Profile:  Warwick McKibben

Professor of International Economics at the Australian National University and a member of the Board of the Reserve Bank of Australia, Warwick McKibbin has called for a dramatic new approach to combating climate change. As the current approach through the UN is failing due to the need to build a consensus among 193 member states with competing self-interest, he proposes an international agreed price on carbon should be set, without any specific  targets or timetables for emissions reduction.

Drew Warne-Smith in The Australian (8 July 2010):

RESERVE Bank board member Warwick McKibbin has called for a dramatic new approach to combating climate change.

The approach would set an international agreed price on carbon but shun any targets or timetables for emissions reduction.

With Prime Minister Julia Gillard expected to address the government’s climate change policy as early as this week as she clears the decks ahead of an election, Professor McKibbin proposed an alternative framework which he believes is more likely to win international support and cut emissions in the near term.

The proposal is contained in a paper launched at the Lowy Institute in Sydney, co-authored by analyst Greg Picker and lawyer Fergus Green, both of whom participated at last year’s Copenhagen climate change conference as negotiators. The co-authors argue the current approach through the UN is failing due to the need to build a consensus among 193 member states with competing self-interest.

Instead, he recommends that a new accord should be struck in the Major Economies Forum on Energy and Climate, a body which comprises 17 countries, including Australia, the US and China, and accounts for 80 per cent of global emissions. Running parallel to last year’s Copenhagen Accord, this framework would require each country to set a consistent price on carbon which rises annually.

That domestic price, or price band — which could be converted into a single international carbon price equivalent — would then be applied as each country sees fit; via a carbon tax, emissions trading scheme or hybrid scheme.

But no country would have to quantify its reduction in emissions, nor say when those reductions would be achieved.

In effect, there would be fewer grounds for dispute, with the cuts occurring as a consequence of the price mechanism.

In doing so, the approach avoids “the hodgepodge of current policies, envisaged actions and conditionally promised targets”, the paper says. Gone, too, would be complex offset arrangements where countries could import carbon credits from overseas or rely on terrestrial sinks.

And while the paper recommends that government subsidies to industry be factored into the price, businesses would have the confidence of knowing what the future carbon cost would be.

“The all-or-nothing character of a targets and timetables system, the long timeframes involved in the compliance period and the complexity and opacity of the data . . . mean such a system is ill-suited to fostering co-operation to mitigate climate change,” it says.

But the Minister for Climate Change, Penny Wong, indicated last night that the government was unlikely to support any moves to re-negotiate international agreements. Through the Copenhagen Accord, about 80 countries had already pledged to reduce or limit the growth of their emissions by 2020, a spokesman for Senator Wong said.

“Our efforts are best focused on implementing the pledges already made through the Copenhagen Accord, rather than spending valuable time re-negotiating the whole global framework for tackling climate change.”

Opposition Leader Tony Abbott did not respond to requests for comment.

Warwick McKibbin is Professor of International Economics at the Australian National University and a member of the Board of the Reserve Bank of Australia. He has been a consultant for many international agencies and governments on issues of economic policy, trade and greenhouse policy issues. Professor McKibbin co-wrote the popular book Climate Change Policy after Kyoto: A Blueprint for a Realistic Approach with Professor Peter Wilcoxen of Syracuse University, New York.

Read Warwick McKibbin’s full report at www.lowyinstitute.org

Summary: Confronting the Crisis of International Climate Policy

By Fergus Green , Professor Warwick McKibbin , Dr Greg Picker

Copenhagen failed to produce an agreement on climate change commensurate with the scale of the problem, highlighting the fundamental weaknesses in the existing UN framework. Progress on a new agreement is agonisingly slow. Weightier commitments by the major emitters are necessary, but calls for ‘greater ambition’ ignore the structural problems embedded in the institutions, processes and policy models of the UN climate regime.

This study proposes an international framework based on carbon prices rather than emissions targets. Under a price-based international framework, countries would undertake to implement specified actions and policies. Those policies should then be converted into an internationally standardised form of economy wide ‘carbon price equivalent’, with each country pledging/negotiating to implement a starting carbon price equivalent policy along with a schedule of real annual price increases.

Source: www.theaustralian.com.au and www.lowyinstitute.org