Climate Change Authority chairman insists ‘more ambitious targets than those adopted by the government can be achieved at modest costs’

The independent Climate Change Authority has shot down key parts of Tony Abbott’s new environmental message, saying the government’s new target is not “in the middle of the pack” of similar countries but rather “at or near the bottom”, that the $600bn price tag the government attributes to Labor’s target is “wrong” and its antagonism to emissions trading schemes is also misguided.

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The prime minister this week unveiled a new greenhouse gas reduction goal of reducing emissions by between 26% and 28% of 2005 levels by 2030, saying this put Australia “fairly and squarely in the middle of comparable economies.”

But CCA chairman Bernie Fraser said the target put Australia “at or near the bottom of the group of countries we generally compare ourselves with”.

Fraser, a former governor of the Reserve Bank, also took issue with the claim modelling done for the CCA in 2013 had shown a 40% to 60% emissions reduction by 2030 would cost $600bn.

The Daily Telegraph revived the modelling this week in a front page story headlined “ALP’s $600bn carbon bill” – arguing the cost was attributable to Labor because it has said it would base its long term targets on up to date advice from the CCA and the modelling work had been done while Labor was in government.

The prime minister then used the same figure as the basis of the claim Labor’s policy would “hit our economy with massive and unmanageable costs, massive increases in power prices, massive increase in the hit on families’ cost of living”.

But in a statement Fraser said: “Others have wrongly claimed that the authority’s own modelling shows that the 40 to 60 target would impose very high costs – in the order of $600bn – on the economy. This is not correct.”

“The treasury modelling conducted for the authority in 2013 did not project the costs to Australia of pursuing a 40% to 60% emissions reduction target by 2030 (or any other 2030 target for that matter).”

He said with the “right” policies the authority was confident “more ambitious targets than those adopted by the government can be achieved at modest costs”.

Under the deal the government did with the Palmer United party to pass its Direct Action policy, the CCA has been asked to look at alternative climate policies.

But Fraser says it is difficult to do that assessment while the government makes false claims about emissions trading schemes every time they are publicly mentioned.

“The authority’s current work on the case for a market-based ETS for Australia is obviously occurring in a difficult environment,” he says.

“While part of the minister’s terms of reference to the authority, the very idea of an ETS (and those raising the idea) are criticised by government members every time it surfaces, asserting it is a ‘tax’ (which it is not in substantial respects), which will have major economic and social consequences (which is not the experience of those countries where ETSs are prominent components of their climate policy tool kits).

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“Major decisions are looming as to how the inevitable costs of achieving large reductions in emissions are best funded – through, for example, expansion of the government’s Emissions Reduction Fund activities, which are financed directly from the budget, and/or through market-based mechanisms like an ETS. However this conundrum is eventually resolved, substantial shifts in much of the current thinking and rhetoric around these issues can be expected,” he says.

The government modelled the economic cost of its own target. It showed the 26% target would shave between 0.2% and 0.3% from Australian GDP in 2030, but the same modelling found that – based on similar assumptions, a 35% target would cut only 0.3% to 0.5% and a 45% target would cut between 0.5% and 0.7%. (The modelling looked at the costs of doing no more after the 2020 target was reached, and of cutting by 26% by 2030, by 25% and by 45%.)

The government has not yet released the modelling, but says it will do so in coming days. It had intended to abolish the CCA but could not get the support of the Senate to do so.