Rachel Kyte speaking at Crawford School.

Carbon scheme makes Australia a world leader

24 March 2013

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Frank Jotzo is Director of The Centre for Climate Economics and Policy at Crawford School, and director of the School’s Resources, Environment and Development program. He currently teaches the graduate courses Domestic Climate Change Economics and Policy and Issues in Development and Environment.

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Australia’s carbon tax may be a political “hot potato” but on the global stage it’s marking the country out as a leader, according to an executive of the World Bank.

Rachel Kyte, Vice President of the World Bank’s Sustainable Development Network, was at Crawford School last week to give a public lecture. Before the lecture, she gave an interview to Associate Professor Frank Jotzo of the Centre for Climate Economics and Policy. Kyte told Jotzo that the international carbon market may not be emerging in the way experts had expected but it’s happening at a pace, and many countries are looking to the Australian model.

“20 years ago I think we all thought there would be a global carbon price and that would emerge from a global liquid carbon market coming from the top down,” said Kyte. “We now realise that’s not going to happen.

“What you’re seeing is a market being built from the bottom up. Within that community of countries that are experimenting and building markets, and within countries that are looking to do so in the near future, people will look internationally at Australia as an example that they want to understand and follow.

“So while this is a domestic hot potato, internationally Australia is seen as a leader.”

Kyte said that a recent report commissioned by the World Bank, ‘Turn down the heat – why a 4 degree warmer world must be avoided’, had given the organisation a wake-up call that it needed to change the way it operated.

“I think the report really forced us to reassess what we’re doing,” she said.

“We’re involved in two process [as a result]. One is going back through the approaches that we take to our sectoral work – transport, energy, agriculture – and asking the question ‘is everything that we’re doing building resilience at the community and country level?’ And is everything that we’re doing reducing emissions to the extent that we can?

“Secondly, if we did all that, the World Bank is but one small part of the landscape of development, and we have to do something way beyond that. Not least because about 20 countries account for most global emissions, and some of those countries are not our clients, they are our shareholders.”

Despite the gloomy predictions detailed in the report, Kyte said there is room for optimism that the worst of the effects of global warming can be avoided.

“There’s nothing in [the report] to suggest it’s unstoppable. The solutions are known, they just need to be deployed. The opportunity is shifting the growth path to one that is cleaner, greener, more inclusive. Then pricing – pricing the things that need to be priced, so we’re very interested in carbon taxes and market-based mechanisms and speeding up their adoption across countries.

“Then I think the difficult thing is avoiding lock-in, especially when you’re building infrastructure. One has to think about infrastructure over the long run, and making that climate resilient and low-carbon infrastructure.

“So how do we bridge the long-term economic clarity with the short-term political cycle? We have to, as an international community, find those additional sources of financing to fund the gap between business-as-usual and a greener business-as-usual, and that’s very difficult in a world where there’s still about a trillion dollars of infrastructure that doesn’t get financed every year.”

A copy of Rachel Kyte’s speech from her public lecture is available here: http://crawford.anu.edu.au/sites/default/files/news_attachments/03212013%20Rachel%20Kyte%20speech.pdf . Rachel Kyte’s lecture was presented by the Development Policy Centre and the Centre for Climate Economics and Policy at Crawford School.

External coverage of Rachel Kyte’s visit to Australia: Radio Australia ABC News ABC The World Today

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