Australia could blow its carbon budget within 15 years

Australia is at risk of blowing its own carbon budget within 15 years – even with its current bipartisan climate change policies – and might need to cut its emissions by more than half by 2030 in a world that acts to avoid the worst impacts of climate change.

These are the broad conclusions of a new study by The Climate Institute, which is urging Australian policy makers to make a long term “budget” approach to climate action, rather than just a series of short term target. It says this is essential to properly recognise the “risks, responsibilities and realities in doing its  fair share in helping achieve climate change goals.”

The concept of carbon budgets has been around for nearly two decades, but is only now beginning to gain traction as the world hurtles towards what many scientists and international bodies such as the UN, the International Monetary Fund, and the International Energy Agency say is a tipping point.

The IEA, for instance, suggested last year that the fossil fuel industry would need to leave more than two thirds of its defined reserves in the ground if global carbon budgets were to be met, and investors are becoming increasingly focused on carbon budgets because of the risk of stranded assets and a huge impact on investments.

HSBC last week issued a further warning about the tight carbon budget, saying it could be exhausted on a global level by 2030, and credit ratings agency S&P has also issued a warning  about the implications of such budgets.

However, the study by The Climate Institute is the first attempt to ascribe a carbon budget to Australia, attempting to judge what its fair share of a global effort would be – a problem about individual and collective country responsibilities that has bedevilled progress in international climate change negotiations for the past decade.

The conclusions have major implications for Australia – or at least for those who would have the country continue on a business as usual basis. The TCI report does not go into the details of how more ambitious targets should be achieved, but the implications for a country heavily reliant on coal-fired generation, and determined to increase its thermal coal and LNG, should be clear.

TCI deputy managing director Erwin Jackson says that even on the Australian government’s current target of a 5 per cent reduction in greenhouse emissions by 2020, Australians would use four times as much of the global budget as the average global citizen.

The 5 per cent reduction suggests a carbon budget of 15 billion tonnes of greenhouse gas emissions for Australia over the next 40 years, while even the 25 per cent target (the current upper range of the government policy options) would assume a 13 billion tonnes budget.

But, says Jackson, “if the average Australian consumes no more of the global budget than the average person in other advanced economies then over the next 40 years we can only release 8 billion tonnes (of) carbon pollution. At current emission levels this budget would be consumed in around 15 years.”

“Like any budget, the more you spend early the less you have for later,” Jackson says. “If targets are set without reference to a long-term and fair national carbon budget, more draconian emissions reductions will be required after 2020 to meet national goals and international commitments.”

Jackson says that how a carbon budget is defined can have an impact on short-term decision making and implications for a long-term emissions reduction pathway.

The Australian Climate Change Authority is about to consider Australia’s short and mid term reduction targets, and Jackson says that if a long- term budget is not taken into account it increases the risk that more dramatic and draconian emissions reductions will be required post 2020.

Jackson provides some scenarios about how this would look like, in the table below. The current policy of a 5 per cent reduction is simply not credible in scientific terms, so is not modelled. But even a 25 per cent reduction by 2020 pre-supposes a much tougher budget in the 2020-2030 decade.

“Like any budget, the more you spend early the less you have for later.”

This graph illustrates what that steady reduction would look like in terms of Australia’s overall budget from 2010-2050.