The supplementary draft report issued by the Garnaut Review provides guidance to the federal government on the emissions cap for the proposed ‘cap and trade’ scheme as well as possible trajectories (pathways) to reach the emission reduction targets in the future. The report also includes the results of modelling to indicate the impact the different ‘caps’ will have on the economy and the expected price of the permits. 
 
Members are advised that the supplementary draft report should be read in conjunction with the draft report, issued on Friday, 4 July 2008 and examined through a previous special climate change e-Bulletin.  
 
The report states that in the absence of a comprehensive agreement on global greenhouse gas emission reductions, Australia, as one of the developed countries should commit to reducing emission levels of 2000, by five per cent. This is consistent with the federal government’s policy to reduce emissions by 60 per cent by 2050.  
 
Two scenarios - 550 and 450 parts per million 
The supplementary report has suggested two cooperative mitigation scenarios in which the countries of the world agree to share the burden. Under the ‘550’ scenario, the world stabilises the concentration of greenhouse gases in the atmosphere at 550 parts per million (ppm) CO2-e. Under the more stringent ‘450’ scenario, the concentration of greenhouse gases in the atmosphere initially overshoots, but then returns to, 450ppm CO2-e.  
 
Based on the 550ppm outcome, Australia’s share of the burden would be a 10 per cent reduction (or 30 per cent in per capita terms) by 2020 and a 80 per cent reduction (90 per cent per capita) by 2050..  
 
The modelling indicates that under the 550ppm scenario, GDP would be 1.1 per cent lower than under the base case scenario by 2020 - with an estimated carbon price of $34.50.  
 
Karen Dowsett, Manager of Chartered Accountants in Business states, “according to the National Greenhouse Energy Reporting Scheme measurement guidelines, the emissions factor for electricity generation is between 0.84 and 1.22kg of CO2-e per kWh depending on the state. Assuming approximately 1kg of CO2-e per kWh, members are advised that this would imply a cost increase of approximately $34.50 per MWh of electricity according to the modelling of the 550ppm scenario by 2020.” 
 
Members can download the supplementary report and related material at the Garnaut report website  
 
Relevant links:

• Garnaut review: Supplementary draft report Targets and Trajectories