Chapter 3 - Arguments in favour of ratification
Australia needs to be, and be seen to be, a good global environmental
citizen and to be seen to be serious about tackling greenhouse gas emissions
3.1
Groups in favour of ratification of the Kyoto Protocol point to the
enormity of the climate change scenario facing the world and argue that,
whatever the limitations of the Protocol, it represents a valuable first step
in addressing climate change in the international arena. As the Climate Action
Network Australia (CANA) indicated:
Kyoto's role in establishing a reductions regime is essential in
order to avoid overshooting the 450ppm mark, and in stabilising CO2 emissions
... despite the modest targets there is great value in the Kyoto Protocol
because it involves action being taken today.[1]
3.2
Greenpeace also stressed the urgency with which climate change action
needs to be taken, stating that if the Kyoto Protocol failed to enter into
force, international action to tackle this serious and alarming problem would
be likely to be set back years, given it had taken over a decade for
international negotiations to deliver the Protocol. The urgency of the need for
international action was stressed by many business representatives as well,
with Environment Business Australia indicating 'there is neither sufficient
time or sufficient goodwill to develop an alternative to Kyoto'.[2]
3.3
CANA pointed out that Australia was out of step with the international
community in its thinking on the Kyoto Protocol, the only agreed international
instrument to address climate change, with Australia being one of only three
developed countries not to have ratified. Friends of the Earth also stressed
that, despite its providing only the beginning steps towards the deep cuts in
emissions required, the Kyoto Protocol was the only international climate
change treaty with legally binding mechanisms.[3]
3.4
As Government representatives pointed out, however, even if Australia
were to ratify the Protocol, this would not be sufficient to bring it into
effect, as our 2.1 per cent of emissions would not help reach the emissions
threshold of 55 per cent as required under the Protocol.
3.5
Australian representatives strenuously and successfully argued during
the Kyoto negotiation period for the inclusion of a clause which effectively
resulted in a fair target for Australia of 108 per cent of emissions over its
1990 level. Article 3(7) reads:
Those Parties included in Annex I for whom land use change and
forestry constituted a net source of greenhouse gas emissions in 1990 shall
include in their 1990 emissions base year or period the aggregate anthropogenic
carbon dioxide emissions by sources minus removals by sinks in 1990 from land
use change for the purposes of calculating their assigned amount.
3.6
It has been suggested that, having achieved acquiescence from the
international community on a point so favourable to Australia as the only Annex
I party for which land use change in 1990 resulted in a net source of
greenhouse emissions, Australia now runs the risk of being seen as an
international pariah for its failure to ratify.[4]
The Ambassador for the Environment, Mr Christopher Langman, who has been
present at many COP negotiations, assured the Committee that this was not the
case:
It has been suggested sometimes that the government's decision
not to ratify the protocol has diminished our international influence. I think
the evidence is simply not there for that. My colleagues and I are on the floor
of the negotiations in the UNFCCC and in other international forums, and I have
not seen it.[5]
If it fails to ratify, Australia will be excluded from potential emissions
trading and CDM benefits
3.7
It has been suggested that under the Protocol flexibility mechanisms,
ratifying countries (including our major trading partners, competitors and
emerging market forces such as India and China) would preferentially trade
amongst themselves, thus effectively excluding Australia if it failed to ratify.[6]
3.8
This is a far from clear-cut situation. It has been suggested that
multinational firms with subsidiaries located in countries that are Parties to
the Protocol may have access to international emissions trading through those
subsidiaries. Even firms based solely in Australia may be able to trade carbon
credits through likely secondary markets. But as Ms Fiona Wain of Environment
Business Australia told the Committee:
We are very concerned ... that the mechanisms under the Kyoto
protocol – the CDM, JI and trading – are going to be denied to Australian
companies at some levels and very difficult to access in other ways. Most of
our companies are small- to mid-sized companies. They will, frankly, not bother
to jump through the hoops of going through third parties and fourth parties to
access the CDM. We are going to lose opportunities.[7]
3.9
Anecdotal evidence has suggested that China is showing a preference for
CDM investment from firms located in countries that are Parties to the
Protocol, with Australian firms losing out to French competitors.[8]
Similarly, Mr Ric Brazzale of the Australian Business Council for Sustainable Energy
(BCSE) told the Committee of a renewable business export delegation to Brazil,
which was effectively told that there was no point in dealing with Australian
companies because of Australia's anti-Kyoto stance.[9]
3.10 Ms Libby Anthony
of the Australian Wind Energy Association (AusWEA) suggested that it was
important for Australia to ratify the Protocol in order to send a strong signal
to the markets that we need to be tightening our belts with regard to energy
efficiency. This would also pave the way towards developing a more robust
market for renewables in Australia as well as facilitating a stronger move into
export markets.[10]
3.11 It was also
argued that the potential for inbound investment under the Protocol could also
be threatened if Australia fails to ratify. Japan in particular has
traditionally invested in carbon sequestration projects in Australia to offset
its own emissions in Japan. One example cited is the Tokyo Electric Power
Company's $120 million investment over ten years in 40,000 hectares of
plantation on the NSW North Coast.[11]
If Australia cannot provide the carbon credits, it is likely that this
investment will go elsewhere.
If it fails to ratify, Australian industry will be adversely affected [and
some firms may be driven offshore with consequent loss of Australian jobs and
profits]
3.12 The industries
which would stand to benefit most from Australia's ratification of the Kyoto
Protocol or, conversely, have most to lose from Australia's failure to ratify,
are those in the sustainable or renewable energy fields. Such businesses would
have enhanced opportunities if Australia was able to participate fully in CDM
projects. Equally, if Australia failed to ratify, it would impact on the
international competitiveness of Australian sustainable energy firms.[12]
Environment Business Australia suggested that the European Union
was seeking a 20% market share target for renewable energy by 2010, a market in
which Australia would be unable to compete on an equal footing without
ratification.[13]
3.13 Witnesses for
the sustainable and renewable energy sector pointed to the jobs boost that
would result from the growth in their industry following a ratification of the
Protocol. Ms Anthony of AusWEA suggested that for every job in the coal
industry, there were six jobs in the renewable industry.[14]
Mr Brazzale of BCSE pointed to another advantage of renewable energy, namely
that job opportunities are spread widely around Australia.[15]
3.14 In determining
whether to ratify, the Australian Government has to look beyond sectoral interests,
however. It has equally been suggested that, at least as far as jobs are
concerned, the net effect of ratification would be a loss of jobs in Australia.[16]
Assuming that the Kyoto Protocol enters into force, and Australia fails to
ratify, in accordance with Article 13(2) of the Protocol it will not be
eligible to participate formally in the proceedings of any session of the
Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol,
and will therefore not be eligible to participate formally in negotiations on
the post-2012 period that occur within the meeting of the Parties to the Kyoto Protocol
3.15 Whilst this is
factually correct, it is far from certain that the Kyoto Protocol will ever
enter into force. Until such time as it is does come into effect, negotiations
are continuing under the framework of the UNFCCC. Australia is a Party to the
Convention and has a full decision-making role. As our Ambassador for the
Environment observed, Australia is routinely asked to chair major negotiating
groups and is asked to participate in a wide range of both formal and informal
meetings.[17]
Even if the Kyoto Protocol does eventually come into force, Australia will have
Observer status under Article 13(2) of the Protocol. Although Australia would
not have a formal decision-making role, it would be able to attend the meetings
and work behind the scenes to influence outcomes.
3.16 In his evidence
to the Committee, Mr Langman made clear that even if the Kyoto Protocol does
enter force and Australia has not ratified it, Australia will be involved in
any future negotiations on the arrangements post-2012:
The Kyoto protocol itself suggests that the discussions and
negotiations on the targets, the commitments, that would be in place in the
second commitment period—that is, the period after 2012—should begin from no
later than the end of 2005. There is some uncertainty about that date because
there is some uncertainty about whether the protocol will enter into force.
Having said that, to answer your question, it could be assumed that parties to
the protocol—that is, countries that have ratified the protocol—will be
involved in those discussions at one level. But there is no doubt that all
parties would be involved.
There is no sense, talking with any other country, that there is
a desire to exclude Australia or to exclude the United States. That would make
no sense in terms of the objectives of the countries that support the Kyoto
protocol because they want to deal with climate change through that means. The
objective of the European Union and Japan, and I am sure the other parties to
the Kyoto protocol, is to make progress in addressing climate change. They know
that it is critical ... that there is a comprehensive and global response. It is
hard to imagine such a response without the engagement of the United States and
the developing countries in practical and meaningful mitigation actions. So I
see no chance that we would be excluded. In fact, we have already been
approached by many countries saying they very much hope Australia would be part
of any discussion of future arrangements, whether it happens under the protocol
or outside that framework.[18]
3.17 Mr Ian Carruthers
from the Australian Greenhouse Office also made the following point:
Just to remind the committee, Australia is a party to the UN
Framework Convention on Climate Change. It is the framework convention that
sets the long-term objective of the international community to deal with the
global threat of climate change. As we look at climate change as a problem that
will have to be confronted by an international response over a period of
decades and through this century, Australia, as a party to the climate change
convention, will be a full participant in the design of an effective long-term
solution.[19]
Ratification would allow Australia to meet its 108% emissions target at
lower cost
3.18 The various
efforts at economic modelling of the impacts on Australia of ratification or
non-ratification of the Kyoto Protocol have all reached the same answer to this
question, although they differ in degree. The most recent analysis, based on
MMRF-GREEN modelling, for the Kyoto Protocol Ratification Advisory Group found
that, if Australia ratified the Protocol, the economic costs of meeting our
108% target would be a drop in GDP of 0.11% ($875 million p.a.) against a
non-ratification cost of -0.26% GDP ($2 billion). The lower cost figure is
based on Australia having unfettered access to low cost abatement through the
Protocol mechanisms, while the higher cost relates to our meeting our targets
via domestic emissions trading.[20]
This assumes, of course, that the Protocol will come into force.
3.19 In overview,
both cost scenarios are relatively low for the first commitment period, so
other factors should carry more weight in any decision on the Protocol.
3.20 Economic
modelling is, of course, only as good as the scenarios on which it is based and
it must be said that there are many uncertainties in this exercise. Ms Fiona Wain
of Environment Business Australia was one witness to call for a better costing
of externalities so as to firm up the data.[21]
If developed countries embraced the Protocol, developing countries would be
more likely to accept emissions targets in commitment periods after 2012
3.21 Developing
countries point to the fact that some 80% of our current concentration of
greenhouse gases has come from the activities of developed countries from the
industrial revolution onwards. Hence, they argue, the weight of responsibility
for addressing the problem of climate change should fall on those who caused
the problem in the first place. This argument was recognised in the Kyoto
Protocol, which absolves developing countries from emissions targets for the
first commitment period.
3.22 But while many
developing countries have expressed a desire to engage in sustainable
development, negotiations in the various Conferences of the Parties since Kyoto
have given no indication that they are prepared to adopt specific emissions
targets, with concomitant penalties built in, in any subsequent commitment
period. In fact, there is persuasive evidence to the contrary. As Mr Langman
told the Committee:
India and China, and indeed the group of developing
countries-the G77-have made it quite clear that they are not willing to accept
or discuss anything that looks like a legally binding obligation to constrain
their greenhouse gas emissions. Many developing countries are taking actions
relevant to greenhouse. China have said publicly on many occasions that they do
not believe it appropriate for them to take such constraints when they have
such an urgent need for basic economic development and that they would not
contemplate that for a very considerable period.[22]
Ratification need not be a permanent or irreversible commitment
3.23 Proponents of
the treaty point out that ratification of the current Protocol would only
commit Australia for the five year period of 2008-2012. Should unacceptable
targets be forced upon Australia or other undesirable conditions determined as
a result of negotiations for a second or subsequent commitment period, Australia
could simply walk away. Another escape clause exists, in the form of the rule to
allow an opt-out after three years. Such conduct would almost certainly draw greater
international opprobrium on Australia than what is already claimed to exist,
and accordingly might be best avoided.
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