New power stations built in Victoria will not be subject to carbon emissions limits after the state government decided to scrap the restrictions based on an independent study released by Victoria University backing investment into the Latrobe Valley.

The Victorian government will now sign up to the federal government's greenhouse gas reduction target of 5% by 2020, scrapping the 20% target to avoid a $2.2 billion black hole in the state budget.

The decision came as Victorian climate change minister Ryan Smith said he would review the relevance of other state climate programs in light of the national carbon tax.

''I would say certainly a number of programs are up for review, as … federal Minister Greg Combet has asked us to review them as we are going to be talking about them in a few weeks time,'' Smith said.

An independent review of Victoria's Climate Change Act released this week recommended repealing the state's 20% emissions target which the state government agreed to, because it would have no extra environmental benefit and would only lighten the load for other states in meeting a national 5% emissions target.

“If the state retained the 20% target when the rest of Australia was only aiming for a 5 % reduction, Victorian taxpayers would have been slugged for billions of dollars in extra international carbon offset payments to compensate for its pollution,” Smith added.

Two Victoria university reports show two sides of the coin

An independent report released yesterday revealed the federal government underestimated the carbon tax's impact on the Latrobe Valley.

A Victoria University report highlighted the level of volatility facing Latrobe Valley from July 1 this year.

The Victorian University Centre for Strategic Economic Studies report entitled The Regional Effects of Pricing Carbon Emissions: An Adjustment Strategy for the Latrobe Valley examined the social and economic impacts of a carbon price in the Latrobe Valley and the wider Gippsland region.

The report describes the assistance set aside by the federal government to assist regions across Australia affected by its carbon pricing policies as “modest”.

It also notes the coal-fired electricity sector remains a 'cornerstone' of the Latrobe Valley economy.

“About 15% of total employment is directly attributable to the coal-fired electricity industry,” it said.

“However, the importance of the sector to the local economy is greater since the electricity and related sectors account for almost 26 per cent of the valley's wage income."

One of the report's main conclusions was that the magnitude of the adjustment required in the Latrobe Valley as a result of the carbon tax was likely to be larger and more complicated than currently anticipated by the Commonwealth.

However, another report from Victoria University Professor Roger Jones shows the smooth curves on climate forecast graphs, with gradual rises in greenhouse gases causing gradual warming, giving a false sense of security.

“They are a guide as to how much climate may change but they don’t tell us how the climate changes,” Jones said.

“This idea leads to the expectation that people can adapt gradually to a smoothly changing climate.

“But sudden increases in risk may mean that gradual adjustments fail to cope with rapidly changing extremes – and that’s what this research suggests is happening.”

Jones has just published a paper in the Journal of Geophysical Research analysing recent warming in southeastern Australia.

In it he shows historical relationships between rainfall and maximum and minimum temperature changes in a stepwise manner in the period 1968–73 as the region warmed abruptly, then again in 1997.

All models showed a stationary period with an abrupt start to regional warming and under increasing emissions similar shifts were predicted through to 2100.

“Regional warming therefore looks more like a staircase than a smooth curve,” Jones said.

Regional climate in SE Australia was stationary to 1967, experiencing a step change in 1968 of 0.7C in minimum temperature and 0.5C in 1973 for maximum temperature.

A step change in 1997 in maximum temperature of 0.8C coincided with a statistically significant step change in global mean air temperature of 0.3C.

Changes since 1997 have affected the number of days of extreme heat, fire danger and a range of other variables.

He said these findings did not challenge the basic theory of greenhouse-induced warming but did show that some shorter term variations, which had been interpreted as natural variability, were in fact part of climate change.

“Energy is being stored elsewhere in the climate system, most probably the oceans, and released into the atmosphere in periodic bursts,” he added.

“Opponents of the theory go on about no warming since 1998 while conveniently overlooking the significant increase in temperature in 1997–98 that contributes to the long-term trend.”

This article first appeared in BEN-Global