Dealing with the uncertainty of climate change should be the focus of policy in Australia and around the world, Professor Warwick McKibbin told Investment and Financial Services Association (IFSA) conference delegates yesterday.
"The biggest problem in Australia and globally at the moment is this uncertainty in climate change policy is in fact, causing economic losses," he said.
When designing climate change policy, it is not about creating short-term emission targets and rigid timetables, according to McKibbin.
"It is about managing risk and dealing with the uncertainty coming from the climate."
Therefore, the focus should be on creating long-term institutions and a bi-partisan policy framework, he said.
"I'm hopeful that the Australian Government and the opposition will see that their policy positions today are very similar to each other," he said.
"All they need to do now is to breach that gap and make it a bi-partisan policy."
There will never be a global emission trading market, according to McKibbin.
"Permits are the promise of a government in the same way that money is the promise of the government," he said.
"The reality is we will never see a sustainable global permit market and unfortunately approaches like the Garnaut Report assume that you can plug into a global market."
What is critical in the climate change debate is getting the balance right between the long-term environmental gaze and the short-term economic cost, McKibbin said.
