China's stance could send climate policy up in smoke
Changes to China's climate change policy will make it even harder for political leaders to secure a new global deal to cut greenhouse gas emissions and will extend Australia's carbon tax pain.
As part of its 12th five-year plan, the Chinese government said it would take steps to introduce emissions trading by 2015. In January, Beijing proposed a concurrent carbon tax at the modest rate of $1.55 a tonne of emissions.
Unsurprisingly, the Gillard government has argued that China's measures mean Australia is acting with the rest of the world.
But earlier this week China announced it wasn't going to meet its 2015 deadline and has now pushed it back until at least 2016.
The changed timeline hardly comes as a surprise. As a recent report from the Stockholm Environment Institute concluded: "Plans to have a functional national (emissions trading) system in place by 2015 are extremely bold and face considerable difficulties."
The same report said that "contrary to what news reports might suggest, carbon trading in China is still in its infancy, with much experimentation but few results to date".
One year may not appear to make much of a difference, but it signals that the Chinese government may have reduced its aspirations for a new international climate change agreement.
By delaying the introduction of a carbon price, the Chinese government is also sending a message that domestic action may be dependent on equivalent efforts by other countries.
Equivalent action requires other big emitters, such as the US, to reverse their absent action or secure a new international agreement to cut emissions.
Any so-called economic benefits of introducing a carbon price requires a carbon-constrained world, where being a lower-carbon economy is economically advantageous. But at the moment the world is barely carbon-constrained. And from the start of next year it is not likely to be at all.
At last December's UN climate change conference in South Africa, governments concluded a timeframe for a new agreement to succeed the Kyoto Protocol. The details will be discussed at this December's conference in Qatar. Irrespective of the outcome at Qatar, there will be no operational international climate change agreement on January 1 next year.
Kyoto is set to expire at the end of this year. Whether efforts to extend Kyoto to 2020 will be successful at December's 11th-hour meeting isn't clear.
Then the focus will shift to a post-Kyoto pact. The adopted Durban Platform set a negotiating timeframe for a post-Kyoto Protocol to be agreed to by 2015, with a 2020 starting date.
Like China's domestic carbon price plans, this timeline appears to be equally ambitious.
The 2015 timeline for introducing a domestic carbon price dovetailed perfectly with the deadline to conclude negotiations for a new international climate change agreement at the end of the same year.
By putting domestic action outside the timeframe for securing a new international agreement China's commitment looks decidedly shaky.
In the history of international carbon politics, the role of the Chinese government has been a mixture of disinterest and enthusiasm to cut global greenhouse gas emissions.
As a big emitter, China had to be included in a post-Kyoto agreement. At the 2009 Copenhagen climate conference, Beijing refused to sign up to a new international agreement. Many countries accused China of scuttling the conference.
Since then, the Chinese government has understandably sought to repair its image. At the subsequent Cancun and Durban conferences, the Chinese supported the framework for a post-Kyoto deal.
Delaying the introduction of a domestic carbon price suggests they may simply be getting better at playing international politics.
China's commitment to cutting emissions has consistently been second-tier to reducing poverty and improving living standards.
Understandably, with an economy that is run on energy from cheap fossil fuels, the government is reluctant to impose an economically harmful carbon price. It has been even more reluctant to be bound to do so through an international treaty.
China may just be positioning itself not to be left with the negotiating hot potato if talks fail, as happened in Copenhagen.
The consequences for Australia's carbon tax are considerable, especially if China's delay dominoes to undermine a new international agreement. Any delay in competitor countries carrying a carbon price will shackle Australian businesses in our domestic and export markets.
At the price of $23 a tonne, Australia's carbon tax won't deliver any real benefits. It is sufficiently high to hit the hip pockets of consumers as well as business competitiveness. But it's too low to drive structural change across the economy - especially in the energy sector, which is the source of most emissions.
That means Australia's climate leadership will saddle us with the world's largest carbon tax, without any long-term advantages, while our competitors get a free ride on our efforts.