Garnaut wants transport and fuel in emissions trading

By: Jason Whittaker

Pressure is mounting on the Rudd Government to include fuel in emissions trading and use revenue from carbon credits to

Pressure is mounting on the Rudd Government to include fuel in emissions trading and use revenue from carbon credits to support industries.

In releasing his draft report into climate change, Ross Garnaut told the National Press Club as many sectors as possible, including transport, must be included in the trading scheme, with all permits open to auction.

Garnaut, an economist advising the Government on the path it should take to mitigate carbon emissions, says the more industries included will reduce the burden on exposed industries.

"The more sectors included in the ETS, the more efficiently costs will be shared across the economy," Garnaut says.

"Transport should be included."

But in order to offset the costs to export businesses, Garnaut says the Government should use about 30 percent of revenue from emissions trading "for structural adjustment needs" to assist them in transitioning towards a greener economy.

Furthermore, he is advocating 20 percent of funds be invested in research and development of low-carbon technologies, while calling for households to receive 50 percent of revenue to help with higher energy costs.

"The proceeds from the ETS should be allocated for purposes that will help Australia adjust to a low-emissions future," Garnaut says.

By allocating the majority of funds to households, Garnaut says consumers will be able to deal with rising energy and fuel prices that will come as a result of including both sectors in emissions trading.

However, the Government will need to invest about $3 billion in order to achieve Garnaut’s request for it to commit to low-emissions technologies.

The alternative, however, is bleak, according to the economist. He says if no action is taken, by 2100 climate change will result in a loss of around 4.8 percent of projected GDP and 7.8 percent of real wages.

It will have much more dire results for the agricultural industry in the shorter term, with Garnaut arguing there will be major declines in agricultural production by 2050 from unmitigated climate change.

"We are running out of time for effective global action, and it is important that we play our full part in nurturing the remaining chance," Garnaut says.

Despite rising fuel prices, transport industry groups are pushing the Government to follow Garnaut’s lead in calling for fuel to be part of emissions trading.

The Australian Trucking Association (ATA) says unless fuel is included, the Government will mandate other stringent regulations, such as certain engine requirements, which will cost the trucking industry a lot more than if fuel was included.

The Australasian Railways Association (ARA) is using emissions trading to champion the ability of rail to take hundreds of trucks from the road. ARA Chief Executive Brian Nye wants the Government to give trucking operators incentives for hauling more freight on rail.

Doing so, he says, will not only increase rail’s share of the freight task, but also reduce the need for the number of long-distance trucks as well as help the trucking industry contain cost pressures as a result of emissions trading.

However, the Government is declining to confirm whether fuel will be part of emissions trading as it comes under pressure from the Opposition to exclude it.

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