Galt Global Review

QFS 360

November 26, 2002
business digest


Australian Roundup - Kyoto
by Jim Plouffe


Alone amongst the world's middle-powers, the Australian government has continued to back the essence, and even the science, of the Kyoto Protocol without pledging to sign the document.

Prime Minister John Howard has said the government will meet Australia's 2012 greenhouse emission target of 108 per cent of 1990 levels but will not ratify the controversial document until the United States and the region's developing nations pledge their support.

Although the fence sitting appears illogical on the surface - working to meet the protocol's levels while not actually ratifying the resolution - Australia is in fact doing a remarkable job of balancing environmental concerns with practical business sense.

Australian environment minister David Kemp says the government is not denying the existence of global warming by refusing to sign on to Kyoto. In fact he says the government has ample proof that Australia - a country he says is plagued by variable climate change - will be hurt by any warming greenhouse gases cause.

"This is why we are committed to achieving our emission target," he said after the recent Johannesburg summit. "We are currently heading towards 111 per cent, and with additional efforts we can get down to 108 per cent."

The minister's optimism was backed in October by a McLennan Magasank Associate's report on the greenhouse gas emissions and electricity generation.

The report found that 70 per cent of Australia's emissions come from the burning of coal to generate electricity. The authors argued that Australia could meet its emission goals by simply replacing 10 per cent of the coal-fired power with renewable forms of energy, such as wind power.

The report also concluded these reductions could be met without substantially increasing the cost of electricity or reducing Australia's international competitiveness.

Competitiveness is also behind the government's argument for not signing on to Kyoto.

The government argues that Australia will lose out economically if the United States or the region's developing nations do not join Kyoto.

"It is essential," Kemp says "to bring the US and developing nations into the system. During the current decade, developing nation emissions will exceed those of the developed nations."

Kyoto is doomed to be a paper tiger without the US onboard. The protocol needs to be ratified by countries that together account for 55 per cent of worldwide emissions but so far only has the support of countries responsible for 36 per cent of the gases. Even the protocol's generous targets will be impossible to achieve without commitment from America because it alone accounts for another 36 per cent of the world's greenhouse gases.

Kemp also argues that developing nations have no incentive to join Kyoto so Australia would ultimately lose resource-based industry to countries such as Indonesia, China and Malaysia, which will not be shackled by emission targets.

To back its point, the government has just released a report from the nation's leading greenhouse modeler, Warwick McKibben, which concludes Australia would pay an economic penalty for joining Kyoto.

But government detractors say that not signing the protocol may have its economic costs as well.

Kyoto supporters have warned that the European Union may soon begin sanctioning goods produced in "environmentally unfriendly" countries - a label Australia may earn if it doesn't sign the agreement.

Opposition leader Simon Crean has also pointed out that there are economic advantages, such as carbon trading, for signatory countries. He says a failure to sign simply retards the environmental development of Australian businesses, which in the end will have to meet the emission standards under local regulations.

"Ratification of the Kyoto Protocol is not only about climate change but about positioning Australian industry for the future, " says Crean. "The government's position makes no sense. They have placed Australia in the absurd position of committing to meet the Kyoto targets while refusing to ratify the protocol."

The real cost to Australia, however, will be to its reputation as a champion of all things green.

Environmentalist David Suzuki told the National Press Club this year that Australia's refusal to sign was a "humiliating decision" for a country that should be leading the world to develop sustainable energy.

In the end, Australia's balancing act may make economic sense but it may also be its lasting shame.
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