Australian businesses want stronger emission reduction policies

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20 November 2014

LONDON: More than three-quarters of Australian businesses and investors support a stronger 2020 emission reductions target as a means to prevent their economy from failing, a new survey reveals.

The Australian Emissions Reductions Survey, which was set up by the Carbon Market Institute and the Australian National University Crawford School of Public Policy, involved 245 experts and senior executives from major greenhouse gas emitting industries, investors and professional service providers.

Australia’s government has committed to reduce the country’s emissions 5% below 2000 levels by 2020. However, 76% of the broad and influential cross-section of industry and government states that this is just not enough.

More than one quarter of the respondents calls for Australia to agree a bolder emission reductions target, but only if the international community follows suit.

This strong consensus reiterates the need for all countries to find a common pathway at the global climate talks in Paris, next year. In fact, almost 80% of the respondents want stronger targets to be aligned with those of China, the US and the European Union. The survey reveals how businesses believe Australia’s future economic growth depends on how well it responds to the challenges and opportunities of a global low carbon economy. If Australia continues to be misaligned with international climate trends, “there could be negative consequences”, with the “risk of Australia being economically disadvantaged as other countries move to decarbonize their economies”.

The data comes days after Australian Prime Minister Tony Abbott shared his differing views on climate change compared to the other G20 members. Last week, the US and China showed their leadership dramatically by announcing what was called by many a “game-changing” climate deal.

“If Australia remains a nation dependent on mining and the export of energy intensive mineral reserves and fossil fuel, our competitiveness will continue to decline,” said one of the respondents. “Particularly as the rest of the world strives for low carbon innovation and structural reform.”

Putting a price on carbon is one of the solutions to avoid this decline. The majority of the respondents who work for heavy greenhouse gas emitting companies state their companies are implementing a carbon price into decisions about future investments. Also, the respondents call for a greater involvement of the private sector in funding and reaching reduction targets.

However, companies need supportive policy to achieve such bold results. “Business expects a range of climate policy instruments to be in place to achieve our targets,” Peter Castellas, chief executive, Carbon Market Institute confirmed to media.

More than half of the respondents see a ‘cap-and-tradecarbon scheme as another important solution. More than 83% believe the system needs to heavily penalize emitters who exceed their quota, to be effective.

“A penalty provision that requires an emissions reductions unit to be bought domestically would create a domestic market,” Frank Jotzo, senior lecturer at ANU's Crawford School of Public Policy said. “But if penalty provisions are very lax then there will be none or very few taking part in carbon trading.”

Mark Kenber, CEO, The Climate Group, says the survey results provide further evidence that the Australian government should act on climate to remain competitive economically: “Australian businesses want a stable, clear policy framework to operate in a global market that is clearly switching toward a low carbon economy. As report after report and company after company show, green business just makes good economic sense. This survey, although with a limited sample group, is another call to Australia’s government to move in the same direction as other major economies: toward a smarter, more secure, low carbon future”.

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