Chapter 2: The Climate Change Challenge
Climate change is the greatest social, economic and environmental challenge of our time. Scientific evidence confirms that human activities, such as burning fossil fuels (coal, oil and natural gas), agriculture and land clearing, have increased the concentration of greenhouse gases in the atmosphere. As a consequence, the earth's average temperature is rising and weather patterns are changing. This is affecting rainfall patterns, water availability, sea levels, storm activity, and drought frequency, putting at risk Australian communities, people's health, agricultural production, tourism, heritage and biodiversity for current and future generations.
The climate is already changing, with more frequent and severe droughts, rising sea levels and more extreme weather events. In Australia, seventeen of the last nineteen years have been warmer than average. Australia is already experiencing the early impacts of these changes. We will face more substantial impacts in the future, including more frequent and severe weather events such as heatwaves, floods, storms and cyclones; and a further decline in rainfall across southern Australia and in water availability through increased evaporation from higher temperatures.
The Garnaut Climate Change Review Final Report (Garnaut Review) paints a bleak picture of Australia at the end of this century should greenhouse gas emissions continue unchecked. There would be major declines in agricultural production across much of the country. The Great Barrier Reef and other reef systems, such as Western Australia's Ningaloo reef, would be effectively destroyed, with serious ramifications for tourism industries and biodiversity. Coastal infrastructure would be at risk from storm surges and flooding.
The Garnaut Review projected declines in the value of agricultural production of up to 97 per cent in the Murray Darling Basin by 2100 — where 90 000 people are currently employed in the agricultural sector. The Great Barrier Reef provides over $4.9 billion in tourism revenues and employment for around 60 000 people. As a result, dealing with the climate change challenge is critical to Australia's economic security and future prosperity.
New data and scientific understanding presented at the Copenhagen Climate Congress in March 2009 suggest that the rate and magnitude of climate change already observed is at the high end of the range estimated by the United Nations' Intergovernmental Panel on Climate Change (IPCC)1 in its Fourth Assessment Report, published in 2007:
For many key parameters, the climate system is already moving beyond the patterns of natural variability within which our society and economy have developed and thrived. These parameters include global mean surface temperature, sea‑level rise, ocean and ice sheet dynamics, ocean acidification, and extreme climatic events.2
The Congress concluded that there is a significant risk that many of the trends will accelerate, leading to an increasing risk of abrupt or irreversible climatic shifts. Climate change science demonstrates that there is a clear environmental imperative to take urgent and significant action. The Government believes that it is in Australia's national interest to achieve a global agreement to stabilise atmospheric greenhouse gas emissions at 450 ppm CO2‑e or lower.
Climate, ecosystems, society and the economy are closely linked. The thriving society that Australians enjoy today has developed within climate parameters that have allowed us to make the most of the abundant natural resources that our country has to offer. Australia is already a hot, dry country, and small variations in climate will be more damaging to us than to other developed countries. Infrastructure, towns and cities, and food production are all based on our historic experiences of long-term climate patterns, for example, the frequency of storms, the height of tidal surges, or rain and temperature patterns. Ecosystems, the economy and ultimately Australian society are likely to be strongly affected by climate change, and analysis presented in the Garnaut Review Final Report builds a strong case for responding to climate change with mitigation action. It concludes that 'the costs of well‑designed mitigation, substantial as they are, would not end economic growth in Australia, its developing country neighbours or the global economy; unmitigated climate change probably would'.
The economy will respond more efficiently to new circumstances when businesses and individuals have certainty about long‑term direction. Starting as soon as possible on a gradual adjustment to a low‑carbon economy will give business, households and industry the opportunity to plan their adjustment pathways and manage changes in technology, equipment and skills requirements, and minimise the risk of stranding existing long‑lived assets.
In contrast, a wait‑and‑see approach leaves the economy exposed to far more serious future adjustment costs and disruption, and will delay investment and damage our future growth and job prospects by prolonging uncertainty. This would drive up the cost of responding to climate change, and might even put limits on effective action as capital becomes constrained. There is a real risk that delaying action will mean bigger changes will need to be made more rapidly, and painfully, in the future.
Failing to put in place a comprehensive response to climate change will leave our children with an environment that is very different from that we grew up with and enjoy today. Iconic natural wonders like the Great Barrier Reef are at risk of destruction; water supplies for many of our cities and farmers are expected to diminish; the damage wreaked by cyclones and storms is forecast to increase; and our beaches and coastal properties are threatened with inundation by rising sea levels.
Business cycles and economic shocks, such as the global recession, can have a substantial impact on the economy in the short term. However, this does not mean Australia should delay putting in place the reforms that will be needed over the long term to respond to climate change. Taking action to address climate change now will assist businesses to manage the process of change to a sustainable environmental future and to weather the present economic crisis. It will also transform the economy to create the green businesses and jobs of the future, preserve our environment and place Australia on a path to a new prosperity.
The Australian economy and community stands to gain many benefits from a comprehensive response to climate change. A long term framework for action on climate change provides the confidence required for employers to take on staff and create new businesses as part of a low pollution economy. Measures such as the Government's $1.3 billion Green Car Innovation Fund (part of the 13‑year, $6.2 billion New Car Plan for a Greener Future announced by the Government in November 2008) are supporting jobs of the future and stimulating the economy while also contributing to Australia's emissions reduction targets (see Box 2.1).
The Government's substantial investment in developing low carbon energy technologies, ambitious action on energy efficiency, and well‑designed limited transitional support for our emissions intensive industries will all support existing industries and jobs, while developing the jobs and industries of the future. For example, the Government's expanded Renewable Energy Target will see a thirty‑fold increase in renewable electricity by 20503.
2.1 The Green Car Innovation Fund: reducing emissions, saving money, supporting jobs.
The Green Car Innovation Fund is part of the 13‑year, $6.2 billion New Car Plan for a Greener Future announced in November 2008, which will make the automotive industry more economically and environmentally sustainable by 2020.
In 2008, the Government announced grants of $35 million to Toyota to manufacture the hybrid Camry in Australia from 2010. Toyota expects that production of the hybrid Camry will result in more than $89 million of incremental purchases throughout the Victorian and South Australian automotive components industry, resulting in new jobs within Toyota's supply chain. The Government also provided a grant of $149 million to GM Holden to produce a new, fuel‑efficient, small vehicle in Australia from 2010.
Australian families and the environment will benefit from Holden's and Toyota's projects. For example, a family travelling 20 000 kilometres per year in Holden's new small car will save almost $500 in fuel and produce 1.7 tonnes less in carbon emissions than current larger vehicles.
1 The IPCC is the leading scientific intergovernmental body, set up in 1988 by the World Meteorological Organization and the United Nations Environment Program. The IPCC's role is to comprehensively, objectively, openly and transparently assess the latest scientific, technical and socioeconomic literature relevant to understanding the risk of human-induced climate change, its observed and projected impacts, and options for adaptation and mitigation.
2 Key Messages: Copenhagen Climate Congress, March 2009.
3 Australia's Low Pollution Future, Australian Treasury, 2008.
If www.budget.gov.au responds slowly or you are having trouble downloading a document, try one of the Budget Website Mirrors
Note: Where possible, Budget documents are available in HTML and for downloading in Portable Document Format(PDF). If you require further information on any of the tables or charts on this website, please contact The Treasury.
