OUR SAY: Garnaut goes easy, but no reason to relax 1

Trucking operators may have dodged a bullet from Garnaut but it is no reason to ignore climate change costs

By Brad Gardner

Either way you look at it, the trucking industry has dodged a bullet from Professor Ross Garnaut. Sure, the economist’s modelling will result in cost increases, but his latest report rejects the call for drastic action, instead plotting a course for a more cautious approach.

Although green groups pushed hard for sweeping changes, Garnaut has tried to strike a balance between business and environmental needs.

His call for a 10 percent reduction in emissions by 2020 based on 2000 levels is modest indeed, as is his recommendation of $20 per tonne of carbon once emissions trading kicks off. This will add almost an extra six cents per litre to the price of fuel.

By contrast, the Greens want a 40 percent reduction by 2020.

Although Garnaut’s preferred model will result in a 2020 carbon price of $60 — about an extra 17 cents for fuel — it is an unlikely scenario.

This price is based on reducing emissions by 25 percent by 2020, which, as Garnaut told the National Press Club when launching the report, is unlikely based on the world’s current carbon output.

Furthermore, there is no guarantee the Government will not aim for a smaller target than a 10 percent reduction when it introduces its Carbon Pollution Reduction scheme.

If Australia cannot bring the international community — particularly the US, China and India — on board, Garnaut recommends the Government revise its obligation to five percent emissions reduction by 2020, which in turn will reduce the impact an emissions trading scheme will have on the price of fuel.

Based on the world’s inability to reach a consensus on climate change, coupled with the Government’s desire to take as conservative an approach as possible, the five percent reduction scenario all of a sudden looks more likely than the 10 percent figure.

However, while this outcome is the best result for the trucking industry short of being exempted from emissions trading altogether, it is no reason to relax.

Although the path to a greener world is still a little hazy, it has nonetheless been made a little clearer by Garnaut’s latest report. At the very least it gives the industry the ability to understand the potential cost of reducing its carbon footprint.

Operators need to use this to determine what impact carbon pricing will have on their business. They need to understand their costs and put in place adequate measures to ensure they are reimbursed accordingly.

Those whose business operations extend to warehouse and distribution need to start looking at what impact Garnaut's predicted 40 percent increase in electricity prices will have.

There is no excuse. The Carbon Pollution Reduction scheme is more than one year away from being introduced and the Government is promising to cut the fuel excise by a cent for every cent increase in the price of fuel from emissions trading.

Yes, governments should also be opening up more routes for high productivity vehicles, introducing truck-only lanes and reducing registration costs for B-double and B-triple operators.

But it can only do so much. The industry may have dodged a bullet from Garnaut but the cost of climate change still has the potential to blow a hole in operators’ margins unless they put in place the right structures to respond effectively to a carbon constrained world.

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