Implications of implementing the emissions trading scheme in Australia Essay
The contentious nature of the yet to be implemented emissions trading scheme (ETS) for Australia has already gathered much storm with particular concerns to the significant impacts that it portends to the business and society in general. Indeed, the ETS touches on almost every nerve of the Australian society. The ETS will seek the commitment of businesses and households to observe set limits of greenhouse gas emissions, with the objectives of counterbalancing the emissions across different sectors of the economy (Garnaut Climate Change Review, 2008).
The suggestions presented in the ETS are bound to introduce significant transformations in the economic activities in Australia. The worrying trends in high levels of environmental pollution in Australia, with statistics indicating that the current emissions levels in the country exceed the recommended 450 ppm co2 –e levels by far (Australian Department of Climate Change, 2009). This essay discusses the significance of ETS in regulating the emission of greenhouse gases in the atmosphere, despite its perceived negative implications to the business sectors and the general society in Australia.
The arguments in the essay are based on the assumption that economic growth emanating from business activities in Australia are meaningless of they do not stand to guarantee the protection of the environment for the current and future generations. Literature review According to the 2008 publication of the Garnaut Climate Change Review, accelerated economic growth and development in Australia is likely to degenerate to damaging and uncontrollable levels of greenhouse gas emissions.
Australia’s economic growth is evidently increasing the demand for fossil-fuel energy, thus the failure to implement appropriate international collective actions will allow manufacturers and consumers to continue with their risky energy consumption behaviours, thereby posing greater threats of adverse climatic change. Romer (1990) regrets that the increased destruction of the environment only serves to precipitate doom rather than good for the future of the planet earth as the world gradually gets exposed to dangers of eminent collapse.
Adequate supply of the environmental goods is facing continuous challenges as economic growth continues to wreck havoc on the environment. The Stern Review Report on the Economics of Climate Change (2006) identified that the world ecosystem is facing threats of eminent destruction due to increased levels of greenhouse emissions to the atmosphere. According to the Stern Report, global greenhouse gas concentrations in the atmosphere stood at around 430 CO2 equivalents as of 2006, compared to 280ppm before industrial revolution (Stern Report on Economic Growth, 2006).
The overwhelming pollution is as a result of combined forces of emissions of toxic gases from the power sectors, transport sectors, building sectors, industry sectors, land use sectors and land use sectors throughout the world. Indeed, these particular sectors represent the key driving forces of economic growth. As pointed out in the Stern Report “emissions have been driven by economic development. Carbon dioxide emissions have strongly been correlated with GDP per head across time and countries.
North America and Europe have produced around 70% of carbon dioxide emissions from energy production since 1850, while developing countries account for less than one quarter of cumulative emissions” (Stern Report on Economic Growth, 2006) Annual emissions are increasing at constant rates year after year. Between 1950 and the year 2000, emission of Carbon dioxide which accounts for the largest share of green house gases, grew by 2. 5% annually” (Stern Report on Economic Growth, 2006). The Stern Report further warns that without action to combat climate change, atmospheric concentration of green house gases will continue to rise.
“In a plausible business as usual scenario, they will reach 555ppm CO2e by the year 2035” (Stern Report on Economic Growth, 2006). Moreover, total emissions are bound to increase more rapidly than emissions per head in tandem with the projections that Australian population will remain positive until 2050 (Garnaut Climate Change Review, 2008). Discussion The government of Australia is targeting to implement a long-term plan of a 60% reduction on the 2000 levels of emission of greenhouse gases in the country (Hasan & Funston (2008).
However, the proposed suggestions contained in the ETS are bound to affect the Australia’s progress of economic growth, with analysts suggesting that the limiting caps will significantly cut down business and economic activities. Despite all indications that the pursuit of economic growth is well intended for the long-term interests of the population in Australia, the threats being posed by same economic growth are real (Australian Department of Climate Change, 2009). The most serious threat being posed by economic growth is environmental degradation which will consequently lead to global warming and depletion of non-renewable resources.
Romer (1990) warns that the narrow view of economic growth coupled with globalisation pose dangerous trends which may lead to systematic collapse of the planet’s natural resources, because continued economic growth leads to increased consumption of resources and subsequent increase in industrialisation. The fact that economic growth is defined by the exponential function, the doubling of benefits of economic growth over time equally demonstrate the doubling destruction to natural resources in the same measure over the same period of time.
Clearly, it is evident that accelerated economic growth in a country impacts negatively on the quality of life of both the current and future generations in the country because many natural factors of life such as the environment are not traded and measured in the market and lose value as growth occurs. Romer (1990) notes growth encourages the emergence of artificial needs because industrialisation causes consumers to develop new tastes and preferences for growth to occur. Consequently, wants are created, thereby converting consumers to servants rather than masters of the economy.
The particular concerns about the ecological and environmental effects of economic activities in Australia are as a result of the persistent threats posed by increased mining, rampant deforestation, increased industrial activities and uncontrolled agricultural activities which contribute immensely to high levels of greenhouse gases in the atmosphere. The collapse of the key components of the environment risks Australia with catastrophic calamities such as droughts and famines due to destruction of water catchments areas (Garnaut Climate Change Review, 2008).
Other disasters such as rising sea levels and frequent tornadoes are also bound to occur due to global warming that result from the destruction of the ozone layer in the atmosphere. Romer (1990) warns that economic growth increases the emissions of green house gases into the atmosphere which gradually destroy the ozone layer, leading to rise in temperatures and subsequent melting of snow, causing the sea levels to rise to abnormal levels.
Scientists estimate that the complete destruction of the ozone layer would lead to the melting of all the ice in the world, ultimately leading to the total destruction of the earth because if all the ice in the planet earth melted, the entire of the earth surface would be submerged in the water mass. Economic growth is a manifestation of technological change. “Yet the essence of technological modernity is non-stationery: many scholars have acknowledged that technological change has become self propelled and autocatalytic, whereby change feeds on change.
Thus, unlike other forms of growth, technology is not bound from above. Inventions have become a norm thus are unstoppable by forces of any nature” (Mokyr, 2005). The stern Report acknowledges that “the relationship between economic growth and CO2 emissions is not immutable. There are practical examples where change in energy technologies, the structure of economies and the pattern of demand have reduced the responsiveness of emissions to income growth, particularly in the richest countries.
“However, Strong deliberate policy choices will be needed to limit toxic gas emissions from both developing countries on the scale required for climate stabilization” (Stern Report on Economic Growth, 2006). This is in itself a confirmation that effective protection and conservation of the environmental goods can be achieved tremendously through the adoption of energy efficient production strategies that will ensure environmental conservation while not hurting long-term growth rate targets.
Nonetheless, varying strategies should be adopted in the noble cause of environmental protection in Australia. Strategies that are over reliant on reduction of fossil fuels may not be enough to stop the overwhelming emissions of poisonous gases (Garnaut Climate Change Review, 2008). Other strategies such as radical shift shifts towards service based economic activities have proved effective in slowing down or reversing the increase in emissions of poisonous gases to the atmosphere.
There should also be increased lobbying for the adoption of the Kyoto Protocol of Climate Change by all countries in the world, including Australia. Romer (1990) is in agreement with David Suzuki, a renowned scientist who warned that ecologies can only sustain typically about 1. 5 % to 3 % of new growth annually. As such, any expectations for greater returns from forestry, minerals and agriculture will eventually deplete the natural resources that constitute the environment, while contributing to unabated increase in the levels of poisonous gases in the atmosphere.
Therefore, economic growth will be meaningful only if the past and present actions guarantee people’ long-term interests, or otherwise, the future will be characterised by countless and unimaginable catastrophes. As demonstrated by figure 2 (see appendices) major economies in the world registered high growth levels in the 1960s and 1970s, with the growth levels dwindling over time because of decreasing levels of raw of materials and increased competition for increasingly scarce natural resources.
Conclusion There is no denying the fact that economic activities must be sustained if the population in Australia is to survive, even though the pursuit of economic growth portends great dangers for the people’s long-term interests at the same time. Therefore, the biggest challenges that the Australian government faces in the projected implementation of the ETS is striking a balance between the two conflicting necessities.
Romer (1990) emphasizes the significance of striking a balance between economic growth and environmental preservation by asserting that “a useful metaphor for production in an economy comes from the kitchen such that, to create final valuable products, we mix inexpensive ingredients together according to a recipe”. According to Romer (1990), economic growth could be achieved only by doing more and more of the same kind of cooking, we would eventually run out of raw materials and suffer from unacceptable levels of pollution and nuisance.
Therefore, the well meaning efforts geared towards economic development must be always be complimented by matching precautionary measures that stand to secure all elements of people’s long-term interests. The Stern Review (2006) suggests that an investment of 1percent of GDP per annum would be sufficient to avoid the worst effects of climate change, and that failure to do so could risk global GDP being 20% than otherwise it mighty be. The fact that economic growth is driven by improvements in technology and efficiency, increased innovations should be utilised to reduce the emissions of poisonous gases into the environment.
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