New index helps track climate performance and puts Australia last

The Morrison Government may be dragging the chain on both measuring the social cost of carbon and acting on climate change but a global coalition of business people and academics has released a ground-breaking Real Carbon Price Index to track the progress the world is making towards reducing greenhouse gas emissions.

“Our ambition is to make the Real Carbon Price Index the global benchmark for carbon pricing. This will shine a spotlight on global decarbonisation efforts, showing whether real action is being taken, and who is taking it,” says Dr Roger Cohen, founder and CEO of Sydney based start-up C2Zero.

The Index shows that at around US$70, the European Union (US$66) along with Finland (US$72.5), Norway (US$65.5) and the UK (US$65.06), have reached or exceeded the lower range of the 2030 target: with Switzerland (US$104.67) and Sweden (US$136.34) leading the world.

Somewhere in the middle are New Zealand (US$33.5), California (US$21.96) and China (US$8.20).

At the other end of the spectrum, the worst performers include India (7% of global emissions), Russia (5%), Iran (2%), Indonesia (2%), Saudi Arabia (2%) and Australia (1%), who collectively account for 19% of global emissions and pay zero.

The High Level Commission on Carbon Pricing has established that if polluters paid US$50-$100 per tonne for their carbon emissions by 2030, this would be enough to trigger action through direct emissions reduction plus innovation, which would allow the goals of the Paris Agreement to be met.

As the Morrison Government has ruled out a carbon price in favour of the ‘technology not taxes’ slogan it makes it way off the pace in terms of what much of the rest of the world is doing.

“If the price is low, as it currently is, there is little reason for polluters to take action. Our Index shows the blunt truth: greenhouse gas emissions are still far too cheap,” Dr Cohen said.

Dr Ummul Ruthbah, Senior Research Fellow with Monash Centre for Financial Studies (MCFS), says the Real Carbon Price Index shows the cost of carbon emissions globally has risen from zero in the 1980s to the current level of just US$4.42 per tonne. “This is far below where it needs to be in order to force both individual companies and entire business sectors with heavy carbon emissions to meaningfully reduce their pollution levels. In fact, the Index reveals that about 75% of carbon emitters are paying absolutely nothing.

“While accounting for 1% of global emissions, Australia is not even included in the Real Carbon Price Index as it does not have a carbon emissions trading scheme, although it does have an offsets trading system administered by the Clean Energy Regulator,” Dr Ruthbah says.

A fellow MCFS researcher, Dr Bei Cui, says: “This inaction stands against the damage done by emitting greenhouse gases. A recent European study found that the social cost of emitting one tonne of CO2 could actually be well above $3,000 if we don’t take action,”

Some economies, including the EU, USA, and China, are making polluters pay for their greenhouse gases, yet most countries, including Australia, have placed very little or no price on greenhouse gas emissions.

“The Real Carbon Price Index lets everyone see how seriously the world is taking climate change. It scrutinises which countries or regions are paying their way or contributing to addressing this crisis,” says Jan Ahrens, Head of Research at SparkChange, a provider of specialist carbon investment products and data.

“The Index can be used to highlight the differences between regions and countries, show how historical decisions (like Brexit) affect carbon pricing and provide guidance for policy makers when setting carbon prices. Sadly, it also illustrates the significant gap between our current levels of ambition and the science-based targets we must achieve to limit global warming,” Mr Ahrens adds.

“What is heartening is that the carbon price and the scope of emissions covered are both increasing steadily. This trend needs greater momentum if we are to get to the target of US$50-$100 and alter the path of climate change,” Dr Cohen says.

What is not heartening is Australia’s continued place as a laggard and not a leader. And what is absolutely disheartening is the implications of carbon prices for the Morrison Government’s obsession with carbon capture.

Mining billionaire Andrew Forrest has described carbon capture as “a good soundbite but it doesn’t work” failing 19 times out of 20.

In March 2020 Food and Water Watch produced a report on the case against carbon capture which explains why it is a good soundbite but is also totally uneconomic under Morrison’s refusal to put a carbon price on emissions.

The report said: “Despite the proven viability of every technological component necessary for a rapid transition to 100 percent clean, renewable energy, embedded interests continue to promote carbon capture and storage as a solution to climate change. Successful deployment of this technology would result in large increases in pollution associated with the extraction, transportation and combustion of fossil fuels, burdens that are borne disproportionately by the least well-off in society.

“At the same time, CCS would fail to meaningfully reduce emissions to stave off the worst effects of climate chaos.

“Carbon capture and storage relies on unproven and dangerous technologies that cannot survive without government support. Continued subsidies for this failed technology only serve as an excuse to defer meaningful climate action. A reckless push for CCS would sacrifice important regulatory guardrails and expose the public to increased water pollution, induced earthquakes and potentially catastrophic releases of CO2,” it said.

The irony is that for carbon capture to be viable in catching, liquefying, transporting and storing (if you can) CO2 Emissions from a coal-fired power plant it would require a carbon price of about $138 per tonne.

And if ScoMo doesn’t take climate change seriously the Nobel Prize Committee does. This year’s physics prize is the first to be awarded for understanding the Earth’s climate. In the 1960s and 1970s, Syukuro Manabe of Princeton University and Klaus Hasselmann of the Max Planck Institute for Meteorology, in Hamburg, studied the way in which the Earth’s atmosphere behaves over time.

Dr Manabe was able to make the first reliable prediction that doubling the level of carbon dioxide in the Earth’s atmosphere would also increase the planet’s surface temperature. Dr Hasselmann subsequently developed models to show how short-term models could predict Earth’s climate far into the future. The climate models in use today stem from their work.