Australia plays an important role as a leading economy within the international community, and host of this year’s summit of the G20 countries.
How it tackles the threat of climate change is of global importance as developing countries look to rich countries to set an example because of their better technologies and history of high emissions of greenhouse gases.
Australia’s current policy settings and institutions hold out prospects for doing its fair share in a global effort that has to increase over time. Repeal of these policies would be a setback for the Australian and international effort.
I hope that Western Australians will be mindful of their contribution to a global effort when they choose between candidates in Saturday’s Senate election.
Other countries are making big efforts.
China is taking seriously the risks of climate change, and pollution more generally, because it understands that hundreds of millions of its citizens are exposed and vulnerable to the impacts.
The Chinese President, Xi Jinping has declared that his country’s economic model is unsustainable.
Academics and policy-makers at the China Development Forum, which I attended in Beijing last month, were looking towards the economic opportunities offered by low-carbon energy technologies.
China is radically re-structuring its economy and adopting more sustainable technologies including renewables and nuclear power.
China recognises that it urgently needs to limit its use of coal, and there is strong discussion about peaking consumption within the next 10 years, while reducing its reliance on imports from countries including Australia, as part of efforts to limit carbon dioxide emissions.
So China is becoming a world leader in tackling climate change.
In the United States as well, even though its Congress is blocking new federal laws to tackle climate change, the Obama Administration is using existing regulations to phase out coal power stations. California has almost completely eliminated coal as a source of its electricity.
Low-carbon technologies will be an important driver of economic growth over the next few years, based on innovation, creativity and discovery.
The biggest single disincentive holding back trillions of dollars in investment in low-carbon technologies around the world is policy risk due to inconsistent and weak policy-making.
Strong, clear policy-making builds private sector confidence and unlocks investment.
To encourage low-carbon investment, policy-makers must tackle the enormous market failure which means that the price paid for products and services that involve the release of greenhouse gas pollution does not reflect the damage it causes through climate change.
This market failure can be corrected by charging for that pollution through a carbon price that makes the polluters pay for the damage they cause, or by implementing standards for energy efficiency and emissions levels.
Other market failures holding back new low-carbon technologies can be overcome through greater investment in research and development, an area in which Australia is likely to be very strong based on its track record of past successes.
Around the world, carbon pricing is already operating or being introduced.
Australia has also followed this enlightened route, but the attempt by the new government to repeal the legislation to charge for carbon pollution not only makes the task of reducing emissions more expensive and difficult, but also undermines private sector confidence and reduces investment in the Australian economy.
Australia still has the highest emissions of greenhouse gases per person in the developed world, but the government has retained the weak commitment to reduce Australia’s annual emissions only by 5 per cent target by 2020 compared with 2000.
It wants these cuts to be achieved through the ‘Direct Action’ of giving subsidies to polluters to encourage them to reduce their emissions, rather than through requiring them to pay for their pollution.
This combination of an unambitious emissions reduction target with subsidies to polluters does not constitute a credible way of promoting the transition to a low-carbon economy.
The international community is now gearing up for new agreement on climate change to be signed in Paris in 2015, after all countries, including Australia, agreed in 2010 that global emissions of greenhouse gases need to be cut sharply by 2050 in order to avoid the huge risks that would be associated with a rise in global average temperature of more than 2 C.
Although many countries are cutting their emissions, there needs to be an acceleration of action to avoid breaching the 2 C threshold.
If the world heads towards warming of 4 C or more, as it risks on its current track, it would be deeply dangerous for Australia and every other nation that is vulnerable and exposed to the impacts of climate change.
What really matters now is the credibility and ambition of action to tackle climate change, and Australia seems to be showing neither.
Australia could and should do much more, while also ushering in a new era of clean, efficient and sustainable economic growth.
Professor Lord Nicholas Stern is I.G. Patel Professor of Economics and Government at London School of Economics and Political Science and President of the British Academy.