The truth is still inconvenient

The evidence is clear that a national emissions trading scheme will not wreck the Australian economy but will create long-term good for the economy and the environment, according to the WA Sustainable Energy Association Inc. (WA SEA), the business chamber for the sustainable energy industry in WA.

(carbon trading opponents want no inconvenience.)

"Claims that fixing climate change would be devastating for Australia's economy simply do not add up:

• Consider first Australia's GDP of more than $800 billion, or simply the operations of the Federal Government with an annual budget of over $200 billion. Within normal operations, the Federal Government is now rolling out $31 billion in tax cuts over several years;
• Also consider the daily trade in shares on the ASX, which can be in the range of $10-15 billion in value, with almost two thirds of the value usually in around 20 stocks. Losses and gains on the ASX can change value of the market by $40 billion in a day;
• Based on the numbers suggested by Professor Garnaut, the carbon market in the first few years of operation will probably only have a total annual value of $3-4 billion, and by his estimation certainly less than $12-16 billion in the slightly longer term - the value of one day of trading on the Australian share market is more in dollar terms than would be traded in an entire year in an established carbon trading market;
• With Australia's total greenhouse gas emissions at under 600 million tonnes, even if all of this were to be traded (which it won't be) and valued at a large $40 per tonne, those total emissions are worth less than $24 billion dollars per year. Compared to daily trades on the share market, this is small change - on rough numbers the value of carbon trading will be much less than $100 million per day."

"The truth is the total value of carbon traded annually in the ETS outlined in the draft Garnaut Climate Change Review will be, in financial markets terms, very small. Indeed, as emissions reduce, the number is more likely to fall - unless we are ineffectual in rolling out energy efficiency across the nation, and fail to commit to quickly build renewable energy generation" says Dr Ray Wills, Chief Executive of WA SEA.

"And in addition to emissions trading, investment to reach a 20% renewable energy target by 2020 will require funds in the range of $25 to 35 billion over the next decade. At an average of $3 billion a year, that's not a big number either - and will be an investment that will make a world of difference," adds Dr Wills.

"This is not to belittle the importance of the task of addressing climate change and designing the best possible emissions trading scheme to assist in the task of reducing greenhouse gas emissions without compromising our industries - it will be challenging. But 'not compromising' does not mean 'not inconveniencing' - we actually have to do as much as we can."

"A combination of a trading system, paired with direct incentives for industry to reduce emissions through both energy efficiency and procurement of lower emissions energy, will actually diversify the economy and create a more robust environment for business. Energy efficiency is a critical component as it will reduce inflationary pressures that would otherwise occur through spiralling fossil fuel prices" says Dr Wills.

"We must fundamentally change the way we think about energy and how we do business."

"But the truth is - it is also achievable, and it will not break the economy," says Dr Wills.

WA Sustainable Energy Association Inc. (WA SEA) Media Release 8 July 2008

Editors notes:
1. The Western Australian Sustainable Energy Association Inc. (WA SEA) is a chamber of businesses variously promoting, developing and/or adopting sustainable energy technologies and services that minimise the use of energy through sustainable energy practices and maximise the use of energy from sustainable sources. WA SEA is supported by a rapidly growing membership of now 175 industry members from a diversity of businesses including the key energy players in WA.

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