The report, Economic Impact of Climate Change Policy: the Role of Technology and Economic Instruments, was released today by ABARE's Executive Director, Dr Brian Fisher. Analysed in the report is a series of global emission reduction scenarios, provided by CSIRO"s Energy Futures Forum, with an additional scenario designed by ABARE involving an international coalition.

"Stabilising the atmospheric concentration of carbon dioxide at 575 ppm in 2100 would mean that in 2050 greenhouse gas emissions would be about 40 per cent lower relative to the projected levels in that year," Dr Fisher stated.

"If all countries were to agree to reduce their emissions and to impose a tax on carbon, the consequences of achieving such an emission abatement outcome include an estimated reduction in global economic output of 2.6–3.4 per cent below what it would otherwise have been in 2050. However, the political feasibility of all countries agreeing to a harmonised carbon tax to achieve this outcome is highly questionable," Dr Fisher said.

The required carbon tax to achieve such an emissions outcome in 2050, under an international coalition (comprising all OECD countries, the Russian Federation and other economies in the Commonwealth of Independent States, plus China and India) is estimated to be five times greater at 2050 than under a full global coalition.

"This highlights the difficulty of achieving significant emission reductions in cases where a large number of developing countries fail to constrain the growth in their emissions," Dr Fisher said.

"One scenario explores the possibility of Australia reducing its emissions by 50 per cent below 1990 levels by 2050. In this case Australia's GDP is projected to be 10.7 per cent lower than it would otherwise have been in 2050. Output from key energy intensive industries is projected to fall between 50 and 75 per cent and the agricultural sector would also experience a 44 per cent decline in output relative to what would otherwise have occurred at 2050," Dr Fisher explained.