Colin Hunt, School of Economics Discussion Paper No. 486 September 2013, School of Economics, The University of Queensland. Australia.


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There is a limit to the quantity of greenhouse gases that may be emitted to the atmosphere if catastrophic climate change is to be avoided. There is a global carbon budget that should not be exceeded by 2050. The practical implication is that most of the world’s fossil fuel inventory must be left in the ground and not burned. The article analyses the implications of adhering to the carbon budget by modelling the implied rate of reduction in emission intensity of the world economy. A delay in concerted international action increases sharply the rate required. The four major emitting countries are examined for their energy and emission policies and the trajectories of their required emission intensities derived. If the budget is adhered to, the intensities of China and Russia will need to be reduced sharply after 2020 when their present policies expire. Barriers are likely to remain to concerted international action in 2020, however. This will leave countries such as China and Russia free to pursue policies for the maintenance of economic growth as a priority, rather than the adoption of strict and economically stultifying targets for emissions or emission intensity.