The cost to the economy of adopting a more ambitious emissions reduction target for 2030 is significantly less than claimed by Prime Minister Tony Abbott, the government's own commissioned economic modelling reveals.
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The Abbott government released two modelling reports late on Friday afternoon that helped underpin its choice of an emissions cut of 26 to 28 per cent cut from 2005 levels by 2030 as the target it will take to a major climate conference in Paris later this year.
In a joint press conference on August 11 to announce the targets, Mr Abbott quoted the modelling to say the target chosen by the government would result in lower gross domestic product of 0.2 and 0.3 per cent from what it would have otherwise would have been in 2030.
But at the same press conference Mr Abbott went on to say: "The modelling that we have done suggests that achieving a 40 per cent reduction by then [2030] will be much more expensive. It will be over 2 per cent of GDP, so that's in the order of $40 billion."
In fact the modelling found on the same figures that a cut of 45 per cent to emissions would result in a reduction in 2030 GDP of 0.5 to 0.7 per cent, significantly less than the Prime Minister claimed.
Asked about the discrepancy in the numbers, a spokesman for the Prime Minister said the figures quoted by Mr Abbott had instead come from "Labor's own modelling". He then referred Fairfax Media to Environment Minister Greg Hunt's office, whose spokesman said it had come from 2013 economic modelling by the Climate Change Authority - an independent body set up by the former Gillard government to advise on climate policy.
Australia's 2030 target has attracted criticism from many environmentalists because it falls behind the commitments of many other comparable nations, including the United States, Canada and New Zealand.
The two new modelling reports released were led by economist and former Reserve Bank board member Warwick McKibbin, and looked at the impact on the Australian economy of different domestic targets and the commitment to tackle climate change of other countries.
If also finds while GDP would be lower in 2030 than it otherwise would have been as a result of both domestic and international action, the Australian economy would continue to grow overall.
The yearly rate of GDP growth between 2020 to 2030 if Australia had no post-2020 target is modelled to be 2.21 per cent. If Australia adopted a 45 per cent cut to emissions, GDP growth over the same time period would by 2.09 per cent.
The modelling also found that Australian coal output would be 14 per cent lower in 2030 as a result of the emissions reduction target the Abbott government has announced. International pledges to cut emissions would add a further 8 per cent decline as countries move to adopt cleaner technology.
On the coal findings Professor McKibbin told Fairfax Media: "If you believe you can reduce CO2 emissions without changing the coal industry in the time frame we are talking about, that doesn't appear to plausible." But he also cautioned the numbers were highly uncertain.
Professor McKibbin said he felt the targets set by the Abbott government "were about right" even if some claimed they was low by world standards, because the cost borne by Australia to reach the goal was higher compared to other countries.
Deputy chief executive of the Climate Institute Erwin Jackson said the modelling showed, as all other similar work had, that the economy could still grow strongly while emissions are cut. He said the modelling released on Friday did not include the economic benefits of acting on climate change, and more credible emissions reduction goals could have been announced if the use of international carbon permits had been part of the modelling mix.
