THE Intergenerational Report has panned Tony Abbott's proposed direct action approach to climate change, saying a market-based mechanism such as the federal government's emissions trading scheme is the only way to go.
The report says that without an overall cap on carbon emissions such as that contained in the government's emissions trading scheme, coal-fired electricity generation, the nation's largest source of carbon pollution, will grow strongly in the decades ahead while the development of alternative energy sources will flatline.
The report, released yesterday by the Treasurer, Wayne Swan, also forecasts that anybody still alive in 90 years will be $17,000 a year worse off in today's dollars if climate change is allowed to go unmitigated.
The report estimates that by 2100, gross domestic product will fall by eight per cent.
Mr Abbott will unveil today the Coalition's latest response to climate change, developed over the summer after Malcolm Turnbull was dumped as leader for supporting an amended ETS he negotiated with the government.
It will rely heavily on trees, soil management, and energy efficiency codes to reduce carbon emissions, all of which the government says would have to be prescribed by regulation or funded out of the budget.
The report says the government's scheme would ''deliver emissions reductions at a lower cost to the economy than prescriptive measures such as regulations or subsidies''.
Market forces would also determine when and how greenhouse gas abatement would occur.
The report says the economy would continue to grow under the ETS, with growth slowed only by 0.1 of a percentage point by 2050.
The report will do nothing to sway the Opposition, which calls the ETS a ''great big new tax'' and will block it again in the Senate after the legislation is reintroduced today.
''We have a very important job as a Coalition over the next fortnight,'' Mr Abbott said yesterday. ''We have to save Australia again from Mr Rudd's great big new tax.''
Mr Abbott's scheme will be funded from the budget, causing the Prime Minister, Kevin Rudd, to label it a ''huge megatax''.
Mr Abbott said yesterday that he would fund his scheme from budget savings.
The government's scheme will be self-funding, using revenue from taxing big polluters to compensate households for the increased cost of living and to provide business with transitional assistance.
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