Independent moves to find alternatives to Kyoto

By agreeing to establish their own carbon-trading system, Australia’s state premiers have taken the lead on a response to climate change. This is a break-out from the lethargy and confusion that has hindered a national response so far.

Climate change has been a lurking problem for politicians. Politicians look for certainties and quick fixes calibrated to set them fair for a future election. Climate change scientists have not been in a position to offer such certainties, their predictions limited by the extent of present scientific knowledge.

Up to now in Australia, a lethargic, largely uninformed public has remained baffled by a muddy pool of information, attitudes, agendas and anxieties with no sense of national leadership.

Happily the premiers’ agreement coincided with the issue of the Millennium Ecosystems report, the first of several, which sets out the world’s situation clearly. The assessment panel includes 13 of the world’s leading social and natural scientists, advised by the findings of 1,300 experts from 95 countries. Its findings cannot be dismissed lightly.

Basically, the report says, that approximately 60 per cent of the ecosystem services supporting life on Earth - such as fresh water, capture fisheries, air and water regulation, and the regulation of regional climate, natural hazards and pests - were being degraded or used unsustainably. Scientists warn that the harmful consequences of this degradation would grow significantly worse in the next 50 years.

Although evidence remains incomplete, there was enough for the experts to warn that the ongoing degradation of 15 of the 24 ecosystem services examined was increasing the likelihood of potentially abrupt changes that would seriously affect human well-being. This included the emergence of new diseases, sudden changes in water quality, creation of “dead zones” along the coasts, the collapse of fisheries and shifts in regional climate.

Australia has a whole continent to be concerned about as well as a duty to near neighbours. “One of the difficulties we’ve got is that the public is not engaged in this (climate change),” Bob Carr, New South Wales Premier and a member of the International Climate Change Taskforce, earlier commented during an ABC Radio National’s Earthbeat program. “It’s tragic, but the public sees this as something that’s distant, unbelievable, or too complicated to fix.”

He was referring to a Commonwealth Scientific and Industrial Research Organisation (CSIRO) report (pdf file 9.35KB) in November that stated NSW could face up to 70 per cent more droughts, and over 50 per cent more days above 35 degrees by 2070 and that a rise in global grain prices was likely to force action. It was also forecast that some parts of NSW could become uninhabitable within the next 70 years, if the world continued to emit greenhouse bases at the current rate.

The US and Australia are the only two developed nations to refuse to sign the Kyoto protocols, endorsed by 141 countries in February 2005. The protocol requires most of the world's developed countries - including Canada, Japan, Russia and all of the European Union - to reduce greenhouse gas emissions by 5 per cent from 1990 levels by 2012. But Kyoto is acknowledged to be only a first step.

National strategy

In Australia there are at least four independent moves afoot to find national answers:

• Victoria initially designed a plan of its own and has successfully encouraged states and territories to join in;
• the National Farmers’ Federation proposes a national vegetation plan on the lines of the National Water Plan, involving the co-operation of federal and state governments;
• Dr Brian Fisher, Australian Bureau of Agriculture and Resource Economics (ABARE), has said carbon capture and geological storage technologies applied to coal and gas fired electricity generation could provide significant opportunities to reduce carbon dioxide emissions over the period to 2050; and
• the Academy of Science invited three scholars to write a paper on climate change, particularly about the uncertainties involved. One of them, Professor Warwick McKibbin, ANU economist and a professorial fellow at the Lowy Institute for International Policy, has proposed an alternative model, the McKibbin-Wilcoxen Blueprint, which, compared to Kyoto, he believes relies less “on controls with their unbounded costs, and more on clear incentives for national governments, firms and households to manage the risks from climate change.”
  

The Victorian plan

The original Victorian Government plan, likely to be reflected in the state premiers’ eventual scheme, envisaged a national trading scheme aiming to create jobs, deliver investment and reduce emissions in the energy sector. According to Premier Steve Bracks, under the proposed emissions trading scheme, a cap would be established limiting the amount of total emissions into the atmosphere. All companies would be awarded credits at the start of the scheme reflecting their level of emissions.

Individual businesses operating below the cap would be able to sell their credits to those wishing to operate above the cap. Businesses would be free to choose to cut their emissions or buy credits from other businesses. “This is not a carbon tax, which is a penalty imposed on industry for emitting carbon or greenhouse gases," the premier pointed out. Unlike a tax, credits could flow between companies and not to government. (Greenhouse Challenge for Energy and the coinciding Allen Consulting Group report)

The farmers’ plan

The National Farmers’ Federation has proposed a vegetation plan on the lines of and in parallel with the National Water Plan. President Peter Corish, who was convinced the Kyoto agreement would disadvantage Australian farmers, is concerned however over the federal government’s reluctance to canvas a carbon credit trading market.
 
 He believes producers should own carbon credits emanating from their properties, which would provide farmers with a major incentive. Government claims concerning the success of restricting, or banning, tree-clearing had ignored the fact that these measures were forced on farmers without financial incentive. “The whole community benefits, but farmers are constantly expected to foot the bill,” Peter Corish said. “This situation cannot continue.”

An NFF report, Tracking to the Kyoto Target 2004, indicates that native vegetation restrictions in Queensland and NSW had reduced annual greenhouse emissions by million of tonnes.

Carbon dioxide storage plan

ABARE executive director Dr Brian Fisher advocates that carbon capture and geological storage technologies, applied to coal and gas-fired electricity generation, could provide significant opportunities to reduce carbon dioxide emissions over the period to 2050. (Near Zero Emissions Technologies report, 2005).

Because of Australia’s high dependence on fossil fuels and availability of geological carbon storage sites, he believes long-term storage of carbon dioxide from electricity generation plants has the potential to substantially reduce emissions growth from the electricity sector, currently contributing around 40 per cent of total anthropogenic carbon dioxide emissions.

The professor’s plan

Professor McKibbin, in conjunction with Professor Peter Wilcoxen, of Syracuse University, has put forward this “Blueprint”, a hybrid version of Kyoto, as an alternative, and uses government bond markets and monetary policy, common to many countries, as an analogy. Under the Blueprint, he writes:

“… each country would issue two kinds of emissions permits: long-term permits that entitle the owner of the permit to emit one metric ton of carbon every year for a long period …and annual permits that allow one ton of carbon to be emitted in a single, specified year. Both types of permit would be valid only within the country of issue - unlike the Kyoto Protocol, there would be no international permit trading. Each year, governments would require firms within a country to have a total number of emissions permits, in any mixture of long term and annual permits, equal to the amount of emissions they produced that year.

“The number of long-term permits each country could issue would be decided by international agreement and could be based on the limits in the Kyoto Protocol - on average about 95 per cent of most countries’ 1990 emissions. It would be up to each government to decide how to allocate its long term permits … Once distributed, the long-term permits could be traded among firms, or bought and retired by environmental groups. In addition, the government itself could buy back permits in future years if new evidence on climate change indicates that emissions should be cut more sharply or in extreme circumstances they could change the units of these permits in a uniform way.

“Annual permits would be sold at a stipulated price determined by international negotiations … Every ten years, countries would meet to evaluate the information on emissions, climate change, and climate science and then decide whether or not to change the agreed annual permit price to be in place for the following decade.

"Professor McKibbin concludes that by establishing property rights over carbon and removing direct subsidies, it would minimise lobbying by industry. It gives the government who creates the property rights the opportunity to allocate this new form of wealth however it wishes ... It compensates fossil fuel intensive industries (and their shareholders) for past carbon investments and creates a market for hedging future investments which creates value in reducing uncertainty … And if the Blueprint is shown to be an attractive system that works as well as expected, it would encourage other countries to adopt a similar price based system. In contrast to a country by country carbon target, a global system based on costs and efficiency would benefit an efficient, low cost energy exporter like Australia, even in a world of tightening carbon constraint.”

(Uncertainty and Climate Change: The Challenge for Policy, Academy of the Social Sciences 2005.)

Moves overseas

In the US, climate change leadership is occurring independent of the White House. Michael Northrop, in the Washington Post on February 28, 2005, writes that some businesses and several governments have not waited for US political leadership, but “have moved ahead, often aggressively, to constrain carbon dioxide releases, mostly by using energy more efficiently. In doing so, they are reaping enhanced profitability and robust growth.

“For example, six companies - IBM, DuPont, BT (British Telecom), Alcan, NorskeCanada and Bayer - have each reduced emissions by at least 60 per cent since the early 1990s, collectively saving more than $4 billion in the process. Numerous other smart companies, such as Alcoa, 3M, Kodak, United Technologies, Lafarge, Shell and BP, have also far exceeded the smaller reductions envisaged under Kyoto and have saved large sums by using energy more efficiently.”

The latest report of the International Climate Change Taskforce (January 25, 2005) reaffirmed that urgent global action was needed, and that if left unmitigated, climate change impacts were expected to be devastating.

Among its recommendations were that the G8+ Climate Group agree to shift their agricultural subsidies from food crops to bio-fuels, while safeguarding sustainable farming methods and biodiversity. Other recommendations concerned further encouragement of renewable energy technologies and the phasing out of fossil fuel subsidies.

It also recommended that G8 governments establish national renewable portfolio standards to generate at least 25 per cent of electricity from renewable energy sources by 2025, with higher targets needed for some G8 governments, and that all industrial countries, like Australia, introduce national mandatory cap-and-trade systems for carbon emissions to encourage industry to reduce greenhouse pollution.

In response, Federal Environment Minister, Senator Ian Campbell, said Australia was already working on reducing greenhouse gases but the report's call for a 25 per cent move to renewable sources of energy within 20 years was technologically and economically undeliverable. The Australian Conservation Foundation believes it is possible.

It is difficult for the public to identify what is a political statement and what is a scientific one. Truth eventually comes out, but if the scientists are right, we do not have the luxury of time. At present in Australia, big and small business, local government, the people who work the land and now, the state governments, have shown they are listening and prepared to act. They recognise that improvement and increased efficiency also spell bigger profits. Basically, the heart of the country is willing. What is still needed is strong national leadership.