Climate change poses clear risks to Australia’s future prosperity.
Only global action can reduce greenhouse gas emissions to a level that significantly reduces the risks of dangerous climate change. In working towards an effective global agreement, the developed world has to lead.
Australia will make its fair contribution, including by implementing efficient market-based policies to substantially cut domestic emissions in a cost-effective way. The Carbon Pollution Reduction Scheme will be the cornerstone of Australia’s mitigation policy. This will safeguard our economic wellbeing, and stimulate sustainable low-emission growth that will form the basis of Australia’s future prosperity.
This is a complex policy area, with important implications for our economy and society. The Government is taking a careful and deliberate approach, drawing on many sources of advice to ensure it understands the costs and benefits to the economy of reaching our emission reduction targets. This will ensure we meet our responsibility to not only protect the economy of today, but also prepare for the low-pollution economy of the future.
The Treasury has conducted one of the largest and most complex economic modelling projects ever undertaken in Australia. This report investigates the potential economic impacts of reducing emissions over the medium and long term. It spans global, national and sectoral scales, and looks at distributional impacts, such as the implications of emission pricing for the goods and services that households consume.
These issues are clearly important to decisions on Australia’s scale and rate of emission reductions in coming years.
We are making the assumptions and results of the Treasury’s analysis available to the public. We will consider public responses to this report before the Government makes its decisions on the national target range for the medium term. This will help take Australia to its goal of reducing emissions by 60 per cent below 2000 levels by 2050.
The Government will continue to build Australia’s capacity for high quality analysis of the costs and benefits of climate change policy. This will ensure we continue to make a substantial contribution to global efforts, and have confidence that our domestic policies enhance the wellbeing of all Australians.
The Hon. Wayne Swan MP
Senator the Hon. Penny Wong
Minister for Climate Change and Water