Staff reporter

The completed version of Ross Garnaut’s 2011 update of his Climate Change Review was delivered today, with the Professor presenting a proposed 10-year carbon budget, based around a $26 a tonne fixed price, which would deliver around $11.5 billion in revenue in its first year.

Garnaut's report also suggested three separate, independent institutions – including a carbon bank – be created to establish and implement Australia’s carbon price arrangements and emissions reduction targets.

On compensation, Garnaut recommended that assistance to households should amount to 55 per cent of revenues in the first three years of a fixed carbon price, rising to 60 per cent for the ETS and to 60-65 per cent by 2021-22.

He also suggested that compensation for trade-exposed industries should stabilise and then decline after the transition to an emissions trading scheme, rather than steadily increase, as envisaged in the CPRS.

For the electricity sector, Garnaut suggested compensation should amount to no more than an aggregate $1 billion, to be allocated through loan guarantees to any generator in genuine financial distress.

THE RESPONSE

“Professor Garnaut has pulled the rug, floorboards and foundations from the myth we are at risk of leading the world. He highlights the toxic impact that low Australian targets would have on global efforts. ...Any mechanism put in place must see pollution levels falling and be flexible enough to achieve at least the 25 per cent target. However, some of Professor Garnaut’s recommendations such as the early setting of the national target have the potential to stymie Australian and global ambition. ...To ensure the pollution package delivers a switch to a cleaner, lower pollution Australian economy, a broad policy suite will be critical. This includes a National Energy Savings Initiative along with power sector generation and vehicle standards, in addition to a credible pollution price and the revenue options outlined by Professor Garnaut." – John Connor, CEO, The Climate Institute

“Garnaut has commissioned a fresh look at the recent data and found that the problem of global warming can't be wished away. Indeed the case has strengthened from 'balance of probabilities' to 'beyond reasonable doubt,' a view in line with almost all recent research and assessment. ...The world is starting to act ...meaning Australia can be more rather than less assertive." – Professor Peter Rayner, carbon cycle scientist, School of Earth Sciences, University of Melbourne

“The main innovation in the final Garnaut Review is a substantial emphasis on the UK model, in particular the proposal for an Independent Committee similar to the UK Committee on Climate Change. The UK approach has already achieved substantial reductions in emissions, and the recently announced commitment to reduce emissions to 50 per cent below 1990 levels by 2025 is an indication of what can be achieved. The experience of the UK provides a direct refutation of claims that the achievement of significant reductions in emissions will be economically ruinous."– Professor John Quiggin, Australian Research Council Federation Fellow in Economics and Political Science at the School of Economics, University of Queensland

"The recognition that the land sector can make an important contribution in the transition to a low-emissions economy is welcome. That said, the opportunities required for generating knowledge and innovation on-farm are more than carbon pricing and fiscal incentives. Also needed are flexible and enabling institutional environments and new partnerships that promote not only frontier research and technology, but also incremental problem solving and on-farm experimentation. Farmer driven innovations have the potential to attain sustainability, but only if the institutions put in place are appropriate”. – Fiona McKenzie, PhD candidate, innovation in agriculture, School of Geosciences, The University of Sydney

“The rising price – with short-term decisions taken out of government hands to avoid distortions arising from political expediency – is absolutely key. Finally ...we need to really level the energy playing field and allow nuclear to compete with renewables and fossil fuels with carbon-capture and storage.” – Barry Brook, Australian Research Council Future Fellow, Sir Hubert Wilkins Chair of Climate Change and Director of Climate Science at The Environment Institute, University of Adelaide

“As Professor Garnaut [said] at the National Press Club today, Australia is in the midst of a struggle between vested interests and the national interest. ACF urges the Multi-Party Committee to back the national interest. ...The proposal for an independent committee with powers to recommend targets and caps to government is a good way to remove these decisions from political influence. ACF also supports independent review of industry assistance to ensure companies are not overcompensated and assistance is only given to the genuinely trade exposed. ...A recent report commissioned by Energy Minister Martin Ferguson showed that to unlock the potential of Australia’s clean energy resources we need to start with a pollution price of around $40 a tonne [as opposed to Garnaut's suggested $26 a tonne]." – Simon O'Connor, economic adviser to the Australian Conservation Foundation

"While we welcome the general approach taken by Professor Garnaut we have significant concerns regarding his proposals for household assistance and tax reform. He proposes that household assistance for those on the lowest incomes be reduced to pay for unrelated tax reforms. It is vital that social security recipients are assured that the average impact of a carbon price on their living costs is more than compensated by increases in their payments. We are confident the government's package will provide that guarantee but Professor Garnaut's proposals, if adopted, would weaken it. ...Professor Garnaut suggests several changes to the personal taxation system. While ACOSS welcomes reform of the taxation system to make it more effective, efficient and equitable, his proposals are only part of the reforms needed and alone would not deliver equitable outcomes." – Dr Cassandra Goldie, CEO of The Australian Council of Social Service