carbon price, not targets, best to tackle...

AUSTRALIA and other heavy polluters should set a carbon price to combat rising emissions rather than rely on the UN or targets, a new report recommends.

The paper co-written by Australian economist and Reserve Bank board member Warwick McKibbin argues that the United Nations is on the wrong track with its targets-based approach..

The contrary advice comes as Julia Gillard grapples with setting a new policy on tackling climate change before the upcoming federal election.

The report, published today by the Lowy Institute think-tank, suggests that heavy-polluting countries like Australia, the US and China should agree to set a similar carbon price, to rise over time.

This ?purely price-based system? would allow major economies to compare their efforts to tackle global warming, and it would be easier to see if countries were meeting their obligations.

However, the current global approach has the UN trying to coax 193 countries into accepting individual targets to reduce greenhouse gas emissions.

Countries would then decide on their own schemes to meet their target.

Last year at Copenhagen that approach led to a row about targets, rules and verification. The UN is still trying to broker a deal, with little success.

?We think that that a price-based international framework is better suited to achieving rapid reductions in global emissions,? concluded the report, co-authored by Greg Picker and Fergus Green.

They wrote that the framework could be co-ordinated by the Major Economies Forum, made up of 17 countries including Australia.

The report said the UN should continue with its efforts in the meantime; the next major climate summit it in Mexico in December.

The price-based approach would be incompatible with the push for countries to have interlinked carbon markets.

Professor McKibbin has co-written the report in his capacity as an academic, not as an RBA board member.

It would be up to each country how they put that carbon price into practice - possibly through an ETS or carbon tax, or through government spending on green measures that would produce a shadow carbon price.

http://www.theaustralian.com.au/politics/carbon-price-not-targets-best-to-tackle-climate-change-lowy-institute-report-says/story-e6frgczf-1225888837438