell. But first, this preview of the Stern Report from David Mark.

DAVID MARK: The UK produces just two per cent of the world's greenhouse emissions, but clearly it's hoped the report by Sir Nicholas Stern will give it the ammunition to lead an international debate about climate change.

What's different about this report is that it's one of the first, and certainly most the significant government report to discuss the economics impacts of climate change.

Sir Nicholas Stern argues climate change could cut global gross domestic product by up to 20 per cent. But the solutions could cost as little as 1 per cent.

FRANK MULLER: It's a big turnaround in thinking from economists.

DAVID MARK: Frank Muller is the Adjunct Professor at the Institute of Environmental Studies at the University of New South Wales and formerly headed greenhouse policy for the New South Wales Government.

FRANK MULLER: Because many of us have been arguing for a long time, the costs of doing something are likely to be a lot less than has been conventionally claimed because of the innovation and the benefits of the investments that would flow from solving the problem.

And that the costs are really quite high if we don't act, and I think Katrina, Hurricane Katrina in New Orleans brought that home to many people.

DAVID MARK: Federal Labor's Treasury spokesman, Wayne Swan, was briefed on the report last week.

WAYNE SWAN: Three fundamental facts stand out from the personal briefing I received from Sir Nicholas Stern. Number one, the world and Australia has a narrow window for action against climate change.

It's what we do in the next 10 to 15 years that will count, because if we don't act during that period, what will occur in 50 years is economic and environmental devastation.

Secondly, that we must set ambitious targets to reduce carbon emissions, and at the core of that is a national and international emission-trading scheme that puts a price on carbon.

DAVID MARK: Frank Muller explains how a carbon-trading scheme might work.

FRANK MULLER: Well the key thing is that we put a price on emissions, a price on using the atmosphere to dump carbo dioxide and other greenhouse gases.

And when people say carbon trading, what they're talking about is what's called a cap and trade scheme. We cap the total amount of emissions that are allowed in a country, for example, and everyone who emits or at least, the big emitters, are required to have a permit.

And the number of permits that are available equals that total cap. And if you need more permits, you have to buy them. If you have excess permits, well then you can sell them.

The other way of course is to have a tax on carbon. They both raise prices, they both affect consumers the same way.

DAVID MARK: And there's the rub as far as the Australian Government is concerned.

There is a mechanism for carbon trading; it's the Kyoto Protocol on climate change and the Europe Union has used that framework to set up a carbon-trading market.

The Stern Report argues climate change requires an international response, and that developed countries should show leadership because they bear most of the historical responsibility for the program. But the Australian Government has argued it won't do anything against Australia's economic interests.

Australia, for example, isn't a signatory to Kyoto and the Australian Government has consistently said it won't sign because the agreement doesn't place limits on developing countries like India and China.

Here's the Prime Minister John Howard in Parliament today.

JOHN HOWARD: But China and India, although being part of Kyoto, don't carry the same burden under Kyoto that Australia carries, and that is reason why until that changes, this country won't join Kyoto, Mr Speaker.

Because unless you have everybody in, you are not going to have a solution to the problem. Well, I am not going to sign up to something ...

SPEAKER OF THE HOUSE: Order!

JOHN HOWARD: ... that imposes burdens on my country that are not imposed on our competitors, Mr Speaker.

DAVID MARK: The Australian Government also says it won't adopt a carbon-trading program if it damages the Australian economy. But Labor's Wayne Swan believes the Stern Report rejects that view.

WAYNE SWAN: He says we must set ambitious targets to reduce carbon emissions. This afternoon in the Parliament, Mr Macfarlane said that he would not be part of a any emissions-trading scheme.

This just shows that the Howard Government, at the highest levels, has its head in the sand.

DAVID MARK: Well, the Howard Government has said it won't sign the Kyoto Protocol. Isn't it time perhaps for the Opposition to abandon Kyoto, and look to a future plan to reduce carbon emissions?

WAYNE SWAN: What we must do is ratify Kyoto, but also we have to have an ambitious agenda for the future. You see, you've still got a situation where the Industry Minister won't admit that climate change is a substantial economic and environmental problem.

But of course, if you read this report, it says we need ambitious targets to reduce carbon emissions, otherwise we face a very uncertain economic and environmental future.

They still reject that fundamental thesis of the Stern Report.

MARK COLVIN: Labor's Treasury spokesman, Wayne Swan, ending David Mark's report.
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