The framework convention on climate change and the Kyoto Protocol  (Part b)

Report of the Senate Environment, Communications, Information Technology and the Arts References Committee
The Heat Is On: Australia's Greenhouse Future
Table of Contents

Chapter 3

The framework convention on climate change and the Kyoto Protocol  (Part b)

(Chapter 3 - Part a)


International Negotiations Following Kyoto

3.88 Since Kyoto, negotiations between governments have continued. In November 1998, the Fourth Conference of the Parties (CoP 4) adopted the `Buenos Aires Year 2000 Plan of Action' to strengthen the implementation of the UNFCCC and prepare for the Kyoto Protocol's entry into force. Decisions were made on a program of work and a process for elaborating rules for the Kyoto (flexibility) mechanisms, the development of technology transfer and future commitments for developing countries; compensation and adaptation; financial resources - Global Environment Facility (GEF); national communications; issues of compliance and land use change and forestry; and an undertaking to discuss supplementarity, ceilings, long term convergence and equity issues. [1]

3.89 The Fifth Conference of the Parties (CoP 5), which took place in Bonn in 1999, continued discussions on a program of works, rules of compliance, land use and forestry change and market mechanisms. [2]

3.90 Negotiations will continue at the Sixth Conference of the Parties (CoP 6) in The Hague in November 2000. Each of the following aspects of the negotiations are further considered in this chapter:

Emissions Trading

3.91 An international emissions trading system is a central element of the Kyoto Protocol. Under Articles 3, 6 and 17, Parties are allowed to trade unused emissions credits - that is, Parties whose net emissions are likely to fall below their assigned amounts can sell them to Parties who require additional credits. However, the Protocol states that international emissions trading shall be supplementary to domestic actions to reduce emissions. Because of disagreement during the Kyoto meeting, the detailed design and structure of the system - including rules for verification, reporting and accountability - was deferred for negotiation to future meetings. It is expected to be discussed at the next meeting of the Parties (CoP 6). [3] Emissions trading is discussed in detail in chapter 9 of this report.

3.92 The Australian Government supports the introduction of emissions trading at an international level and is considering its domestic introduction. Mr Tulpule emphasised that:

The role of sinks - land use, land use change and forestry

3.93 The role of sinks is discussed in detail in chapter 7 of this report. The word `sinks' refers to those natural processes which absorb carbon dioxide from the atmosphere. The role of sinks is one of the most complex technical issues in the Kyoto Protocol negotiations. The rules and modalities to operationalise the sinks provisions in the Kyoto Protocol, and their applicability in the flexibility mechanisms, are yet to be agreed by the Parties. The scope of the use of sinks as a measure to offset emissions from elsewhere is dependant on the final definitions accepted for forests and what may be counted as an additional activity. A number of potential loopholes could be created as a result of these definitions. The permanence of sequestered carbon in forestry or other vegetation-based sinks has also been of significant concern to many stakeholders. Other uncertainties relate to the measurement and monitoring of carbon stored in sinks. How this will be operationalised at an international and domestic level has been a key issue and, in particular, confidence in and the transparency of any accounting system developed.

3.94 In relation to sinks, Ralph Hillman, Ambassador for the Environment, told the Committee that:

3.95 The Australian Government also achieved a provision at Kyoto, under Article 3.7 of the Protocol (the Australia clause). The clause allows countries to include emissions from land clearing to be added to their 1990 baseline to calculate the emissions target in the Kyoto commitment period of 2008 to 2012. [6] Higher baseline emissions imply a higher target, and if emissions from land clearing are declining for other reasons, this frees up allowable emissions for other sectors. [7]

3.96 The Australia Institute has argued that the clause `effectively [only] benefits Australia':

3.97 The Institute also explained that:

3.98 While, under the Kyoto Protocol, Australia is permitted to include land clearing within its total emissions, it is currently not reported in the National Greenhouse Gas Inventory because of considerable uncertainties in calculating the effects on emissions. [10] The Australia Institute and the Australian Conservation Foundation have criticised the decision of the Conference of Parties at Kyoto, at the request of Australia, to include land clearing when calculating national totals of carbon emissions. [11] These organisations argue that, if falls in the rate of land clearing occur, when factored into national totals, they may allow Australia to go close to meeting its Kyoto target without the need for further abatement action that would reduce current trend increases in energy emissions:

3.99 The Australia Institute argued that, again because of accounting rules, plantations would be less effective sinks than is widely considered to be the case:

3.100 CANA summed up the sensitivity and importance of the land clearing issue to stakeholders in the climate change negotiations in Australia as follows:

Recommendation 5

The Committee recommends that strict rules to govern the use of carbon sinks should be included in any emissions trading framework developed by the Parties to recognise the uncertainties in measurement and the long term security risks.

The compliance system?

3.101 Means for demonstrating compliance with the targets agreed in the Kyoto Protocol have also been the subject of international negotiations but have not yet been agreed. The Kyoto Protocol puts great emphasis on compliance assessment. [16] It repeatedly stresses the need for accountability and verification.

3.102 Michael Grubb noted that the Parties have expressed concern that `many emission sources and sinks might be hard to estimate and that compliance assessment would be correspondingly hard'. [17] He also pointed out that `the Protocol provisions for reporting and review are scattered throughout the document, making their overall effect difficult to grasp at a glance'. [18]

3.103 Article 18 of the Kyoto Protocol provides the mandate for the adoption of compliance procedures and mechanisms and is one of a number of provisions in the Protocol that will provide the basis for its `compliance system'. The monitoring, reporting and review provisions in Articles 5, 7 and 8 of the Protocol will provide the tools for assessing Parties' compliance, or non-compliance, with their target obligations. These provisions will provide an important early warning device, enabling Parties to identify and address (or to seek help to address) potential compliance problems at an early stage. [19] Articles 16, 18 and 19 of the Protocol contain the specific legal processes concerning compliance. [20] Article 18 is directed at overall compliance with specific commitments and, with Article 16, basically provides a framework for more negotiations and the development of an `indicative list of consequences' for non-compliance. [21]

3.104 Michael Grubb points out that Article 18 makes the Protocol a `potentially stringent mechanism, far more so than in most other international agreements'. [22] He concludes that the wording of the Article suggests that the Parties intend to try to enforce compliance by imposing a range of penalties in a routine and systematic way.

3.105 Article 19 of the Protocol provides for the settlement of disputes procedure in the UNFCCC.

3.106 To be effective, the Kyoto Protocol will require a robust and efficient compliance regime. Accurate and transparent measurement and reporting of emissions provide the foundation for the effective operation of the Protocol's market-based mechanisms. [23] Parties must have an accurate assessment of their emissions in order to monitor the effect of transfers and acquisitions under the mechanisms. The importance of an effective compliance mechanism is strengthened because the level of non-compliance with targets is rolled over into later commitment periods. If a developed country does not emit the whole of its assigned amount by the end of the commitment period, it is allowed to carry forward the unused portion to the next commitment period. This is known as `banking' of emissions. Verification of actual emissions levels achieved, and their comparison with accepted targets, is critical to this banking process.

3.107 At CoP 5, the Parties agreed that the Protocol's compliance system should have three objectives: promoting compliance, preventing non-compliance and determining and addressing instances of non-compliance. Details of the Protocol's compliance system remain to be negotiated. [24]

3.108 It has been accepted that the system should have both facilitative (to encourage compliance) and enforcement (to deter non-compliance) functions, although there was no consensus as to how these functions could be implemented. [25] In earlier international agreements, international pressure has been used as a major enforcement mechanism, with the threat of trade restrictions for non-compliance.

3.109 Ralph Hillman, Ambassador for the Environment, advised the Committee of the current Australian view about compliance mechanisms:

3.110 The two main aspects of Australia's view are, therefore, that the compliance mechanism should focus primarily on country targets and that it should have a `pro-compliance' approach, that is, the system should encourage and facilitate countries to meet their obligations before punishment for infringements is considered.

Recommendation 6

The Committee agrees that the integrity of the Kyoto Protocol rests on its ability to deter non-compliance and recommends that the Australian Government works with the Parties towards the adoption of firm sanctions for non-compliance.

Recommendation 7

The Committee recommends that the Australian Government support the development of a reporting mechanism under the Kyoto Protocol which will identify and assist those Parties falling behind in Protocol emissions targets.

The role of developing countries and carbon leakage

Developing countries and the Kyoto Protocol

3.111 Developing countries are currently not required to commit to agreed targets under the Kyoto Protocol. This situation has generated considerable international debate, especially in the context of possible transference of emissions from activities in developed countries to activities in developing countries (`carbon leakage'). The commitment of developing countries to targets under the Protocol was also a common concern in the submissions to the inquiry from industry. As a result of current modelling on greenhouse gas emissions, ABARE noted that:

3.112 The inquiry heard much debate about whether and when developing countries should agree to binding targets, and whether this issue should affect Australia's timetable for ratification.

3.113 Ambassador Hillman addressed the Committee with the issue of how and when developing countries should take on targets under the Kyoto Protocol and confirmed that the Australian Government is `not asking the developing countries to ratify; [but]… asking that they agree to a pathway towards taking on targets'. [28]

3.114 In the United Nations, developing countries seek to group together under the umbrella of the Group of 77 (G77) plus China (numbering more than 120 countries at full strength). [29] Since the inception of the climate change regime, developing countries have been united by the principle that any major response action should be led by the industrialised world. Developing countries, as formally represented by the G77 and China, have firmly resisted efforts to open discussions on quantified emissions commitments. [30]

3.115 Developing countries will be affected directly by the physical aspect of climate change (as acknowledged in Articles 4.8 and 4.9 of the UNFCCC) and indirectly, by the implementation of response measures in developed countries to meet the Kyoto targets (Articles 3.14 of the Kyoto Protocol and 4.8 of the UNFCCC). [31]

3.116 Adoption of Kyoto targets and mechanisms will affect the structure of world trade and investment and adoption of technology. [32] Hence, developing countries, despite having no emissions abatement targets, are likely to feel the economic consequences of emissions abatement measures in developed countries, through trade and investment links. [33] ABARE claimed that the consequences for developing countries would include those arising from:

Importance of the Clean Development Mechanism (CDM)

3.117 In general, developing countries are keen to see the Kyoto Protocol's CDM implemented.

3.118 Under the CDM, the richest countries shall provide `new and additional financial resources' and facilitate technology transfer to developing countries. So-called UNFCCC Annex II Parties (essentially the OECD) will fund the `agreed full cost' incurred by developing countries for submitting their national communications. These funds must be `new and additional' rather than redirected from existing developmental aid funds. UNFCCC Annex II Parties will also help finance certain other UNFCCC-related projects, and they will promote and finance the transfer of, or access to, environmentally sound technologies, particularly for developing country Parties. The UNFCCC recognises that the extent to which developing country Parties implement their own commitments will depend on financial and technical assistance from the developed countries. [35]

3.119 ABARE pointed out that the CDM has the potential to offer low cost abatement opportunities for Annex B countries while assisting developing countries to achieve sustainable development. [36] The credits can also create revenue for developing countries as, under the CDM, non-Annex B countries will receive a share of the emissions reduction credits generated by certified emissions reduction projects. [37]

3.120 ABARE noted the importance of ensuring that the CDM `is implemented in a way that is all encompassing in its approach to projects, and includes removals by sinks as well as emissions reductions by technology transfer'. [38] The organisation concluded that, unless the latter is the case, `the benefits from the Clean Development Mechanism will not be distributed equitably among developing country Parties to the Protocol'. [39]

3.121 In relation to the cost of implementing the Kyoto Protocol, Ambassador Hillman, asserted that:

Should developing countries take on targets?

3.122 The importance of encouraging commitment by developing countries was highlighted by Ambassador Hillman when he stated:

3.123 In response to questions from the Committee about the rationale for Australia to wait to ratify the Protocol until developing countries have agreed to a commitment to taking on greenhouse gas emissions targets, Ambassador Hillman argued that a global, communal effort was required to achieve reduction in emissions:

3.124 However, Ambassador Hillman went on to explain that:

3.125 However, other witnesses pointed out that developed countries had agreed to take the lead. [44] The Australia Institute drew attention to the fact that the aim of the 1995 Berlin Mandate:

3.126 The Berlin Mandate reaffirmed the principle, enshrined in the UNFCCC, that: `developed countries should take the lead in combating climate change and the adverse effects thereof'. The Mandate not only stated that the targets to be set would apply to developed countries alone, but also set down the principles that were to guide the process, notably:

3.127 The Australia Institute explained that:

How likely is carbon leakage?

3.128 The potential shift of production and associated carbon emissions from developed countries to developing countries is described as the carbon equivalent leakage effect. [48] ABARE estimated that the rate of carbon equivalent leakage will be 14 per cent in 2010 under independent abatement. [49] With emissions trading introduced, they suggest that leakage would be reduced to 8 per cent.

3.129 Concerns were expressed in a range of submissions suggesting that mandatory measures to cut emissions, which have the effect of increasing energy prices, will see industry move out of countries such as Australia because of the competitive disadvantage that would be produced. [50] The Australian Industry Greenhouse Network (AIGN) expressed the views evident in a number of submissions and suggested that:

3.130 AIGN argued that the Kyoto Protocol `suffers from a fundamental flaw':

3.131 Mr David Coutts, Executive Director of the Australian Aluminium Council added weight to this comment:

3.132 Mr Ian Satchwell, Chief Executive Officer of the Chamber of Minerals and Energy of Western Australia, also argued that developing countries must be included in the global greenhouse effort as soon as possible. [54] The organisation put the view that, in spite of efforts to produce energy-intensive products efficiently, Australian industry is likely to attract either international disrepute for exceeding the Kyoto target, or extra costs in the form of traded emissions targets. The result will be a loss of capital investment to non-Annex B countries which can emit CO2 without such penalties.

3.133 Dr Jim McCabe, representing Chevron Australia, explained their approach to Australia's obligations under the Kyoto Protocol:

3.134 In contrast to other witnesses, Chevron did not believe developing countries needed to take on targets before the Kyoto Protocol was implemented. Rather, they could take on CDM projects:

3.135 The Australia Institute argued that industry claims about a loss of capital investment to developing countries were exaggerated:

3.136 The Institute pointed out that organisations which consider moving their operations to developing countries will have to address the fact that the developing countries will also be required to develop emissions abatement policies in a decade or so, as they take on emissions reduction obligations. [58]

3.137 There is some agreement that there are a few industries which may legitimately claim concessions for differential impact. The Australia Institute explained that:

3.138 However, developed countries need to be seen as leaders in attempts to check climate change, but the extent of their leadership is constrained by economic factors and the willingness of industry to follow. How to address the vulnerability of developing countries remains an important issue on the post-Kyoto agenda. [60] Some developing countries, such as low-lying island nations, are highly vulnerable to the impacts of climate change and are likely to favour commitment, others feel more threatened by the potential economic repercussions if they take abatement action.

3.139 The Committee acknowledges industry concerns about possible `carbon leakage', although it recognises that only a small proportion of overall emissions are likely to be effected. The Committee supports efforts to encourage and assist developing countries to adopt binding targets as soon as possible.

Conference of the Parties 6 (CoP 6)

3.140 The next post-Kyoto milestone is CoP 6, to be held in The Hague in November 2000. Major decisions are expected on the operational details of the Kyoto Protocol with the aim of bringing the Protocol into force as early as possible. The UNFCCC Secretariat has indicated that many Parties have indicated a wish to see this occur by 2002. [61]

3.141 At this meeting a number of issues are of particular importance to all Parties. Senator Hill outlined the level of resolve:

3.142 Issues of particular concern to Australia have been discussed earlier in this chapter. Mr Ralph Hillman, Ambassador for the Environment, highlighted the major issues which the Parties have agreed to negotiate at CoP 6:

3.143 The Ambassador noted that the issue of how and when developing countries should take on targets under the Kyoto Protocol is also of concern to Australia. However, no agreed process or time frame has been established by the Parties to the Protocol to deal with this question and it is not expected that this issue will be resolved at CoP 6.

3.144 Flexibility mechanisms are believed to offer a substantial reduction in the cost of implementing Kyoto, compared with a situation where each country meets its target by domestic measures alone. [64] The EU, and some G77 countries, are supporting a cap or limit on the extent to which these mechanisms can be used to achieve targets. Australia on the other hand, as a member of the umbrella group, is committed to uncapped use of emissions trading and other flexibility mechanisms. [65]

3.145 The Clean Development Mechanism (CDM) has been introduced earlier in this chapter. Under the CDM developed countries can invest in a project in the developing world and earn certified emissions reductions (CERs) to reduce (on paper) pollution in their own country. [66] Ms Reynolds, representing Climate Action Network Australia (CANA), pointed out that the CDM is `potentially a very positive part of the Kyoto Protocol' and that the mechanism provides an opportunity, acknowledged by the Parties, for developed country investment into developing countries. [67]

3.146 However, Ms Reynolds also expressed concern that this flexibility mechanism has been identified as a potential Kyoto accounting loophole. She explained that there is:

3.147 There is concern that developed countries, rather than take action to reduce pollution at home, could meet a large portion of their emissions target through involvement in initiatives under the CDM. [69] CANA recommend that the CDM should only provide credit for activities that are additional to those which would have been undertaken under a `business as usual' situation. [70]

3.148 Eligible CDM activities have yet to be finalised under the Kyoto Protocol. In this context it is noted that some countries, including Australia, are lobbying for few or no restrictions in terms of activities which will qualify to be included under the CDM. Ms Anna Reynolds pointed out that there is concern about what can be included in the CDM and that:

3.149 However, a number are Parties are opposed, in particular, to the expansion of nuclear power as a result of the Kyoto Protocol. [72] There is support to limit CDM activities to best practice renewable energy and energy efficiency projects. [73]

Recommendation 8

The Committee recommends that credit for activities should only be provided for activities that are additional to those which would have been undertaken under a `business as usual' situation.

Recommendation 9

The Committee recommends that the Commonwealth Government oppose in future international negotiations, any proposals for the inclusion of nuclear technology in the Clean Development Mechanism.

Australian Democrats Recommendation 2

The Australian Democrats recommend that the Commonwealth Government oppose in future international negotiations, any proposals for the inclusion of clean coal or sinks in the Clean Development Mechanism.

3.150 Progress on sinks issues is planned at CoP 6, following a special IPCC report on land use and forestry produced in May 2000. The Australian Government is also working with the umbrella group on carbon sinks, which remains a central issue for Australia. Again, the EU and some G77 countries are trying to limit the extent to which sinks are used to meet Kyoto Protocol targets. However, the Australian Government is pushing for a very broad range of activities to be defined as sinks and considers sinks to be a critical element in enabling Australia to meet its target. [74]

3.151 Senator Hill has commented that:

3.152 Ambassador Ralph Hillman noted that penalties for non-compliance will be important to most industrialised countries in relation to their decision on ratification. [76] The Parties will be required to agree on the difficult issue of the consequences that would be invoked if a party failed to meet its target. Australia supports a strong facilitative component to encourage implementation of Parties' commitments, but is yet to finalise a position on consequences. [77]

3.153 The developing countries will seek reassurance of financial and technological support in relation to concerns such as the cost of adaptation to climate change, and building institutional capacity to deal with greenhouse. [78] These countries are also requesting technology transfer beyond that associated with CDM. OPEC countries are seeking compensation for economic loss they might suffer as a result of any fall in oil prices arising from the emissions abatement policies of the developed economies.

3.154 In his submission, Professor Ian Lowe commented on a further issue of concern to Australia, that of leadership image:

3.155 If the evidence submitted to this inquiry is correct, Australia's position at CoP 6 will be viewed closely by Parties that have less liberal targets agreed. Mr Ian Fry, Regional Coordinator for Pacific Bioweb, having attended a number of Meetings of the Parties, explained to the Committee:

3.156 CANA, in support of this view, summarised the international perspective:

3.157 The Committee acknowledges that Australia has led in some actions such as the preliminary work on a national emissions trading system and the introduction of a mandatory renewable electricity target, but in other areas is actively trying to minimise the need to cut industrial emissions. The opportunity exists for Australia to demonstrate its commitment to meeting its target, rather than being on the wrong side of a debate over cosmetic accounting techniques designed to show Australia in a good light.

Ratifying the Kyoto Protocol

3.158 To achieve any form of success, the Kyoto Protocol must aim for global participation and a high degree of measurable compliance. [82] To achieve maximum participation, requirements under the Protocol will have to be both realistic and achievable by the Parties involved:

3.159 The Kyoto Protocol does not enter into force until it is ratified by at least 55 Parties which accounted for at least 55 per cent of the total CO2 emissions in 1990 (Article 25.1). [84]

3.160 Appendix 4 provides a list of countries which have signed, and also those which have ratified, the Protocol as at 13 January 2000. [85] The Committee was told that many countries will seek ratification based on the outcome of CoP 6 at the end of 2000. Ambassador Ralph Hillman noted:

3.161 At this point, it remains unclear how many, and which, countries will ratify the Kyoto Protocol. However, Michael Grubb expresses the view that ratification by 55 Parties is not a high hurdle, and that the effective hurdle is the minimum fraction of emissions. [87] While the position of the US remains uncertain, the Protocol could enter into force by 2003 without the US. Michael Grubb pointed out that:

3.162 Australia signed the Kyoto Protocol on 29 April 1998, but has not yet ratified it, and Government members have indicated that they will wait for US ratification before doing so themselves. [89] The Minister for Environment and Heritage, Senator Hill, stated, after the signing, that ratification may have to wait for the resolution of outstanding issues such as the involvement of developing nations in abatement agreements and the design of an international system of emissions trading. [90] However, the Minister also stated that Australia would not wait for ratification before it moves to implement the Protocol's provisions and commitments. More recently, Senator Hill commented:

3.163 Dr Clive Hamilton, from the Australia Institute, noted claims from Australian industry that:

3.164 This response to ratification has also been supported by representatives of Australian industry. Woodside Energy Ltd explained:

3.165 Australia's position with regard to ratification of the Kyoto Protocol was clarified by Ambassador Ralph Hillman, who has suggested that ratification of the Protocol should occur following resolution of some of the current uncertainties regarding implementation of the Kyoto Protocol. [94] The key issues to be resolved were identified as: the rules and models for the flexibility mechanisms; the use of sinks; the compliance system; and involvement of developing countries in the Protocol and transfer of resources and technology.

3.166 There is support for the approach that, irrespective of any final decisions made at CoP 6 in relation to the flexibility mechanisms, Australia must ratify the Kyoto Protocol and send a clear message to the world that it is prepared to play its part as a good international citizen in resolving the greenhouse issue. Ms Lynette Thorstensen, a consultant for the Australian Consumers' Association, in support of this view commented:

3.167 Professor Lowe also expressed concern that Australia should be seen to be taking a positive approach to the issue of climate change and noted that:

3.168 Dr Clive Hamilton of the Australia Institute agreed:

3.169 In relation to addressing targets for greenhouse gas abatement, Senator Hill also argued that Australia needed to move towards decoupling economic growth from emissions growth. He pointed out that:

3.170 In support of Australia's intention to ratify the Kyoto Protocol, a working group of the Prime Minister's Science, Engineering and Innovation Council (PMSEIC), released a paper in June 1999 strongly advocating a proactive response from industry and government to the challenges and opportunities presented by global warming. The group recommended that the Government swiftly ratify the Protocol, that industry should take a leadership role in developing new technologies and opportunities for abatement, that Australia should prepare early for the trade in carbon credits and use the response to greenhouse to promote knowledge-based industries and exports. [99]

3.171 While targets at Kyoto are not yet legally binding, the working group notes the expressed intention of the Australian Government to act as if they were. If Australia waits for ratification while other countries act, it runs the risk of missing out on global opportunities. [100]

3.172 It appears to this Committee that Australia will only consider ratifying the Kyoto Protocol after several key issues have been resolved. These issues include: the rules and modalities for the three Kyoto flexibility mechanisms - Emissions Trading, Joint Implementation and Clean Development Mechanism; important definitional and operational issues concerning the treatment of sinks; design of a system for compliance with the Protocol obligations; and participation of developing countries. [101]

3.173 Mindful of these issues, Professor Lowe summarised the likely situation for Australia at the next Convention of the Parties (CoP 6):

UNFCCC Beyond 2012

3.174 Progress in implementing the Convention, for example through National Communications and In-Depth Reviews, financial assistance, technology transfer and methodological issues, is of critical importance to forging an effective response to climate change issues. [103]

3.175 The Kyoto Protocol will be reviewed on a regular basis and negotiations over targets for the post-2012 period are expected to begin no later than 2005. The intergovernmental process on climate change will continue to evolve as scientific knowledge improves. [104]

Planning for future targets

The Committee notes that, even if ratified, the Kyoto Protocol, would still fall short of what nature requires to allow the climate to restabilize. [105] Dr Geoff Jenkins, Director of the Hadley Centre for Climate Prediction and Research in the UK, explained to the Committee that:

3.176 This scenario was confirmed by the Chairman of the IPCC, Dr Robert Watson. Dr Watson argued that the:

3.177 A salutary warning about the likelihood of more stringent targets in future was provided by Mr Paul Flanagan from Pacific Power:

3.178 At Kyoto, Australia was fortunate to win a target of 108 per cent. What will the next target be? In the Committee's view, Australia should not wait for further emissions targets to be imposed by an international community. Mindful of past victories won, Australia should accept an ambitious but fair target for the second commitment period and begin to work methodically towards it now. Australia can become a world leader on the greenhouse issue and should look to reap the benefits, rather than be over-protective about the costs.

3.179 Australia must hold itself accountable to the international community by looking beyond the immediate commitment period, further developing its strategic thinking about greenhouse gas emissions (e.g. reductions through the development of renewable energy sources in the long term), and ensuring that its response is transparent and verifiable.

Recommendation 10

The Committee recommends that the Commonwealth Government take a leadership role in international negotiations on climate change, with a view to moving through Australia's treaty-making process in a timely manner to achieve ratification of the Kyoto Protocol, including:

Australia and the Future of the Kyoto Protocol

3.180 Australia played an important role in the international community's response to ozone depletion. It has the opportunity at CoP 6 and beyond to take a similar leadership role over greenhouse issues.

3.181 National and international research in climate change has highlighted the potential costs of adverse climate change to Australia. Dr Jenkins pointed out that:

3.182 Dr Watson, representing the IPCC also noted that:

3.183 The Committee established that ABARE had not undertaken any full impact assessment which took into account the costs of the physical impact of climate change on Australia or globally. [111] Dr Fisher, representing ABARE, explained that, at present, the organisation does not have the models capable of undertaking that sort of study.

3.184 The Chief Executive of the AGO, Ms Gwen Andrews, also acknowledged that there could be substantial costs to Australia from climate change:

3.185 It became very clear to the Committee, during its inquiry, that more information and research about the potential impact - and cost of that impact - of climate change on Australia is needed. However, as discussed in chapter 2, Australia faces potential serious impacts on biodiversity, the Great Barrier Reef, agriculture, human health, tourism and built environment. It is of serious concern to the Committee that there is such a dearth of knowledge in regard to the potential costs of not acting. In the Committee's view, such potential costs to Australia and its region need to be considered in any discussion about the costs of abatement.

3.186 The Kyoto Protocol does provide a necessary diplomatic framework for nations to address the climate crisis and defines the basic structural elements upon which efforts to address global warming in the twenty-first century will rest. Given the flexibilities in the agreement, many of the details of which are still to be decided, the specific commitments required by the Protocol are modest in terms of both environmental and economic impacts. Evidence indicates that implementing the Protocol commitments themselves will neither halt global emissions growth nor have a significant impact on economic growth. Nevertheless, the commitments represent a fundamental change of course and a structure which, if ratified, implemented and expanded for subsequent periods, offers the chance of an effective international framework for arresting and reversing global warming.

3.187 Unlike the majority of developed nations, which will need to reduce emissions on average 5.2 per cent below 1990 levels, Australia's `victory' at Kyoto has meant that it will be able to increase 1990 emissions to 108 per cent, to be met on average during the first commitment period between 2008 and 2012. The consequence of this victory, however, which also included the insertion of the so-called `Australia clause' in relation to land clearing, damaged Australia's international reputation and may have important consequences for Australia in future climate change negotiations.

3.188 Dr Clive Hamilton, Director of the Australia Institute, pointed out that a greenhouse-constrained future left Australia with important choices:

3.189 Reducing greenhouse emissions presents costs but also opportunities. Overall, Australian policy frameworks emphasise a need to reduce emissions at least cost to the economy, a view which the Committee broadly endorses. The responsible use of Kyoto flexibility mechanisms, and a domestic emissions trading system, will also reduce costs. A sensible path of reductions, which avoids excessive action too early or too late, is the best option.

3.190 The potentially huge long term costs of climate change, both to Australasia and globally, also need to be borne in mind. The opportunity to act now to reduce or avert these costs is an important and valuable one. Developing a serious national approach to abatement will help Australia grasp this opportunity, along with the opportunity to develop new domestic and international markets in renewable energy and other technological innovations.

 

Footnotes

[1] Brian Fisher, Kyoto Protocol: Economic impacts on Annex B economies and key Australian industries, Outlook 99, Proceedings of the National Agricultural & Resources Outlook Conference, Commodity Markets and Resource Management, Volume 1, 17 - 18 March 1999, ABARE, Canberra, 1999, pp 39-40. See also Peter Cameron, `From Principles to Practice: the Kyoto Protocol', Journal of Energy & Natural Resources Law, 18(1), February 2000, p 1-18, at p 10.

[2] Greenpeace International, Greenpeace Analysis of the Kyoto Protocol, Greenpeace Briefing Paper, UNFCCC, Session of the Subsidiary Bodies, Bonn, June 2-12 1998, Greenpeace International.

[3] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, pp 128-29.

[4] Proof Committee Hansard, Canberra, 16 August 2000, p 905.

[5] Proof Committee Hansard, Canberra, 9 March 2000, p 3.

[6] The Australia Institute, Submission 79c, p 2281.

[7] The Australia Institute, Submission 79c, p 2281.

[8] The Australia Institute, Submission 79c, pp 2283-84.

[9] The Australia Institute, Submission 79c, p 2282.

[10] Australian Greenhouse Office, National Greenhouse Gas Inventory 1998, July 2000.

[11] Australian Conservation Foundation and The Australia Institute, Land Clearing and the Kyoto Protocol: Summary of a paper presented to Buenos Aires Climate Change Convention Negotiations, November 1998, http://www.acfonline.org.au/campaigns/globalwarming/govt per cent20process/landclearing.htm. Detailed analysis of the impact of the land use change clause in Australia's commitment is discussed in Clive Hamilton and Lins Vellen, `Land use change in Australia and the Kyoto Protocol', Environmental Science and Policy, No 2, 1999, pp 145-52.

[12] The Australia Institute, Submission 79c, p 2281.

[13] The Australia Institute, Submission 79a, p 586.

[14] A Reynolds, & C Hamilton, 1998 Land Use Change in Australia and the Kyoto Protocol, a presentation given at CoP 5, 12 November 1999.

[15] Climate Action Network Australia, Submission 193, p 2035.

[16] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 143.

[17] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 143.

[18] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 143.

[19] Department of Foreign Affairs and Trade, Climate Change: Options for the Kyoto Protocol Compliance System, A Discussion Paper, May 2000, paras 10-11.

[20] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 147.

[21] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 147.

[22] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, pp 143, 148.

[23] Department of Foreign Affairs and Trade, Climate Change: Options for the Kyoto Protocol Compliance System, A Discussion Paper, May 2000, para 15.

[24] Department of Foreign Affairs and Trade, Climate Change: Options for the Kyoto Protocol Compliance System, A Discussion Paper, May 2000, para 3.

[25] greenhouse.gov.au/pubs/factsheets/fs_cop5.html (17/07/00), p 2.

[26] Proof Committee Hansard, Canberra, 9 March 2000, p 3.

[27] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 2.

[28] Proof Committee Hansard, Canberra, 9 March 2000, p 6.

[29] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 35.

[30] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p xli.

[31] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 15.

[32] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 3.

[33] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 1.

[34] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 1 and 3.

[35] unfcc.de/resource/iuckit/fact18.html (17/07/00), pp 1-2.

[36] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 9.

[37] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 34.

[38] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 9.

[39] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 11.

[40] Proof Committee Hansard, Canberra, 9 March 2000, p 2.

[41] Proof Committee Hansard, Canberra, 9 March 2000, p 3.

[42] Proof Committee Hansard, Canberra, 9 March 2000, p 6.

[43] Proof Committee Hansard, Canberra, 9 March 2000, p 6.

[44] See above in this chapter.

[45] The Australia Institute, Submission 79a, p 585.

[46] The Australia Institute, Submission 79a, p 585.

[47] The Australia Institute, Submission 79a, p 585.

[48] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 4.

[49] Cain Polidano et al, The Kyoto Protocol and Developing Countries: Impacts and implications for mechanism design, ABARE, 2000, p 4. Carbon equivalent emissions from non-Annex B regions are projected to rise by 140 tonnes for every 1000 tonne reduction in carbon equivalent emissions in Annex B countries.

[50] See Proof Committee Hansard, Sydney, 23 March 2000, p 393; Minerals Council of Australia, Submission 107, p 911; Proof Committee Hansard, Perth, 17 April 2000, p 480; and Proof Committee Hansard, Perth, 17 April 2000, p 485.

[51] Proof Committee Hansard, Melbourne, 20 March 2000, p 144.

[52] Australian Industry Greenhouse Network, Submission 113, p 960-61.

[53] Proof Committee Hansard, Canberra, 10 March 2000, p 47.

[54] Proof Committee Hansard, Perth, 17 April 2000, p 474.

[55] Proof Committee Hansard, Perth, 17 April 2000, p 510.

[56] Proof Committee Hansard, Perth, 17 April 2000, p 511.

[57] The Australia Institute, Submission 79a, p 589.

[58] The Australia Institute, Submission 79a, p 589.

[59] The Australia Institute, Submission 79a, p 589.

[60] unfccc.de/resource/process/components/response/respkp.html (17/07/00), p 2.

[61] unfcc.de/resource/process/components/road/roadahe.html (17/07/00), p 1.

[62] Senator the Hon Robert Hill, Warming to the Challenge: The role of Australian business in combating global warming, An address to The World Business Council on Sustainable Development and the Australian Business Council Forum, Melbourne, May 5 2000, p 4.

[63] Proof Committee Hansard, Canberra, 9 March 2000, pp 2-3.

[64] Proof Committee Hansard, Canberra, 9 March 2000, p 2.

[65] Mr Ralph Hillman, Proof Committee Hansard, Canberra, 9 March 2000, pp 2-3.

[66] Climate Action Network Australia (CANA), Submission 193, p 2036.

[67] Proof Committee Hansard, Canberra, 10 March, p 87.

[68] Proof Committee Hansard, Canberra, 10 March, p 87.

[69] Climate Action Network Australia (CANA), The Kyoto Protocol – make it work and make it law, Briefing Paper, September 2000, p 3.

[70] Climate Action Network Australia (CANA), The Kyoto Protocol – make it work and make it law, Briefing Paper, September 2000, p 3.

[71] Proof Committee Hansard, Canberra, 10 March 2000, p 87.

[72] Climate Action Network Australia (CANA), Submission 193, p 2036.

[73] Climate Action Network Australia (CANA), The Kyoto Protocol – make it work and make it law, Briefing Paper, September 2000, p 3.

[74] Australian Greenhouse Office, Submission 169, p 1685. See also Greenpeace Australia, Sinks: Australia attempts to increase its fossil fuel emissions, Greenpeace Australia, 2000.

[75] Senator the Hon Robert Hill, Opening Address to the High Level Forum on Greenhouse Sinks, 18 April 2000, Department of the Environment and Heritage, Media Release and Speeches, environment.gov.au/minister/env/2000/sp18apr00.html (14/08/00), pp 3-4.

[76] Proof Committee Hansard, Canberra, 9 March 2000, p 3.

[77] Proof Committee Hansard, Canberra, 9 March 2000, p 3.

[78] Mr Ralph Hillman, Proof Committee Hansard, Canberra, 9 March 2000, p 3.

[79] Proof Committee Hansard, Brisbane, 26 May 2000, p 563.

[80] Proof Committee Hansard, Canberra, 10 March 2000, p 88.

[81] Proof Committee Hansard, Canberra, 10 March 2000, p 89.

[82] Eileen Claussen, President of the Pew Center on Global Climate Change, Kyoto – the best we can do or fatally flawed?, Royal Institute of International Affairs Conference, London, 20 June 2000, p 2.

[83] Eileen Claussen, President of the Pew Center on Global Climate Change, Kyoto – the best we can do or fatally flawed?, Royal Institute of International Affairs Conference, London, 20 June 2000, p 40.

[84] The US share of global GHG emissions is 38 per cent (Peter Cameron, `From Principles to Practice: the Kyoto Protocol', Journal of Energy & Natural Resources Law, 18(1), February 2000, p 1-18, p 11).

[85] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p xl.

[86] Proof Committee Hansard, Canberra, 22 June 2000, p 682.

[87] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p 255.

[88] Michael Grubb, The Kyoto Protocol: A Guide and Assessment, The Royal Institute of International Affairs, London, 1999, p xl.

[89] Nick Hordern, `Kyoto Protocol may have to be revised before US signs up', The Australian Financial Review, 17 September 1999, p 23.

[90] Senator the Hon Robert Hill, Warming to the Challenge: The role of Australian business in combating global warming, An address to The World Business Council on Sustainable Development and the Australian Business Council Forum, Melbourne, May 5 2000, p 4.

[91] Senator the Hon Robert Hill, Warming to the Challenge: The role of Australian business in combating global warming, An address to The World Business Council on Sustainable Development and the Australian Business Council Forum, Melbourne, May 5 2000, p 4.

[92] Proof Committee Hansard, Canberra, 16 August 2000, p 910.

[93] Woodside Energy Ltd, Submission 129, p 1300.

[94] Proof Committee Hansard, Canberra, 9 March 2000, p 2.

[95] Official Committee Hansard, Sydney, 22 March 2000, p 368.

[96] Proof Committee Hansard, Brisbane, 26 May 2000, p 559.

[97] Proof Committee Hansard, Canberra, 16 August 2000, p 910.

[98] Senator the Hon Robert Hill, Opening Address to the Insurance Council of Australia's Canberra Conference, 10 August 2000, Department of the Environment and Heritage, Media Release and Speeches, environment.gov.au/minister/env/2000/sp10aug00.html (13/08/00), p.3.

[99] Prime Minister's Science, Engineering and Innovation Council, From Defence to Attack: Australia's Response to the Greenhouse Effect, 25 June 1999.

[100] Prime Minister's Science, Engineering and Innovation Council, From Defence to Attack: Australia's Response to the Greenhouse Effect, 25 June 1999, p 3.

[101] Proof Committee Hansard, Canberra, 9 March 2000, p 6.

[102] Proof Committee Hansard, Brisbane, 26 May 2000, p 563.

[103] unfcc.de/resource/process/components/road/roadahe.html (17/07/00), p 1.

[104] unfcc.de/resource/process/components/road/roadahe.html (17/07/00), p 1.

[105] Ross Gelbspan, `In Focus: The Climate Crisis and Carbon Trading', Foreign Policy in Focus, vol 5(20), July 2000, p 2 (foreignpolicy-infocus.org/briefs/vol5/v5n20climate.html).

[106] Proof Committee Hansard, Canberra, 9 March 2000, p 26.

[107] Proof Committee Hansard, Canberra, 9 March 2000, p 36.

[108] Official Committee Hansard, Sydney, 22 March 2000, p 364.

[109] Proof Committee Hansard, Canberra, 9 March 2000, p 25.

[110] Proof Committee Hansard, Canberra, 9 March 2000, p 36.

[111] Proof Committee Hansard, Canberra, 23 June 2000, p 823.

[112] Proof Committee Hansard, Canberra, 9 March 2000, p 9.

[113] Proof Committee Hansard, Canberra, 10 March 2000, p 58.