25% emissions cut makes economic sense

The World Wildlife Fund (WWF) Australia Monday released an economic study proposing that Australia could increase its emissions reduction target from 5 to 25 percent by 2020 via the carbon price at very little cost to the economy. The analysis by Vivid Economics and Monash University found a small additional impact on gross domestic product (GDP) of 0.01 percent,and around 0.06 percent on gross national income. The researchers suggested that Australia's economy would make up for the delayed growth in GDP association with the extra emissions cuts in less than two months. "The economic costs of a 25 percent target are four times lower now than estimated back in 2008 when the Government and Opposition first reached bipartisan agreement on an unconditional cut to emissions of 5 percent," said WWF spokesperson Will McGoldrick. "Much of the 25 percent reduction would be achieved by buying cheaper-than-expected overseas abatement permits. This is the upside to the low carbon price -- we can achieve much more for the same impact on GDP," he added. McGoldrick commented that no matter who wins the next Australian federal election, growing international and domestic pressure on Australia will urge the government to lift its 2020 carbon pollution target above the unconditional 5 percent. He added that a carbon price is the most effective direct action for Australia. "The Vivid analysis shows that under a carbon price, Australia could rely less on overseas emissions permits, improve domestic abatement, and still achieve a 25 percent pollution cut with only a moderate additional impact on economic growth, shaving an extra 0.28 percent off GDP in 2020 compared to current 5 percent target. "The modelling shows that with a carbon price Australia can afford to get the balance right between encouraging domestic abatement and committing to an ambitious and globally credible target," McGoldrick said.