Media Release

Monday, 13 October 1997

Nations around the world can get on with the job of seriously tackling greenhouse gas emissions if they act on a new solution being put forward by economists at the University of Adelaide and ANU.

Professor Kym Anderson, director of Adelaide's Centre for International Economic Studies (CIES), and Professor Warwick McKibbin from ANU believe much of the disagreement about approaches to greenhouse gas emissions stem from the economic cost to the nations involved.

Their alternative approach-which would not only reduce carbon and methane emissions but would also generate national and global economic benefits-is to cut subsidies and trade barriers on coal.

"Subsidies and trade barriers have encouraged the excessive production of coal in Europe and excessive consumption of coal in developing countries," Professor Anderson says.

"What's really needed is a reversal of those policies, which will allow us to overcome the environmental damage associated with coal mining and burning, If these policies were reformed, the resulting gains in economic efficiency and reductions in carbon dioxide emissions would be substantial."

According to their studies, even if just Western Europe were to gradually remove its coal production subsidies and import restrictions by the year 2005, emissions of carbon dioxide in OECD nations would drop by 13% and global carbon dioxide emissions would drop by 5%.

"Environmental gains from coal market reform can be achieved with gains in economic efficiency rather than economic costs. That's a positive outcome for both the economy and the environment, which is in direct contrast to many of the costly proposals currently being advocated to reduce greenhouse gases."

Professors Anderson and McKibbin also want:

• Western European countries to raise their low coal consumer tax rates;
• the low price of coal in China, India and Russia raised to international levels;
• countries to impose taxes (instead of subsidies) on coal production, ensuring that coal mining companies compensate society for the pollution they cause.

Professor Anderson says nations should consider these options in the lead-up to the international convention on Climate Change in Kyoto, Japan later this year.