Failure to extend Kyoto agenda will mean pain at home

Bookmark and Share Economics & Deregulation, Deregulation Unit, Energy and Climate Change | Tim Wilson
The Australian 3rd December, 2012

Over the next week the fallacy that our carbon tax is in line with international action to cut greenhouse gases will be exposed, and with serious consequences for Australia.

Last Monday the latest round of international negotiations to cut global greenhouse emissions started in Doha, Qatar.

The December ministerial-level negotiations are designed for ministers to attend, get their photos taken as they sign the conference outcome and recommitment to the next year's agenda.

Where big breakthroughs are expected, presidents and prime ministers turn up to claim credit.

This year Julia Gillard and Climate Change Minister Greg Combet are staying away, instead sending Combet's junior.

The reason is simple - the only expected outcome is the superficial extension of the failed Kyoto Protocol.

The 1997 protocol remains the only treaty to cut global emissions.

On December 31 this year, Kyoto expires and afterwards there will be no binding international framework obliging countries to cut emissions.

Not that Kyoto was a success. The journal, Nature, recently argued: "In practice, the 1997 treaty did little to curb emissions of greenhouse gases".

Countries that met their targets did so because of its preferential design and caveats.

Data from the European Union shows that its preaching for emissions cuts was matched with action only because of declines in industrial activity following from the global financial crisis.

And a recent UN Environment Program report concluded that future commitments to cut emissions were insufficient to achieve the stated objectives that countries agreed to at past climate negotiations.

For years countries have been negotiating to extend Kyoto into next year and up to 2020. So far they have failed.

Even if countries do agree to extend Kyoto by the end of the week, there will still be a legal gap until it is enforceable.

Three-quarters of countries need to ratify the change.

It can take months, and even years, for each country to officially work through the bureaucratic and political process of ratification.

It's quite probable that countries may sign up in front of the world's media in Doha to changes and then never deliver on them when they get home.

That's what Bill Clinton did to Kyoto. His vice-president, Al Gore, signed Kyoto but then never even sought its ratification through the Senate.

But this time it's likely to be broader-based. Already the US, Canada, Russia, Japan and others have signalled that they don't intend to ratify.

The reason that countries are not following is simple. Kyoto does not oblige developing countries to cut their own emissions.

Since Kyoto was negotiated developing countries have become the key source of emissions growth.

In 1997 the US was the world's largest emitter.

Today it is China, and its emissions are still growing.

For developed countries the domestic political support to increase costs for their struggling economies while giving developing competitors a legally free ride is negligible.

Based on the draft text circulated before the Doha meeting, countries are still haggling on how long the extension will be for, how countries can count their emissions cuts and the extent that they are prepared to do so.

It's really only Europe and Australia that are pushing hard to save policy and political face after imposing domestic carbon schemes on the grounds that the rest of the world will follow.

Despite the decline in political toxicity of the carbon tax, for Australia and the Gillard government there is a lot at stake.

For global action, anything other than a full recommitment to Kyoto by the end of the week will be as significant as the collapse in efforts to secure a new treaty in Copenhagen in 2009.

The only difference is this time expectations are so low. But Qatar's failure does translate into pain for Australia.

The Gillard government imposed the world's largest and most broadly applied carbon tax on the argument that other countries were taking similar action.

Apart from Europe, countries that are considering domestic schemes have their policies and timeframes tied to outcomes in international climate talks.

China, for example, moved any domestic emissions trading scheme until after the timeline for a post-Kyoto treaty and will be heavily influenced on whether it is bound to act.

So far, at the Qatar talks China has been talking down obligations in a post-Kyoto treaty.

Considering Australia's carbon pricing regime is built on the architecture of Kyoto, by the end of this year it will operate outside of an international legal operational framework. But in practice minimising the economic harm of the carbon tax and a post-2015 emissions trading scheme requires other countries to take on equivalent costs.

The Treasury's strong growth, low pollution modelling assumed that other countries would have carbon prices by 2015 and that Australia would be buying cheaper emissions reduction from all over the world.

The pain won't just be economic. The absence of commitments to equivalent emissions cuts means there won't be any environmental dividend either. Pity Australia's national interest.