Equity What is Equity? Equity Within Nations Equity Between Nations International Economic System Global Warming and Equity Impacts Responsibility Actions • Australia References Site Map Back to Main Menu...	Greenhouse Gas Emissions in Australia       The consequences of greenhouse emission reductions in Australia Industry, government, union and other groups in Australia have argued that measures to reduce greenhouse gas emissions would damage the economy. The NSW Government argues that the close link between Australia's energy consumption and its level of economic activity means that, at least in the short term, reductions in greenhouse gases are likely to involve reductions in energy consumption and probably reductions in economic growth as well. A CRA-sponsored report, prepared by economists from the Australian Graduate School of Management, argues that carbon dioxide reductions would result in a decline of wages until the year 2005, and rises in electric power and transport costs ('Cuts in carbon dioxide emissions could result in wage slump' 1990). Similarly, an Australian Bureau of Agricultural and Resource Economics report argues that the Australian aluminium industry would suffer from greenhouse gas reductions because of increases in electricity prices (Duncan 1992). Other industries to be hit would include the coal-mining industry, other basic smelting including iron and steel, copper, lead and zinc, and energy-intensive or carbon-emitting industries such as cement (ESD Working Groups 1991b pp. 107&endash;8). However, not everyone agrees that reducing greenhouse emissions will be very costly. Some argue that energy efficiency measures would actually save energy and money in the long run, and that the development and marketing of energy-saving technologies could actually enable Australia to earn additional export dollars. The Institution of Engineers, Australia, has issued a statement saying that: Australia's record on energy wastage is so appalling that the country need only adopt the most basic measures in order to cut its greenhouse gas emissions. Australians could cut greenhouse gases by one fifth and save the economy $6.2 bn a year through energy savings in transport, homes, factories, offices. (1992) The Australian Conservation Foundation argues that: Contrary to the arguments raised by many industry groups and economic commentators, increased input costs for Australian industry, if strategically directed, could in fact upgrade the competitive advantage of Australia's industry rather than degrade [it]…Australia, therefore, needs to be moving faster than its competitors in improving its relative energy and resource use efficiency. To lag behind is to leave us open to having to import technologies to achieve emission reductions rather than produce them domestically. (quoted in Industry Commission 1991, p. 224) Similarly, the NSW Government (1990, p. 20) argues that 'the greenhouse effect should be seen as a challenge and an opportunity rather than a threat', and that the worldwide need for new technologies could turn out to be to the state's 'economic advantage'. Another argument is that the policies required to reduce greenhouse gas emissions would be beneficial in other ways, because they would reduce resource usage and other forms of pollution. The ESD Working Groups (1991, p. 83) differentiate between 'no regrets' actions and 'insurance' actions. 'No regrets' actions do not impose additional costs on the community and would be beneficial anyway, even if they did not reduce greenhouse emissions. 'Insurance' actions may cost the community some money to start with 'but are judged necessary or socially desirable despite the absence of complete knowledge.' The Australian Bureau of Agricultural and Resource Economics has modelled the steps that might be required to meet the Commonwealth's interim planning target, recommended by the Toronto Conference 'The Changing Atmosphere', to reduce greenhouse gas emissions by 20 per cent of 1988 levels by 2005. It argues that 'substantial switching away from coal' would be required to meet this target. (ESD Working Groups 1991b, p. 107) The human impact of the resulting job displacements should not be ignored even if the total employment level were hardly affected. Falk and Brownlow (1989) estimate that a 20 per cent cut in the output of the coal industry would result in the loss of 15 909 jobs (0.22 per cent of the Australian work-force) at most, but that much of the impact would be felt in coal-mining regions. Such a reduction would reduce employment in the Illawarra region, for example, by about 1.8 per cent if both direct employment and indirect employment (that generated in other associated and servicing businesses) were accounted for. This represents more than two thousand people in a depressed area that has already been subject to many job cuts since 1980. Thus whilst it is true that BHP could afford the cost of cutbacks in coal, it is not true that the local miners or many others in the local community could. Many of the miners would be too old and would lack skills to find employment in other regions, and they would lack the capital to relocate. (p. 224) The regions identified by the ESD working group on mining as being the worst affected by greenhouse emission reductions are Collie/Bunbury in Western Australia; Leigh Creek and Port Pirie in South Australia; Gladstone/Bowen Basin and Ipswich in Queensland; the La Trobe Valley, Portland and Geelong in Victoria; and the Hunter Valley, Illawarra and Lithgow in NSW. The working group gives the following figures for the Hunter Valley as an example: In 1986, the Hunter's total employment was approximately 182 000, with around 43 000 jobs in 'basic employment'&emdash;that is, in economic activities which provide the reason for existence of the regional economy, in that they export their production or services outside the region. Coal, power generation and aluminium accounted for 41 per cent of this 'basic' component and if steel and zinc production are included, this rises to 56 per cent. If activities directly related to these sectors are also included (for example, coal rail freight, coal loaders at port, construction and engineering services), the percentage would be higher still. Clearly the Hunter economy is highly vulnerable to contraction in these industries. (ESD Working Groups 1991b p. 110) Even if Australia were to decide not to act, the action of other countries reducing their greenhouse emissions would impact on Australian exports, particularly coal, and this would have an adverse effect on the balance of trade and result in loss of jobs in the mining sector. Conversely, if Australia were to act alone in reducing its greenhouse emissions, measures such as energy taxes used to encourage energy reductions could make Australian goods less competitive on the international market. This would also affect the balance of trade and impact adversely on jobs. Also, industries might relocate to avoid having to reduce their emissions; apart from the economic impacts of such moves, that would defeat the objective of reducing global greenhouse emissions. The Commonwealth Government has therefore adopted a 'no regrets' policy and has stated that, in the absence of similar commitments by other major greenhouse gas-producing nations, it will only keep to its interim planning target of 20 per cent reductions on 1988 levels by 2005 if there are no adverse economic impacts nationally or on Australia's competitiveness (Industry Commission 1991, p. 13) (It should be noted that, since 1988, energy-related greenhouse emissions in Australia have increased by about 15 per cent&emdash; which means that even heavier reductions will need to be made to achieve a 20 per cent reduction on 1988 levels by 2005.) Many people argue that it would be foolhardy of Australia to incur costs in reducing greenhouse emissions if other countries do not do the same, because the resulting impact on global greenhouse levels would be so small as to make little difference. For example, a CRA-sponsored report argues that: On a world scale it would be futile for Australia to undergo the costs of switching over from brown to black coal or from coal to gas, if China, for instance, seeks to raise what is one of the world's lowest standards of living by developing its massive coal deposits. ('Cuts in carbon dioxide emissions could result in wage slump' 1990) But although Australia contributes only about 1.1 per cent to global warming, it is very high on the list of per capita emissions. Deni Greene, environmental spokesperson for the Institution of Engineers, says that Australians release 11 tonnes per person of greenhouse gases a year compared with an OECD average of 6.1 tonnes and a world average of 2.5 tonnes (1992). This is partly because of individual use of electricity and oil but also because of Australia's energy-intensive industries, its heavy reliance on coal and the long transport distances. Moreover, although other industrialised countries have improved their energy efficiency as a result of oil shortages in the 1970s and 1980s, Australia has increased energy consumption during that time at a much faster rate than countries such as the USA, Japan or Western Europe. It can be argued for these reasons that Australians have a moral obligation to reduce their greenhouse emissions. Not only do they use more than their share of energy resources and contribute more than their share of greenhouse gases, but they are in a position, given their relative affluence and technological capabilities, to provide a model or example of how it can be done. Falk and Brownlow argue that: By declaring themselves prepared to take the greenhouse threat seriously, and to make the necessary changes to production, lifestyle and international relations, Australians could help catalyse a process where the other citizens in other countries would increase the pressure on their governments to do the same. (1989 p. 232) One of the reasons there is so much reluctance to commit money and resources to greenhouse reductions is that, although some of the costs seem to be readily identifiable and quantifiable, the benefits are often vague and uncertain&emdash;since there is little agreement about what impacts global warming would have. For example, the Industry Commission (1991) stated quite plainly that it was unable to provide even an estimate of the benefits to Australia of achieving an international consensus to reduce greenhouse gas emissions. Source: Sharon Beder, The Nature of Sustainable Development, 2nd ed., Scribe, Newham, 1996, chapter 19. Back to the Top...