List of boxes, charts and tables
Boxes
Box 1.1:	The international response to climate change	3
Box 2.1:	Sources of greenhouse gas emissions	8
Box 2.2:	Market‑based policy responses to climate change	9
Box 2.3:	Policy assumptions in the modelling	10
Box 2.4:	Australia as a part of international action	11
Box 2.5:	Measuring emissions	17
Box 2.6:	Projections over long timeframes	18
Box 2.7:	Market exchange rate versus purchasing power parity	19
Box 2.8:	Alternative way to report on modelling — a hypothetical example	21
Box 3.1:	Climate change policies in the reference scenario	28
Box 3.2:	Reference scenarios compared	32
Box 3.3:	Climate change projections in the reference scenario	35
Box 3.4:	The reference scenario in G-Cubed	46
Box 3.5:	Energy efficiency	50
Box 3.6:	Commodity prices	57
Box 3.7:	Methodology for household spending distributional analysis	68
Box 4.1:	Climate change projections: stabilisation at 450 and 550 ppm	77
Box 4.2:	Alternative specifications of targets	78
Box 4.3:	Depletion of natural resources	79
Box 4.4:	Emission targets, mitigation and trade	81
Box 5.1:	The emission price in G‑Cubed	95
Box 5.2:	How do mitigation costs arise?	101
Box 5.3:	Forward‑looking behaviour and early action	102
Box 5.4:	Impact of a multi‑stage global framework	104
Box 5.5:	Implications of revising stabilisation goals	105
Box 5.6:	Comparison with other mitigation cost studies	108
Box 5.7:	The role of carbon capture and storage	127
Box 5.8:	Electric vehicles and fuel cell technology	131
Box 5.9:	Future transport fuels	132
Box 6.1:	Difference in GNP and GDP impacts across models	148
Box 6.2:	Unavoidable mitigation cost impacts	154
Box 6.3:	Impact on domestic consumption	156
Box 6.4:	Revenue recycling	156
Box 6.5:	Technology sensitivity details	159
Box 6.6:	Sectoral impacts and structural adjustment	166
Box 6.7:	Impact on competitiveness in a multi‑stage world: the role of shielding	169
Box 6.8:	Modelling of electricity generation in GTEM and MMRF	177
Box 6.9:	Early retirement of power plants	178
Box 6.10:	The expanded Renewable Energy Target	180
Box 6.11:	Mitigation policy and inflation	192

Charts
Chart 1:	Five pathways for Australian emissions and GNP	xii
Chart 2:	Emission reductions by sector	xv
Chart 2.1:	Integrating the suite of models	15
Chart 2.2:	GDP — hypothetical reference and policy scenarios	21
Chart 3.1:	Gross world product per capita growth	29
Chart 3.2:	Fuel combustion emissions	30
Chart 3.3:	Global emissions by gas	31
Chart 3.4:	Global greenhouse gas emissions	32
Chart 3.5:	Emission intensity	32
Chart 3.6:	Shares of global emissions	33
Chart 3.7:	Gross world product growth	35
Chart 3.8:	World population	36
Chart 3.9:	Gross world product per capita growth	36
Chart 3.10:	Gross domestic product per adult	37
Chart 3.11:	Distribution of gross world product	38
Chart 3.12:	Share of total output by sector	39
Chart 3.13:	Global emissions by sector	40
Chart 3.14:	World electricity demand	41
Chart 3.15:	World electricity generation by fuel	41
Chart 3.16:	World electricity emissions by fuel	42
Chart 3.17:	Mode of global transport	42
Chart 3.18:	Global transport emissions	43
Chart 3.19:	Global road transport technology share	44
Chart 3.20:	Real GNP and real GNP per capita	47
Chart 3.21:	Australian emissions	48
Chart 3.22:	Share of cumulative emissions 2005 to 2050	49
Chart 3.23:	Emission intensity	50
Chart 3.24:	Emissions in Australia	51
Chart 3.25:	Emissions by state/territory	52
Chart 3.26:	Decomposition of GDP growth	52
Chart 3.27:	Australian population	53
Chart 3.28:	Australia’s terms of trade	54
Chart 3.29:	Australian GDP and GNP levels	55
Chart 3.30:	Consumption, investment and export shares of GDP	56
Chart 3.31:	Commodity price assumptions	57
Chart 3.32:	Export shares by key sectors	58
Chart 3.33:	Value added shares	59
Chart 3.34:	Electricity sector	60
Chart 3.35:	Australian electricity generation, technology shares	61
Chart 3.36:	Transport sector	62
Chart 3.37:	Road transport sector	63
Chart 3.38:	Road transport sector	64
Chart 3.39:	Australian land under forestry, and associated sequestration	65
Chart 3.40:	Emission-intensive industries	66
Chart 3.41:	Aggregate household spending	67
Chart 3.42:	Spending on energy as a percentage of all spending	69
Chart 3.43:	Spending on energy as a percentage of all spending	69
Chart 3.44:	Spending on energy by household size	70
Chart 4.1:	Australian emission allocations	76
Chart 4.2:	Global emissions and allocations	80
Chart 4.3:	Global emissions pathway and allocation	80
Chart 4.4:	Multi‑stage emission allocations: relative to reference scenario	83
Chart 4.5:	Contraction and convergence approach	84
Chart 5.1:	Global emission allocations	92
Chart 5.2:	Global emission prices	94
Chart 5.3:	Emissions, allocations and cumulative banked permits	96
Chart 5.4:	Decomposition of global mitigation by gas	97
Chart 5.5:	GTEM: Gross world product per capita	98
Chart 5.6:	GTEM: Gross world product	98
Chart 5.7:	G‑Cubed: Gross world product	99
Chart 5.8:	Emission intensity of gross world product	100
Chart 5.9:	Cost of global mitigation policy delay	103
Chart 5.10:	Gross world product	105
Chart 5.11:	GNP mitigation costs across regions	107
Chart 5.12:	Mitigation by gas	113
Chart 5.13:	Contribution of international income transfers to GNP	114
Chart 5.14:	Contribution of international income transfers to GNP	114
Chart 5.15:	Terms of trade	115
Chart 5.16:	GTEM sectoral output relative to the reference scenario in 2020	119
Chart 5.17:	G‑Cubed sectoral output relative to the reference scenario in 2020	120
Chart 5.18:	GTEM sectoral output relative to the reference scenario in 2050	120
Chart 5.19:	G‑Cubed sectoral output relative to the reference scenario in 2050	121
Chart 5.20:	Global emissions mitigation, by sector	122
Chart 5.21:	Global emissions mitigation, by sector	123
Chart 5.22:	Emission intensity of world electricity generation	124
Chart 5.23:	Global electricity generation, Change from reference scenario	124
Chart 5.24:	Global electricity sector technology share	125
Chart 5.25:	Composition of renewable electricity generation	126
Chart 5.26:	Global technology shares in electricity generation	127
Chart 5.27:	Regional electricity supply prices	128
Chart 5.28:	Global transport emissions	129
Chart 5.29:	Cost of transport technology	130
Chart 5.30:	Transport technology shares	130
Chart 5.31:	Cumulative global sequestration from land‑use change and forestry	131
Chart 5.32:	Global agriculture emissions	133
Chart 6.1:	Australian emission allocations and GNP per capita	138
Chart 6.2:	Australia’s emission allocation	139
Chart 6.3:	Australian emission price	140
Chart 6.4:	Australia’s emission pathways	141
Chart 6.5:	Emission intensity of GDP	141
Chart 6.6:	Sector emissions	142
Chart 6.7:	Share of cumulative emission reductions by sector	143
Chart 6.8:	Sector emissions	143
Chart 6.9:	GNP per capita	144
Chart 6.10:	Gross domestic product	145
Chart 6.11:	Capital Stock and Investment	151
Chart 6.12:	Real wages	151
Chart 6.13:	Terms of trade	153
Chart 6.14:	Australia’s actual emissions, allocations and permit trading	155
Chart 6.15:	Domestic consumption	156
Chart 6.16:	Australian gross national product	157
Chart 6.17:	Gross State Product	161
Chart 6.18:	Gross State Product	161
Chart 6.19:	Emission intensity	162
Chart 6.20:	Australia’s coal sector	167
Chart 6.21:	Trade-exposed emission-intensive industries - emissions	168
Chart 6.22:	Australian aluminium output relative to current levels	170
Chart 6.23:	Electricity demand	173
Chart 6.24:	Emission intensity of electricity technologies	173
Chart 6.25:	Technology shares of generation	174
Chart 6.26:	Emission intensity of electricity generation	175
Chart 6.27:	Average Australian wholesale electricity prices	175
Chart 6.28:	Gas‑fired electricity generation	178
Chart 6.29:	Coal and gas generation	179
Chart 6.30:	Renewables capacity	180
Chart 6.31:	Electricity sector emissions	181
Chart 6.32:	Transport sector emissions	182
Chart 6.33:	Contribution to transport mitigation	183
Chart 6.34:	Distance travelled by mode of road transport	184
Chart 6.35:	Road transport fuel mix	184
Chart 6.36:	Australian additional land under forestry	185
Chart 6.37:	Australian forestry sequestration	186
Chart 6.38:	Private per capita consumption	187
Chart 6.39:	Household expenditure shares in 2020	188
Chart A.1:	How the suite of models fit together	220
Chart B.1:	Emission allocations by region	227
Chart B.2:	Contraction and convergence approach	228
Chart B.3:	Australian population	234
Chart B.4:	Industry labour‑augmenting technical change	236
Chart B.5:	Australia’s terms of trade	240
Chart B.6:	Energy commodity price assumptions	241
Chart B.7:	Domestic Australian gas prices	243
Chart B.8:	Cumulative renewable capacity constraints — MMA	254

Tables
Table 1:	Australia’s emissions and economy	xii
Table 2.1:	CO2 emissions from energy, 2005	11
Table 3.1:	Global emissions	31
Table 3.2:	Emissions by region	34
Table 3.3:	Gross domestic product per capita	37
Table 3.4:	Global plantations and deforestation	44
Table 3.5:	Cumulative global land-use change and forestry emissions since 2005	45
Table 3.6:	Growth of other emission-intensive sectors	45
Table 3.7:	Share of world emissions (direct and indirect)	46
Table 3.8:	Emissions by source	48
Table 3.9:	Population growth by state/territory	53
Table 3.10:	Consumption shares, 2020	55
Table 3.11:	Gross state product	58
Table 3.12:	Spending on energy by principal source of household income, 2010-11	71
Table 4.1:	Summary of emission trajectories	76
Table 4.2:	Advantages and disadvantages of different climate change targets	78
Table 4.3:	Summary of policy mechanisms	86
Table 5.1:	Global emission allocations	91
Table 5.2:	National emission allocations	93
Table 5.3:	Global emission prices	93
Table 5.4:	Emission prices (US$/tCO2‑e, nominal) first year of scheme	95
Table 5.5:	Global allocations, emissions and banked permits	96
Table 5.6:	Gross world product, change from reference scenario	99
Table 5.7:	Gross world product, average annual growth rates	99
Table 5.8:	Regional GDP costs in 2050	104
Table 5.9:	Net present value of GWP	106
Table 5.10:	Gross world product mitigation cost estimates	108
Table 5.11:	Emission Intensity of GDP	109
Table 5.12:	Regional GNP costs	110
Table 5.13:	Delay in growth, GNP per capita	111
Table 5.14:	Regional GDP costs	112
Table 5.15:	Terms of trade impacts	115
Table 5.16:	GTEM international trade in permits	116
Table 5.17:	GTEM regional emissions	116
Table 5.18:	G‑Cubed international trade in permits	117
Table 5.19:	G‑Cubed CO2-e permit prices	117
Table 5.20:	GTEM regional real exchange rate impacts	118
Table 5.21:	Emissions by sector	122
Table 5.22:	Global land‑use and forestry sequestration	133
Table 5.23:	Direct and indirect emissions for other emission‑intensive sectors	134
Table 6.1:	Mitigation scenarios	139
Table 6.2:	GNP per capita annual growth rates	144
Table 6.3:	GDP annual growth rates	145
Table 6.4:	Headline national indicators	146
Table 6.5:	Other national indicators	147
Table 6.6:	Contributions to GNP	149
Table 6.7:	Industry investment	152
Table 6.8:	Australian allocation, emissions, trade and banking	155
Table 6.9:	Technology sensitivities	158
Table 6.10:	Impacts at the sectoral level	162
Table 6.11:	Gross output, by sector, 2050	164
Table 6.12:	Employment, by sector, 2050	165
Table 6.13:	Electricity sector emissions reductions	172
Table 6.14:	Average wholesale electricity price increase	176
Table 6.15:	Average household electricity price increases	176
Table 6.16:	Carbon capture and storage, estimated deployment year and emission price	179
Table 6.17:	Transport output	183
Table 6.18:	Estimated price impacts by household type	190
Table 6.19:	Estimated price impacts by household type	190
Table 6.20:	Estimated price impacts by region in 2010	191
Table 6.21:	Estimated price impacts by region in 2010	191
Table A.1:	Regions and sectors of GTEM	206
Table A.2:	Database change: increase in wage bill for former Soviet Union	208
Table A.3:	Regions and sectors of G‑Cubed	210
Table A.4:	Sectoral aggregation in MMRF	215
Table A.5:	Concordance of GTEM and MMRF sectors	221
Table A.6:	Inputs and Outputs of the Energy Sector Model (ESM)	223
Table B.1:	Key emissions trading scheme design features, policy scenarios	226
Table B.2:	Regional groupings in GTEM and G‑Cubed	227
Table B.3:	Summary of offset credit assumptions	229
Table B.4:	Carbon pollution reduction scheme design	229
Table B.5:	World GDP (GTEM regions)	232
Table B.6:	Australia’s population, productivity and GDP	232
Table B.7:	Gross state product	233
Table B.8:	State population	234
Table B.9:	Global population level and growth rates (GTEM regions)	235
Table B.10:	Productivity level to the US level (GTEM regions)	238
Table B.11:	Sectoral labour productivity distribution	238
Table B.12:	Change in factor efficiency per doubling in the level of extraction	242
Table B.13:	Intermediate input usage in MMRF(a)	244
Table B.14:	Intermediate input efficiency, GTEM	245
Table B.15:	Household taste shocks in MMRF	246
Table B.16:	Transport sector energy‑efficiency assumptions	247
Table B.17:	CSIRO fuel efficiency improvements	248
Table B.18:	Non‑ferrous metals energy‑efficiency shocks	248
Table B.19:	Non‑metallic mineral energy‑efficiency shocks	249
Table B.20:	Chemical, rubber and plastics energy efficiency shocks	249
Table B.21:	Blast furnace	250
Table B.22:	Electric Arc	250
Table B.23:	Technology characteristics, MMA	251
Table B.24:	Thermal efficiency of new power plants in electricity generation in GTEM	252
Table B.25:	Reductions in non‑combustion emission intensity in GTEM	256
Table B.26:	Reductions in non‑combustion emission intensity in MMRF	256
Table B.27:	GTEM fugitive/industrial process emission MAC curve parameters	257
Table B.28:	MMRF industrial process emission MAC curve parameters	258
Table B.29:	MMRF combustion emission MAC curve parameters	258
Table B.30:	Cost assumptions, 2007 prices	260
Table B.31:	Assumed mill‑door price by type in the reference scenario, 2007 prices	260