The Climate Change Authority's recommendation to increase Australia's emissions target is as unsupportable as the policy it was designed to influence.
The authority, established by the Gillard Labor government, recently released its draft report recommending Australia's trajectory for cutting emissions.
Despite Abbott government plans to junk the tax, the emissions trading scheme and the authority, the draft report recommended increasing Australia's targets from a cut of 5 per cent of 2000 emission levels to 15 per cent or 25 per cent by 2020.
The 5 per cent target does sound modest, until it is properly analysed.
According to the authority's report, a seemingly modest 5 per cent amounts to a 23 per cent reduction off business-as-usual emission levels in 2020.
Even that is modest compared with other BAU projections.
One UN dataset suggests that to meet a 5 per cent cut may require Australia to nearly halve its emissions off 2020 BAU levels.
The authority also modelled a more ambitious 15 per cent cut off 2000 levels, equivalent to a 32 per cent reduction off 2020 BAU levels; and a 25 per cent cut, equivalent to a 42 per cent cut.
Lobbyists and non-government organisations regularly make calls for such deep cuts, but they do so without responsibility. That doesn't hold true with the authority. It was designed to be the de facto setter of Australia's emissions targets.
Politicians were expected to accept the authority's recommendations that could potentially come into force if there was no political agreement to reject them.
Having so much confidence in a so-called independent body requires a misplaced confidence in its analysis.
The authority's recommendation to cut emissions by between 30 per cent and 40 per cent off BAU levels wrongly assumes the extent to which other countries are cutting emissions.
At the end of last year the Kyoto Protocol expired, and with it went the only operational, comprehensive agreement binding developed countries to cut emissions. Before it expired, a skeleton commitment crew of Australia and European countries agreed to give it a last breath of life until 2020. Previous ratifying countries, including Canada, Japan, New Zealand and Russia, walked away. The US continued to stay away. Negotiations are now being held to conclude a successor treaty by the end of 2015 to be operational for 2020.
The Climate Change Authority assumes the pledges countries are making in these negotiations will be met.
Yet negotiation for a comprehensive international agreement among major emitters to cut emissions has not emerged in more than a decade. Instead, contrary evidence is starting to appear.
Last week there was a report that the Japanese government is considering weakening its emissions reduction target from 25 per cent off 1990 emissions levels to an increase of 3 per cent on 1990 levels.
It's not the first time Yes Minister-style "courageous" assumptions have been made by government agencies to justify significant climate policies.
Similar assumptions were included in the federal Treasury's 2011 Strong Growth, Low Pollution modelling supporting the introduction of the carbon tax. To prove Australia would not be economically harmed by the tax, Treasury assumed by 2016 developed countries would take on equivalent costs to cut emissions, and that many developing countries would follow by 2021.
There was little evidence then; it looks even less likely now.
The modelling also assumed 61 per cent of emissions cuts would be purchased cheaply offshore, despite the government then capping offshore permits at 50 per cent.
The assumed extent to which other countries are cutting emissions clouds the judgment of those defending the former government's policies. There's also a dismissiveness of the structural flaws of these policies. A government-mandated emissions trading scheme will never give the marketplace the certainty it requires.
To its credit, the authority correctly noted "longer-term guidance on emissions reduction goals is a critical factor for many investment decisions, particularly in long-lived capital items", such as energy investments, that would drive emissions cuts.
But as long as politicians decide the supply of permits, and decide demand by setting who is required to buy the permits, political considerations will influence their decisions and hence the rate of carbon-based taxation.
It's a particular problem when different studies have concluded Australia needs a permit price as high as $51 a tonne to achieve the 5 per cent target that has bipartisan support.
In response to this criticism, government-sponsored bodies argue for complementary mechanisms, such as long-term purchasing contracts for expensive renewable energy and "gateway mechanisms" that set upper and lower long-term emissions caps.
But such measures are tantamount to price-fixing in a marketplace, demonstrating the market is primarily for show and not setting prices.
Such behaviour is consistent with the authority's recommended ambition — by suspending reality.
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