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A low carbon economy: the smart way forward by Connie Hedegaard, European Commissioner for Climate Action


Connie Hedegaard, European Commissioner for Climate Action

Would you board an airplane if you knew it had a 90 per cent chance of crashing?

This is the situation we face with climate change. The world's leading scientists are more than 90 per cent certain that most of the global warming seen since the 1950s comes from man-made emissions of greenhouse gases.

Climate change is happening, and it reinforces a whole range of other global economic and social problems.

We have a duty, both moral and economic, to avoid wrecking the planet.

It is right that Australia, with the highest level of greenhouse gas emissions per head in the developed world, should undertake its fair share of the global effort to reduce emissions.

What is more, I believe the Australian Government's Clean Energy Future plan is an important step in the right direction.

This is not only because Australia is especially vulnerable to more severe and frequent extreme weather.

It is also because the transition to a low-carbon global economy presents a huge opportunity to modernise our economies, stimulate growth and create jobs by building dynamic new industries based on innovative clean technologies and clean energy.

An opportunity to join Europe and others such as China - which has already become the world's leading manufacturer of wind turbines and solar panels – in building up the global market for low-carbon energy and energy-efficient technologies. This market is set to double, or even triple to 2.2 trillion dollars, between 2010 and the end of this decade.

No major trading nation can afford to miss out on their slice of this expanding cake.

The Clean Energy Future plan provides a smart combination of investments and reforms to build this low carbon economy.

Pricing carbon is the most economically efficient way to address emissions because it allows them to be cut at least cost. And it drives innovation and investment by creating a permanent incentive to reduce emissions.

By putting the revenues of carbon pricing back into the pockets of taxpayers, this plan stimulates household spending. By delivering lower income taxes and other labour costs it also helps create thousands of jobs. In Europe, we estimate that up to 1.5 million jobs can be created by 2020.

Wouldn't you rather a system that taxes more of what we burn and less of what we earn? If we want to consume less energy, we need a smarter way of taxing. That's one of the tools we are working with in Europe. Indeed, some of our most energy-efficient member states get a significant share of tax revenues from taxing energy instead of citizens' hard-earned income.

Europe has adopted a mix of climate and energy measures broadly similar to those in Australia's plan, and they are proving their worth.

For 2020 we have three targets: reducing emissions to 20% below their 1990 levels, delivering 20% of energy through renewables, and improving our energy efficiency by 20%. The first two targets are binding legislation which requires all our 27 member states to do their fair share.

These measures are underpinned by our emissions trading system (ETS), which puts a price on carbon and caps emissions from 11,000 power stations and heavy industrial installations responsible for 40% of the EU's total emissions.

Emissions from each installation are now on average 8.3% lower than when we launched the system in 2005. Beyond the recession, the ETS itself is delivering genuine reductions.  

More broadly, while our economy grew 40 per cent since 1990, emissions are down 16 per cent. We have proved wrong those who claim emissions can't be cut without sacrificing the economy.

Emissions trading will remain centre stage as the EU moves towards its longer term goal of 80-95% emissions reduction below 1990 levels by 2050. The advantages of carbon pricing are increasingly being recognised around the world. Besides Europe, emissions trading is spreading through different models to New Zealand, large US states like California, and Canadian provinces, South Korea and now China, whose pilots will lead to a national system from 2015.

The world is moving and Australia is once again in a driver's seat thanks to the Clean Energy Future plan. Now the task for the EU and Australia is to work together toward truly global solutions, confident and proud of our leadership in this field.

Last update: 27/06/2013 | Top