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Chapter 9 Australia’s emissions budget to 2050

In Chapter 3, the Authority set out the global emissions budget consistent with a likely chance of keeping temperature increases relative to pre-industrial levels to below 2 degrees. Chapter 9 considers Australia’s fair share of this finite global emissions budget, and how this long term national emissions budget informs its short and medium term emissions reduction goals.

Equity is one of the Authority’s legislated guiding principles, and deserves explicit consideration in setting Australia’s emissions reduction goals. The Authority has considered various approaches to determining Australia’s fair share of the global emissions budget adopted in Chapter 3, and how to use Australia’s national budget over time.

Equality in emissions rights per person is desirable, but takes time to achieve. A ‘modified contraction and convergence’ approach gradually shifts from Australia’s high current per person emissions to equal emissions rights in the long term; this is an equitable and feasible approach for Australia. As a share of the Authority’s preferred global emissions budget, this implies a national emissions budget of 10 100  million tonnes of carbon dioxide equivalent (Mt CO2-e) for the period 2013 to 2050. This is about 17 years of emissions at current levels.

Different ways of ‘spending’ the national emissions budget over time imply different costs and risks for Australians over the coming decades. A 5  per cent 2020 target would require an implausibly rapid acceleration of effort beyond 2020. If Australia adopted it and still wished to meet its fair share of the 2 degree budget, it would need to reduce emissions by a further 45 percentage points in the decade to 2030, and then would have only 14 per cent of its budget left for the next two decades. A 2020 target of not less than 15 per cent would keep Australia’s future options open, including the option of Australians doing their fair share of the strong global action that is in the national interest.

The Authority’s recommended emissions reduction goals for Australia, including the 2050 budget, are ‘net’ goals. That is, to the extent that Australia’s domestic emissions exceed the budget, they must be offset by genuine emissions reductions purchased from overseas.

Chapter 9 takes the estimated global emissions budget adopted in Chapter 3 as its starting point. It considers Australia’s fair share of the global budget and how Australia might use this share over time. It covers:

  • different ways to share a global emissions budget, and their implications for Australia;
  • the recommended long term national emissions budget; and
  • the implications of this long term emissions budget for Australia’s 2020 emissions reduction goals.

9.1 Approach to determining Australia’s share

The internationally agreed goal of limiting global warming to below 2 degrees implies a tight constraint on global emissions. As discussed in Chapter 3, the Authority has adopted a global emissions budget to 2050 that provides at least a likely chance of limiting warming to below 2 degrees. This global budget of 1 700 gigatonnes (Gt) CO2-e provides a reference point for considering Australia’s national emissions budget to 2050 (our ‘long term’ national budget).

As discussed in Chapter 8, a long term national budget provides an important reference point for choosing short and medium term emissions reduction goals. If these goals were adopted without considering the long term constraint, Australia might emit so much in the near term that it would have no budget left for later.

Deciding how much of the global emissions budget Australia should allocate itself necessarily involves thinking about what constitutes a fair share. There are many different ideas about what is fair, and deciding on a fair share for Australia is necessarily a matter of judgement. The Authority has considered a range of approaches in coming to its judgement of an appropriate 2050 budget for Australia.

The Authority has also assessed the feasibility of different approaches to sharing global budgets, from two perspectives – whether the national budget implied by a particular approach is feasible for Australia, and whether the approach would help Australia play a constructive role internationally.

On the second of these, there is no international process that assigns national targets based on a specific allocation principle or approach. Rather, countries assess their own national interest, and take domestic actions and make international commitments accordingly. It is not the Authority’s role to promote global action on climate change per se. That said, given that securing our national interest in limiting warming to below 2 degrees requires strong global action, the Authority can usefully consider how Australia can play a constructive role internationally. It is clearly in Australia’s interest to persuade and encourage other nations to strengthen their contributions to international action; Australia is likely to be more persuasive and encouraging if its own goals are viewed as a fair contribution by others. Similarly, Australia is likely to be more persuasive if it adopts an approach that would strengthen global efforts if it were also adopted by other nations.

Careful analysis of equity has helped the Authority recommend a long term national emissions budget that represents Australia’s fair share of the finite global budget. The following sections set out this analysis, providing a robust, transparent basis for determining Australia’s long term budget and its use over time.

9.2 Approaches to sharing a global emissions budget

Countries have different levels of development and income per person and make different contributions to cumulative greenhouse gas emissions that are the cause of climate change. All countries have agreed that those with greater capacity to act and responsibility for emissions should lead action on climate change. This agreement is reflected in Article 3 of the United Nations Framework Convention on Climate Change (UNFCCC), which states ‘the Parties should protect the climate system … on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities’.

There are two broad approaches to sharing emissions reduction efforts – sharing a desired global emissions budget (‘resource-sharing’) or sharing the emissions reductions required to meet that budget (‘effort-sharing’) (Figure 9.1). In some ways, the two approaches are similar – sharing the remaining budget implicitly sets a mitigation task and vice versa. But from a practical perspective, resource-sharing can often be more feasible – it requires only an estimate of the global emissions budget (discussed in Chapter 3) and equitable principles. In contrast, effort-sharing also requires an estimate of the global emissions trajectory in the absence of climate change action. As more countries take more action, this trajectory becomes increasingly abstract and difficult to estimate.

Figure 9.1: Resource-sharing versus effort-sharing

This is an illustrative figure showing that resource-sharing involves sharing a desired global emissions budget, represented by the area under a global trajectory to meet the emissions budget, and that effort-sharing involves sharing the emissions reductions required to meet that budget, represented by the area between global business as usual emissions and a global trajectory to meet the emissions budget.

Source: Climate Change Authority

The rest of this Section sets out the approaches that the Authority has considered. None of these approaches is prescriptive about where emissions reductions take place. Australia’s domestic emissions could be higher than the allocation so long as additional emissions reductions are purchased from another country. This is consistent with the Authority’s recommendation on the use of international emissions recommendations (see Chapter 13), accounting rules under the Kyoto Protocol and likely accounting under future international agreements for the period after 2020.

While almost all of the approaches are based on the emissions rights of individuals, none would allocate emissions budgets directly to individual Australians. Rather, these approaches develop budgets by starting with principles based on individuals, then aggregate to the national level.

9.2.1 Resource-sharing approaches based on emissions rights per person

There are four resource-sharing approaches based on equal emissions rights per person. Three involve a gradual move to equal emissions rights per person and the fourth involves immediate equality.

Contraction and convergence

Under contraction and convergence, emissions per person contract over time in countries above the global average, and rise over time in countries below the global average, reaching a ‘convergence level’ of equal per person emissions in a specified future year. The convergence year is a key variable in this approach. A shorter convergence period results in smaller budgets for countries which, like Australia, start with above average per person emissions.

The Authority has used 2050 as its preferred convergence year when analysing these approaches, balancing the feasibility of the transition with the goal of equalising per person emissions rights.

Modified contraction and convergence

This approach was proposed by Professor Garnaut in his 2008 Review. It involves two main modifications to simple contraction and convergence – developing countries are allowed increasing emissions per person for a transitional period; and developed countries reduce emissions more quickly to provide this headroom (Garnaut 2008). Specifically, it allows developing countries’ allocations to grow at half their economic (gross domestic product) growth rate, if that is greater than the growth rate of their allocated emissions under the simple contraction and convergence approach.

Professor Garnaut proposed modified contraction and convergence because some rapidly growing developing countries are close to the global per person average for greenhouse gas emissions. Under simple contraction and convergence, they would have to either stop the growth in their per person emissions very soon or purchase large volumes of emissions reductions from other countries. Professor Garnaut argued that, for these nations, the first is difficult and the second is inequitable. The modified approach provides some ‘headroom’ to allow high-emitting developing countries to make a more gradual adjustment. All countries converge to equal per person shares by 2050.

Common but differentiated convergence

Under this variant of contraction and convergence, developing countries are provided headroom through delayed reductions rather than larger allocations. Countries begin to reduce per person emissions when they reach a specified threshold of the (time varying) global average, then move linearly to the convergence level. Regardless of when countries begin to reduce emissions, they have the same amount of time to reach the convergence level.

The threshold level of emissions and the amount of time to reach the convergence level are policy choices that depend on the global emissions budget. For budgets that limit temperature increases to below 2 degrees there is no headroom for some higher emitting developing countries (Höhne and Moltmann 2009, p. 25).

Immediate convergence

Contraction and convergence equalises per person emissions at a point in the future. Immediate convergence – also referred to as an equal cumulative per person emissions approach – equalises per person emissions straight away. The Authority has calculated indicative budgets using this approach, adjusting for changes in countries’ share of the global population over time so that each person alive in a given year has an equal share of that year’s available emissions.

Some proposals for equal cumulative per person emissions do not adjust for population changes over time (see, for example, German Advisory Council on Global Change 2009). Instead, they allocate each nation a share of the global emissions budget equal to its share of global population in a single ‘reference year’. These variants do not really give effect to the principle of equal emissions per person, so the Authority has not considered them in detail. Other proposals include historical emissions in the calculations; for example, Jayaraman, Kanitkar and D’Souza (2011) incorporate emissions from 1970. Under this approach, Australia’s 2000–2050 emissions budget is negative. This means that Australia’s past emissions have already more than exhausted its entitlements, and the right to all ongoing emissions would have to be purchased from countries with positive entitlements. The Authority’s view is that distant past emissions should not be included as these occurred when their harmful effects could not be foreseen.

Figure 9.2 provides a stylised comparison of these four resource-sharing approaches. It shows how contraction and convergence and common but differentiated convergence are based on per person emission levels only, while modified contraction and convergence takes levels of development directly into account. Immediate convergence requires instant equality for all countries regardless of their characteristics.

Figure 9.2: Comparison of approaches with equal per person emissions rights

This is an illustrative figure with four panels showing different approaches to converging on equal per person emission rights: •	In the contraction and convergence illustration countries with high and average emissions per person reduce emissions and countries with low emissions per person increase emissions, reaching a ‘convergence level’ of equal per person emissions in 2050. After 2050 all countries continue to reduce emissions. •	In the modified contraction and convergence illustration middle income countries are allowed to increase emissions per person for a transitional period; and developed countries reduce emissions more quickly to provide this headroom. Less developed countries increase their emissions. All countries reach a convergence level in 2050, after which all countries continue to reduce emissions. •	In the common but differentiated convergence illustration countries begin to reduceper person emissions when they reach a specified threshold of the (time varying) global average, then move linearly to the convergence level. Countries with high emissions per person reduce their emissions rapidly to create headroom for countries with average and low emissions per person. All countries reach a convergence level after 2050. • In the immediate convergence illustration all countries have the same emissions rights per person immediately, which reduce over time.

Source: Climate Change Authority based in part on Höhne and Moltmann 2009

Figure 9.3 illustrates the implications of the four resource-sharing approaches for Australia’s long term national emissions budget, showing its share of the global 2 degree budget adopted in Chapter 3. It also shows two simple budgets to help put the others into perspective – a ‘status quo share’ based on Australia’s current share of global emissions, and a ‘population share’ based on Australia’s current share of the global population.

All four approaches give a budget comparable to or smaller than the one based on Australia’s current share of global emissions. Modified contraction and convergence provides a budget around 20 per cent smaller than simple contraction and convergence, in part because it allows developing countries a greater share of the global budget. Immediate convergence provides a very small national emissions budget.

Figure 9.3: Australia’s long term national emissions budget under various approaches (Gt CO2-e) and share of the global emissions budget (per cent)

This is a column graph showing Australia’s long term national emissions budget under various approaches (gigatonnes of carbon dioxide equivalent) and share of the global emissions budget (per cent): • Contraction and convergence: 13.1 gigatonnes of carbon dioxide equivalent, 1.2 per cent • Modified contraction and convergence: 10.1 gigatonnes of carbon dioxide equivalent, 1.0 per cent • Common but differentiated convergence: 9.5 gigatonnes of carbon dioxide equivalent, 0.9 per cent • Immediate convergence: 3.7 gigatonnes of carbon dioxide equivalent, 0.4 per cent • Comparison: national budget based on status quo share: 12.3 gigatonnes of carbon dioxide equivalent, 1.2 per cent • Comparison: national budget based on current share of global population: 3.4 gigatonnes of carbon dioxide equivalent, 0.3 per cent

Notes: National emissions budget for 2013–2050. All approaches share a global emissions budget consistent with a 67 per cent probability of limiting temperature increases to 2 degrees. Australia’s status quo share based on its share of global emissions including emissions from land use, land use change and forestry.
Source: Global budget: Authority calculation based on Meinshausen et al. (2009) adjusted using International Energy Agency (IEA) (2012a) and (2012b) and The Treasury and DIICCSRTE modelling (2013). Approaches: Authority calculations based on spreadsheet tool used for the Garnaut Review (2008) with updates for emissions, population and Gross Domestic Product from The Treasury and DIICCSRTE modelling (2013) (contraction and convergence; modified contraction and convergence); Höhne and Moltmann (2009) and inputs to spreadsheet tool (common but differentiated convergence); Authority calculations based on The Treasury and DIICCSRTE modelling (2013) and IEA (2012b) (other approaches).

The next Section discusses two effort-sharing approaches. These are not included in Figure 9.3 because allocations are not available over the period to 2050, so long term national budgets cannot be derived.

9.2.2 Effort sharing approaches

Equal proportional emissions reduction costs

This approach seeks to equalise the wellbeing forgone when taking action to reduce emissions. It generally uses Gross Domestic Product (GDP) as a proxy for wellbeing, and allocates mitigation targets among developed countries so that each incurs the same total emissions reduction cost as a proportion of GDP.

The implications for targets depend critically on whether countries undertake all emissions reductions domestically or can source them internationally:

  • If international emissions reductions cannot be used, developed countries facing higher total emissions reduction costs have weaker targets, and those facing lower costs have stronger targets, so that the cost as a share of GDP is the same in both countries.
  • If international emissions reductions can be used, all countries can collectively achieve the emissions reductions at a lower cost, because reductions can take place wherever in the world they are cheapest. Developed countries with higher total costs would still have weaker targets under this approach than those with lower costs; however, the difference in targets would be smaller than without trade.

There are not many published studies that address the specific question of relative costs explicitly. While those that do vary, a common conclusion is that Australia faces relatively high total emissions reduction costs (see, for example, McKibbin, Morris and Wilcoxen (2010) and den Elzen et al. (2009)). This means that Australia’s target under this approach would be relatively weaker than those of developed countries with lower costs.

Greenhouse Development Rights

The Greenhouse Development Rights approach takes differences in capacity within nations explicitly into account. Each country’s share of emissions reductions is based on two things – how many people in that country have incomes above a ‘development threshold’ and how many emissions those people have generated since 1990. These are combined in a Responsibility-Capacity Index, which is used to calculate the country’s share of the global emissions reduction task. Under this approach, short term targets for developed countries can be very strong indeed.

9.3 Assessment of Australia’s fair share

All things considered, it is the Authority’s view that:

  • some approaches are not feasible for Australia;
  • focusing solely on equalising costs has conceptual and practical problems;
  • a budget based on eventual convergence to equal per person emissions rights is desirable; and
  • modified contraction and convergence provides a budget for Australia that is both equitable and feasible.

9.3.1 Some approaches are not feasible for Australia

Some approaches imply very small emissions national budgets and therefore unrealistically rapid emissions reductions for Australia. This includes immediate convergence (which implies a 2020 target of more than 70 per cent below 2000 levels) and the Greenhouse Development Rights approach (which implies a 2020 target of more than 55 per cent below 2000 levels), both of which received some support in submissions. The desirability and feasibility of very deep near term cuts depends in part on how much of Australia’s emissions reductions can be sourced internationally. If there is a strong desire to undertake a large share of emissions reductions within Australia, then near term reductions of this magnitude are probably infeasible.

As an effort-sharing approach, there are also important practical problems with using Greenhouse Development Rights to inform budgets over long timeframes. As more countries take more action, the ‘no action’ trajectory required to calculate targets becomes increasingly abstract and difficult to estimate.

9.3.2 Focusing solely on equalising costs has conceptual and practical problems

Approaches focusing on costs of emissions reductions received support from several stakeholders, including the Business Council of Australia (Issues Paper submission, p. 3), which recommended that the Authority ‘adopt an approach to determining Australia’s fair share of any global emissions budget that equates the economic costs that Australians are expected to pay with those of similar wealth’, and the Australian Industry Greenhouse Network, which stated that:

The [Climate Change Authority] should consider reframing this discussion in terms of the relative economic burden of making emissions reductions, since such a metric more closely reflects the working reality that Australia must operate within in international negotiations. (Issues Paper submission, p. 5)

Costs are undoubtedly important and the Authority takes the economic and social impacts of climate action seriously. Chapter 10 examines the potential costs of achieving different targets in detail. Nevertheless, cost-based approaches to sharing global climate action have three important conceptual and practical limitations.

First, costs are only one aspect of Australia’s fair contribution to global action. Australia’s capacity, responsibility and exposure to climate change are also relevant considerations. By international standards, Australia is a wealthy nation with high per person emissions relative to other countries and high exposure to climate damages. It is therefore fair that Australia take on some additional costs – particularly relative to developing countries, for which poverty eradication and improving living standards are the most important priority. If costs were to be equalised across developed countries only, then Australia’s relatively high exposure to climate damages and responsibility for emissions still suggest it might take on additional costs. In this case, the practical difficulties of attempting to take on equal costs would be compounded by first having to determine a fair share for developed countries as a whole.

Second, the costs of emissions reductions – and their distribution across households and industry – depend heavily on policy design. As Chapter 10 shows, Australia can achieve strong targets at modest costs. Policies can be designed to assist households with increased costs and to moderate the impact on businesses. If countries choose to pursue more costly policies, it should not follow that their fair share of the global budget increases.

Third, economic models are not well suited to divining the long term equitable contribution of each country to the global mitigation task. Modelling involves making a wide range of assumptions about the future, including industrial composition, technology development and policy design across the world. Projections necessarily become more speculative over the longer term. This suggests that it would be difficult to identify emissions reduction targets that equalised proportional reductions in GDP across countries. Further, the results could be contested rather than useful, as countries would have a perverse incentive to inflate their estimated costs. These points were made by Macintosh (2013, p. 17), who concluded that:

Economic modelling is too unreliable, too subjective and too vulnerable to manipulation to provide a reliable and objective basis from which to set caps. Economic modelling has its uses, including in relation to the formulation of climate policy. The danger lies in exactly how it is used.

The Authority therefore considers that the costs of emissions reductions – by themselves – are not an appropriate way to determine Australia’s fair share of the global emissions budget.

9.3.3 A budget based on eventual convergence to equal per person emissions rights is desirable

On balance, the Authority’s view is that eventual equality in per person emissions is fair. These approaches have received quite widespread support in Australia and among the international community. The 2008 Garnaut Review stated that:

… the approach that seems to have the most potential to combine the desired levels of acceptability, perceived fairness and practicality is one based on gradual movement towards entitlements to equal per capita emissions. (p. 202)

Many submissions that discussed budget-sharing expressed support for equal emissions shares per person. For example, the Investor Group on Climate Change wrote that Australia should set:

… national reduction targets that reflect our fair share of the global effort required under the ‘contraction and convergence’ approach to limit global temperature increases to two degrees. (Issues Paper submission, p. 1)

Despite the quite widespread support, there are some notable criticisms of equal per person emissions, including that it:

  • Creates perverse incentives for population growth. Some suggest that allocating national rights based on population size may make countries increase their populations to gain a larger allocation.
  • Relies on unacceptably inaccurate population projections. Errors in country level population projections 40 or 50 years ahead can be quite large.

The Authority does not find these criticisms convincing.

Regarding population growth, while national allocations increase one for one with population, staying within a larger budget with more people is unlikely to be much easier than staying within a smaller budget with fewer people. Moreover, emission rights could only ever be one of many factors influencing a country’s population and immigration policy.

On the accuracy of future population projections, periodic review of longer term goals can include revisions to take account of new population projections and the Authority recommends this be incorporated in the regular review of Australia’s post-2020 goals (see Chapter 8).

Two further criticisms warrant closer inspection – that equality in per person emissions:

  • Does not explicitly consider historical responsibility. Approaches that achieve equality in emissions per person start from the status quo and as such do not take responsibility for previous emissions explicitly into account when determining emissions reduction goals.
  • Is unfair. Stern (2012) argues that allocating one good (emissions rights) without taking account of peoples’ other goods or characteristics (such as income) is counter to conventional public economics. He shows that a more conventional public economic approach would generally result in a larger allocation to lower income nations and smaller allocations for wealthy nations like Australia.

The Authority’s view is that distant past emissions should not be included in determining a country’s fair share – these emissions occurred when their harmful effects could not be foreseen. While the modified contraction and convergence approach does not directly account for historical emissions, it does place extra responsibilities on developed countries with high per person emissions. These countries reduce their emissions more rapidly to provide the ‘headroom’ for rapidly industrialising countries.

The modified contraction and convergence approach also goes some way to dealing with Stern’s criticism, by taking countries’ level of development as well as current emissions per person into account. More broadly, the Authority is inclined to agree with Stern’s suggested way forward on this issue. He writes:

Whilst the poor countries have much the better of the argument on equity, between the rigidity and intransigence of [rich and poor nations], the future of their children is held hostage … And it is poor people who are at the most risk. But there is a way forward. It is not to drop the equity criteria but to embed them in the idea of rich country support in fostering the dynamic and attractive transition to the low-carbon economy in both their own countries and as a driver of growth and poverty reduction in the developing world. (Stern 2012, pp. 101–2)

It is in that spirit that the Authority reiterates that equity on climate change has implications beyond Australia’s emissions reduction goals. Australia already provides support for mitigation and adaptation to developing countries through its overseas development program and could enhance this contribution further if desired.

9.3.4 Modified contraction and convergence provides a budget for Australia that is both equitable and feasible

Of the equal per person approaches, the Authority finds that modified contraction and convergence is the most equitable and feasible.

A simple contraction and convergence approach implies too great a burden on developing countries. It implies, for example, that China’s and Papua New Guinea’s per person emissions would need to fall from now. A common but differentiated convergence approach implies very demanding emissions reduction goals for high-emitting developing countries for the smaller global emissions budgets that are in Australia’s national interest.

Modified contraction and convergence is fairer than both simple contraction and convergence and common but differentiated convergence. By providing headroom rather than requiring immediate reductions, this approach allows rapidly developing countries somewhat more time to decarbonise their economic growth. By allowing all countries to transition from their current position, rather than move immediately to equal rights, it also implies stronger but manageable emissions reductions for developed countries. This approach therefore provides the best basis for determining Australia’s appropriate share of the global emissions budget, and gives guidance on Australia’s other emissions reduction goals.

9.4 Australia’s national emissions budget

The Authority’s recommended national emissions budget to 2050 based on Australia’s fair share of the global budget is 10 100 Mt CO2e.

To derive a national budget, first the 2000–2050 global emissions budget of 1 700 Gt CO2e (see Chapter 3) is adjusted to remove historical global emissions from 2000–2012 (around 600 Gt CO2e). Second, projected emissions from international aviation and shipping for 2013–2050 (about 50 Gt CO2e), are removed, as these are not allocated to any individual country (see Section 8.6.1). Third, Australia’s share of the resulting 2013–2050 global emissions budget is calculated as its share of emissions under a modified contraction and convergence approach. Appendix C6 provides further details. The Authority will carefully monitor new data with implications for the recommended national emissions budget and reflect relevant developments in its Final Report.

The Authority’s recommended emissions reduction goals for Australia, including the 2050 budget, are ‘net’ goals (see Chapter 8). That is, to the extent that Australia’s domestic emissions exceed the budget, they must be offset by genuine emissions reductions purchased from overseas. To put it in perspective, the budget represents about 17 years of current Australian emissions; Australia’s domestic emissions could be higher if they are offset.

The Authority recommends that this budget be reviewed on a regular basis, taking into account developments in climate science, international action and the costs of reducing emissions.

Draft recommendation

R.4 That the national carbon budget for the period 2013–2050 be 10 100 million tonnes of carbon dioxide equivalent (Mt CO2-e), and be reviewed on a regular basis.

9.5 A responsible long term budget influences Australia’s short term choices

This Section explores implications of long term national emissions budget for the distribution of Australia’s effort over time.

As discussed in Chapter 8, in addition to the long term national emissions budget, the Authority will recommend a medium term trajectory range and goals to 2030, including a 2020 emissions reduction target. This set of goals must be internally consistent and provide reasonable steps from one milestone to the next. The importance of choosing internally consistent goals was raised by AGL Energy Limited (Issues Paper submission). A stronger 2020 target provides greater flexibility in later reductions to stay within the 2050 budget. A weaker 2020 target requires stronger action to 2030 and beyond. This has implications for the costs and risks faced by Australians of different ages. Some trajectories imply a distribution of effort that is so uneven that recommending such a path would be inequitable and lack credibility.

The bottom of the Authority’s recommended trajectory range indicates the scale of effort required between 2020 and 2030 to stay within the recommended national emissions budget. As described in Chapter 8, the bottom trajectory plots a straight-line pathway from the 2020 target to meet the recommended 2050 budget. Such trajectories provide a clear signal to the international community – Australia is prepared to do its fair share of the effort required to give the world a likely chance of staying below 2 degrees of warming.

A 5 per cent 2020 target requires an implausibly rapid acceleration of effort between 2020 and 2030 to remain within the long term budget. A 25 per cent target sets a pace that needs to be maintained to 2030 and beyond; a 15 per cent 2020 target would require some acceleration after 2020.

The bottom trajectory ranges for these and two other 2020 targets (10 and 40 per cent) are shown in Figure 9.4. The figure also plots:

  • the continuation of the straight-line trajectory past 2030, to indicate when the national emissions budget would be exhausted; and
  • a straight-line trajectory to 2050 to illustrate the amount of the national emissions budget to 2050 remaining after 2030 for each target. These post-2030 trajectories are illustrative only, in part because the Authority recommends that the long term national emissions budget be reviewed on a regular basis (see Chapter 8). The Authority is not recommending a 2050 target in this Review, and a range of 2050 targets could be consistent with the Authority’s recommended national emissions budget; see Box 11.1 for further discussion.

For example, with a 2020 target of 15 per cent and the recommended 2050 budget, the difference between the 2020 target and the bottom of the trajectory range in 2030 would be 35 percentage points. This jump seems challenging; the Authority considers changes greater than this to be implausibly large.

Figure 9.4: Relationships between 2020 targets, 2030 trajectories and national emissions budgets

This is a line graph showing how the choice of 2020 target affects the trajectory required over 2013 2050 in order to meet the long term national emissions budget. Trajectories are shown for 2020 targets of 5, 10, 15, 25 and 40 per cent reductions. After 2020 emissions reduce following a straight line trajectory that allows the long term national emissions budget to be met. A bar chart shows that the higher the 2020 target the greater the budget remaining for 2031-2050. With a 5 per cent 2020 target 14 per cent of long term emissions budget remains for 2031 2050. This increases to 17 per cent with a 10 per cent 2020 target, 19 per cent with a 15 per cent 2020 target, 25 per cent with a 25 per cent 2020 target and 35 per cent with a 40 per cent 2020 target.

Source: Climate Change Authority; historical emissions from The Treasury and DIICCSRTE 2013

Overall, Figure 9.4 shows that:

  • A 2020 reduction target of 5 per cent is not a fair or responsible next step to meeting the 2050 emissions budget. If Australia adopted it and still wished to meet its fair share of the 2 degree budget, it would need to reduce emissions by a further 45 percentage points in the decade to 2030, and then would have only 14 per cent of its budget left for the next two decades.
  • The minimum 2020 target that can be credibly combined with the recommended budget is 15 per cent. A 15 per cent 2020 target would require faster reductions in the 2020s than the 2010s, with a 35 percentage point change between the 2020 target and the bottom of the 2030 trajectory range. A 25 per cent target would involve a relatively constant rate of emissions reductions from 2010 to 2030.
  • If Australia adopted a 2020 target of 25 per cent it would keep open the possibility of pursuing a stronger 2050 budget or a lower warming limit in the future. This is discussed further in Chapter 11.
  • A 40 per cent 2020 target would also keep open stronger budgets, but represents a very steep jump from Australia’s current position. The argument that anything more than a 35 percentage point jump between targets 10 years apart is too large rules out both 5 and 40 per cent 2020 targets for Australia.

In summary, a 5 per cent target for 2020 cannot credibly be described as a ‘gradual start’ to meeting Australia’s 2 degree budget. A 5 per cent target would leave such large reductions for later that future Australians would either face a very large emissions reduction task or have to abandon the long term national emissions budget. This is inequitable in the first case and against Australia’s national interest in the second. It is avoidable in both cases by adopting a 2020 target of not less than 15 per cent. This would preserve Australia’s options and allow it to respond to a wide range of futures, including making its fair contribution to global action to limit warming to below 2 degrees. Chapter 10 considers the economic implications of moving from the 5 per cent target to one consistent with Australia’s fair share of the global emissions budget geared to limiting warming to below 2 degrees.