Australia’s economy is less equipped to deal with a low carbon emissions world than it was nearly two decades ago, an international study has found.
The study, backed by think tank the Climate Institute and multinational GE, found that since 1995, Australia’s dependence on polluting activities had grown relative to almost every other major economy.
The study ranked Australia 16th out of 19 countries in being ready to deal with a low-carbon world — ahead of just India, Indonesia and Saudi Arabia.
The rankings are based on 19 measures, including emissions growth, energy generation, export industries, transport and investment in clean technology.
A retrospective analysis found Australia ranked 12th in 1995 on a “low-carbon competitiveness index”, but had since been overtaken by Turkey, Mexico, Russia and South Africa. The list was headed by France, Japan, Britain, South Korea and Germany.
Climate Institute deputy chief executive Erwin Jackson said relative to other countries Australia’s economy had become more dependent on pollution, not less.
“Among other things our energy sector is dominated by coal, our use of oil is inefficient, we have high rates of deforestation and our export industries are based on low-value-added resources and not high-value-add technologies,” he said.
The study, using an index created by British consultants Vivid Economics, does not factor in Australia’s carbon price scheme and associated clean energy funding as the laws do not take effect until July 1.
It is based on an assumption that, while the global economy is volatile, there is an underlying “mega-trend” towards low emissions goods.
The authors cite evidence that more than 100 countries have policies to support clean energy, leading to a record $US260 billion spending in the area last year, and that major emitters have agreed to work on a climate pact to be signed by 2015 and take effect by 2020.
They quote a 2010 speech by BHP Billiton chief Marius Kloppers, in which he said that “to remain competitive in a future carbon-constrained world, Australia will need to turn into a lower carbon economy”.
GE Australia’s Ben Waters said businesses and economies had to act on carbon “to mitigate risks and maximise opportunities”.
The report comes as business groups are lobbying for the starting Australian carbon price to be cut from $23 to $10 a tonne of emissions, pointing to mounting economic pressures and the collapse in the international carbon price.
The Climate Institute/GE report says Australia’s price is not excessive compared to those applied to fossil fuel industries in several countries, including Norway ($53), Britain ($24-$30) and Switzerland ($30-$60). For big emitting export industries, it says the compensation effectively reduces the starting carbon price to between $1 and $8 a tonne.
While there is a growing expectation that the Australian price could fall back to the government-imposed minimum of $15 a tonne when international trading of carbon permits starts in 2015, Mr Jackson said it was unclear what impact the start of emissions trading schemes in China, South Korea and California would have.
“Regardless, if Australia’s is to begin to drive structural changes in the economy that will ensure we start to become competitive in a world limiting pollution, we will need credible carbon prices to begin to drive the transition,” Mr Jackson said.
