Power prices up 40% under climate plan
Electricity prices will increase by 40 per cent by 2020 under economist Ross Garnaut's greenhouse target.
Professor Garnaut has recommended the nation cut emissions by 10 per cent in 12 years' time, in his latest report.
While a 40 per cent price increase would be a "big hit" for households, government revenue from emissions trading could compensate for that.
Petrol would rise by five cents a litre in 2010 if it was included in the trading scheme as he recommends.
"Over that (10-year) period, and remember it's not happening overnight, (there's) an increase of 40 per cent in electricity prices," Prof Garnaut told the National Press Club.
"It's a big hit."
But, he said, most of that added cost would come back to the government in the form of revenue from auctioning emissions trading permits.
"That can be given back to households in ways that do not remove the incentive to use electricity more economically.
"If that is done well, the revenue from the emission trading scheme can fully make up for the hit to living standards coming from those other increases.
"There's no reason, whatsoever, why Australian households should be poorer but there is a reason why they will be facing higher electricity and petrol prices."
Prof Garnaut later added that the "bottom half" of households need not be worse off under emissions trading.
In his report on the carbon trading scheme, he says Australia is a special case and its emissions should be reduced by less than any other developed country.
Australia's high level of immigration, he says, meant it cannot realistically cut emissions as much as other wealthy nations.
Prof Garnaut believes Australia should soften its target to a five per cent cut, based on 2000 levels, if an international climate pact is not forged.
He also recommended emissions trading start in 2010 with a fixed carbon price of $20 a tonne, indexed for inflation plus four per cent each year.
Prof Garnaut is pessimistic about the ability of the world to tackle climate change, and says there is "just a chance" that dangerous global warming can be avoided.
The problem of climate change was "diabolical", "intractable" and "daunting", and the world was rapidly running out of time.
Other developed nations should do more than Australia to cut emissions, Prof Garnaut says.
Canada should slash its emissions by a third, Japan by 27 per cent, the European Union by 14 per cent, and the US by 12 per cent.
Australia had the "least stringent 2020 reductions targets of any of the developed countries/regions modelled".
"Australia's population, because of the country's long-standing and large immigration program, has been and will be growing much faster than populations in other countries," Professor Garnaut said.
"The allocation formula ... accommodates Australia's rapid population growth."
Prof Garnaut has recommended Australia adopt a more ambitious 80 per cent emissions reduction target by 2050. The government has committed to a 60 per cent target by then.
He also thinks the world should move towards a per-capita system of emissions reductions, which would have a major impact on Australia because it has one of the world's highest rates of per-capita emissions.
But the "per-capita" system would not kick in until 2050 under the Garnaut plan.
The report also includes some modelling on the costs of climate change.
Prof Garnaut found not acting on climate change would cost Australia dearly, slashing eight per cent from gross national product by the end of this century. Wages would drop by 12 per cent.
But taking action on climate change would have a "manageable" cost.
Growth would be cut initially by 0.8 per cent, settling to 0.1 per cent in subsequent years.
By 2060, taking action on climate change would have a net positive affect on the economy.
Prof Garnaut's final report is due at the end of this month.
The federal opposition has refused to comment on the emissions targets recommended by Ross Garnaut.
Instead, it demanded the government release its own modelling and data on emissions.
Federal opposition environment spokesman Greg Hunt said the coalition would review Prof Garnaut's work shortly.
When asked what he thought about Prof Garnaut's 10 per cent target, Mr Hunt would only say: "We would be very careful in our judgment, we have two principles.
"One is what is the best way to reduce the world's emissions? And the second is how do we do it in a way which ensures that Australian jobs are protected in the long term?"
But Mr Hunt said the coalition would respond when the government released its own modelling.
"Mr Rudd has reduced Professor Garnaut to merely an interest, Mr Rudd himself has said the only figures that really matter are his figures, he's got them, he's sitting on them.
"Why won't he release the figures to the public? Just be open, be honest, and show the Australian people what the figures are."
The Australian Chamber of Commerce and Industry (ACCI) said Prof Garnaut is one the right track with his recommended 10 per cent target.
"It's much closer to the ballpark than some of the previous discussion," ACCI industry policy and economics director Greg Evans said.
"That's the sort of scope that Australian business has indeed been looking at in terms of modelling outcome.
"The softer the target the more measured the approach."
Mr Evans said business was awaiting Treasury modelling due next month which would define for the first time the impacts of different targets on industry sectors.
He said the Garnaut Review may turn out to be only a minor part of the process determining government climate change policy.
The Climate Institute said Prof Garnaut should have set a minimum 25 per cent reduction target to avoid damaging climate change.
"We need to reject these weak targets and to push forward as a positive player in the climate change talks so much in our national interest," institute chief executive John Connor said.
"He's assessed the situation in a way that is surprising to many of us, that he thinks that the (global) negotiations are hard to achieve.
"We think that 25 per cent target at least is very achievable."
Greenpeace said Prof Garnaut's recommended target would ensure that Australia and the world would be heading for "catastrophic" climate change.
"It's giving up on the struggle to create a safe climate globally," Steve Campbell, head of campaigns at Greenpeace Australia Pacific told reporters in Canberra.
"If the prime minister takes the advice of Prof Garnaut to adopt a 550 part per million target, it will be signing the death warrant for the Great Barrier Reef, for the Kakadu National Park, for the Murray Darling, and indeed for our international reputation."
He said if Australia wanted to become a true leader on climate change it was going to have to talk about a much harder target.
"We are recommending greater than 40 per cent by 2020," he said.
"We have got to be in this fight, we have got to be going hard, we have got to be playing to win, and this target won't do that at all."
ACTU President Sharan Burrow says whatever carbon emissions target the Rudd government accepts, it must allow green jobs to grow and keep the economy globally competitive.
"We want to sustain jobs in trade exposed industries but we want to make sure our intensive energy users are here for the haul," Ms Burrow said.
"Business needs certainty, they need to be part of the solution, they must have a plan and a target must be set to allows us to be globally competitive."
She said the rest of the picture was still to come.
But right now Australia could act on research, on technology development to grow green jobs, and on energy efficiency measures to add to those green jobs.
"We reject any notion that the economy will be impoverished," Ms Burrow said.
"We absolutely know that we can grow millions of green jobs off the opportunity and we can sustain jobs in trade exposed and energy intensive industries, she said.
Brought to you by