Kyoto, Australia and honesty

Climate change cannot be ignored and developing the technologies and attitude to reduce and eventually reverse the trends are crucial for our future. Ross Garnaut's Interim Report suggested cuts and timeframes necessary to reduce the impact of climate change on Australia. The Rudd Government considered the 90 per cent cuts extreme and additional advice is being sought. Seeking additional advice is one thing, but there is no silver bullet for reducing the effects of climate change since it can only be confronted by a global co-operation where total emissions are addressed.

Rudd's forthcoming visit to China

Mr Rudd and Mr Garrett have been "informing" us that once Australia has a "seat at the table," Australia becomes a key player in the fight against global warming and the leader in innovative green technologies that will play a critical part in greenhouse gas reduction in the future.

Green house gas emission reduction is crucial in a future in which the OECD Environmental Outlook foresees a doubling of world GPD by 2030. The clear link between such GDP growth, energy production and greenhouse gas emissions cannot be ignored.

As from March 11, Australia is now part of Kyoto and has that "seat at the table" and at the end of March, Mr Rudd will depart for a 16-day tour of three regions considered vital to Australia's military and economic future: the US, Europe and China. Kyoto, is definitely on his agenda.

Garnaut interim climate change report findings

Much was made of Garnaut's Interim Report and its 90 per cent emission cuts, models and varied input, but very little was made of putting that into context. Section 3 of the report quietly said it all: "The extent of Australia’s own commitments to mitigation would depend on progress towards effective global mitigation."

In other words, Garnaut's tough targets must be implemented in conjunction with a global mitigation program, not a unilateral commitment by Australia alone. Without global mitigation, implementing these cuts will have no effect on the impact of global warming on Australia.

Mr Rudd was fully aware of the implications when he asked Ross Garnaut to "report on targets that would lower Australian emissions without harming economic growth." Rudd back flipped when he was forced to embrace John Howard's line "We can't have a situation where Australian industry is bound to take steps to curb greenhouse gas emissions, but competitive countries like China are not bound".

Kyoto

Kyoto requires Australia to limit growth in greenhouse-gas emissions to an 8 per cent increase above 1990 levels for the 2008-2012 period. The 1990 date represents a period of growth so far below our current economic growth as to be impractical. The same applies to China. Before that happens, Kyoto MK II needs to see the light of day recognising the real problems and confronting 2008 and beyond with relevant and effective solutions.

Mr Rudd perceives climate change as "... the moral challenge of our generation ..." OECD members and developing nations lauded Mr Rudd when committing Australia to Kyoto. It was inferred that Australia was now on an equal footing with the OECD and trading partners and can now take a lead role in curbing climate change.

And that raises two interesting questions.

Just how important is Australia when it comes to the world economy? And just what is this persuasive “diplomatic approach" of Mr Rudd's to convince China to cut its emissions? Mr Rudd won’t get a “yes” from China without a “yes” from India and other developing nations. To wield such proclaimed influence, Australia must be seen to be a vital part in the global economy, not just a raw material supplier.

We are constantly reminded by Mr Garrett and interest groups, both endorsed by Mr Rudd, that Australia is the No4 major global emitter and as a responsible global citizen must act to reduce the impact of climate change.

But how valid is this claim and what does it all really mean?

That No4 ranking is based on outdated, pre-1996 data and calculated on a per capita basis.

When it comes to greenhouse gas emissions, Australia produces less than 1 per cent of the global total. Since the 1996 report was tabled, total global emissions have blown out and Australia's contribution in proportion to the total has plummeted.

Based on total emissions, Australia is ranked 16, producing around 1 per cent. How important and what effect is this ranking on a per capita basis? Australia is ranked 53 in the world with just 3.2 per cent of the world's total population. India and China on the other hand combine to account for about 40 per cent of global population. If Australia complied with the Garnaut recommendation and cut emissions by 90 per cent, the overall effect would be a reduction in global carbon emissions of less than 0.9 per cent. Even if Australia cut emissions by 100 per cent, the overall impact on global warming would be negligible if acting unilaterally and without a global mitigation co-operation agreement.

Considering the foregoing begs the question of just why is Australia being publicly promoted as being so vitally important in the global warming issue?

Signing Kyoto does not place Australia on an equal footing with OECD and our other trading nations. Australia is now committed to playing uphill on an uneven field. Because so much was deliberately made of Australia's now defunct No4 ranking, it got many of the OECD governments off the hook with their own policies and commitments to Kyoto. It is more likely that the OECD strategy was to exploit Rudd's inexperience and commitment to Kyoto policies to isolate Australia from the US and hopefully force the US to sign Kyoto.

Much has been said about the strategies used to cut emissions by many OECD and other nations and held out as a model for Australia to follow even when the majority of developed nations in Kyoto failed miserably to meet their targets. But what are these strategies and just what has been achieved? Can Australia successfully implement these same strategies?

When it comes to emissions, the difference between Australia and many of the OECD countries comes down to two basic strategies.

To reduce their greenhouse gas emissions, the OECD nations have:

• outsourced energy intensive industries to other countries; and
• a sizable nuclear component in its energy base loads.

India, China and the former Soviet bloc countries provide low cost manufacturing bases. Australia's remoteness seemed a logical reason to keep its energy intensive industries at home to provide jobs, utilise infrastructure and expand export earnings.

On the nuclear side, OECD nations alone account for 77 per cent of the world's nuclear power generation. Thirty-three per cent of Europe's overall energy demand is met by nuclear. Increasing numbers of reactors are in the design and construction stage. Thirty-one nations worldwide operate 439 nuclear reactors for power generation.

The Australian government prohibits nuclear power and has no nuclear input to offset emissions from its base load power. With the exception of the variable input from Snowy Mountains Hydro and local domestic hydro in Tasmania, Australia's entire energy base load will be subjected to cuts under Kyoto. Solar and wind are minor contributors. In Australia, our per capita emissions represent 16 tonnes of carbon dioxide equivalent. In the OECD, it is only 11.5 tonnes carbon dioxide equivalent helped by a sizable nuclear component.

China's Kyoto windfall

China signed and fully supports Kyoto. Unlike developed nations the rapidly developing giants, China and India, are exempt from the initial 5.2 per cent reduction target of six greenhouse gases by 2008-2012, based on 1990 levels.

China's exemption presents it with a massive economic windfall by enhancing its price competitiveness and increasing exports to fuel foreign consumer spending. It will also experience a jump in foreign direct investment.

If manufacturing and service industries of the developed nations in Kyoto are to produce competitively priced goods and return profits to shareholders the only option will be to outsource their bases to China, India, Vietnam, and so on. The downside is an increase in emissions for the manufacturing-base countries, and a decline in domestic job opportunities and GDP in developed countries. What is Mr Rudd's strategy to confront this possibility? Maybe the answers lie in the Australia 2020 Summit perhaps?

How could China refuse to submit to Mr Rudd's charm and diplomatic persuasion to commit to emission cuts beyond its current obligations? The answer is "easy” Any commitment that would decrease China's high economic growth rate will jeopardise the ambitious growth goals of the 10th and 11th 5-Year Plans. Especially with high inflation and the impact of lower consumer spending in the US.

Hu Jintao has a very ambitious vision for China 2020. During the 17th NPC and presentation of the 11th 5-Year Plan, he appeared to reconfirm the commitment to "quadrupling the GDP value by 2020" as set out in the 10th 5-Year Plan. His ability to play the game however, was highlighted by his subtle change in terminology when he proclaimed the goal was to "quadrupling the per capita GDP by 2020" in place of "quadrupling the GDP value by 2020".

That is a much higher growth target than that set earlier. No one is going to convince those in the Zhongnanhai to give that up.

Signatories to Kyoto strengthened China's hand by granting it the right to continue on a path of massive emission increases that undermined the efforts of the developed nation signatories. The impact of this becomes clear when comparing the differential in growth between 1990 and end 2007. The OECD's 2007 model of doubling global GDP by 2030 will result in massive increases in total global emissions.

China's increasing emissions

China passed the US as the world's biggest carbon emitter and now wears the crown of the world's biggest single polluter of air, soils, rivers and marine environments.

Despite this China is still committed to high economic growth through to 2030. To meet its growth plans China intends to achieve 67 per cent urbanisation by 2030. A review of China's population now confirms the 1.5 billion mark will be reached prior to 2030. Accommodating such growth and demographic change will involve the construction of the equivalent of 1.5 cities the size of Beijing each year over a 14-year period to 2020. That alone will create a massive increase and ongoing demand in energy, steel, glass, cement, timber, plastics and chemicals. This in turn will increase emissions and demands on a rapidly shrinking water resource.

Such change and surge will increase the already massive growth in China's private car ownership, exacerbating emissions and resulting in disproportionate use of resources such as water and energy as rural becomes urban. Although official figures suggest that 140 million cars will be on China's roads by 2020, experts consider this too conservative when taking into account the growth plans for 2020.

Much has been made of China's huge investment in renewable and alternative energies. Except for some PR exercises, it is limited only to hydro and wind. As for nuclear, China has 11 reactors in operation and eight under construction. By 2020 the intended goal is 40 nuclear reactors with two to three being commissioned each year. There is clear evidence of the use of selective data in official statements, but by 2020, 92 per cent of China's base load will continue to rely on coal. Nuclear and renewables will contribute only 4 per cent each.

At this time we should bring some perspective to China's energy growth that has been failing to play catch-up with demand. For 12 months 2005-2006, the rate of energy growth was well in excess of economic growth at just over 20 per cent and in 2007 there is still a serious energy shortfall.

So we can conclude that:

• China has an excessive and increasing energy demand;
• demand is outpacing capacity; and
• wasteful energy use and pricing policies are undermining gains.

If Mr Rudd can convince Hu Jintao to cut back just on emissions alone, he will achieve a monumental economic miracle. It will be a good opportunity for Mr Rudd to vigorously debate the issue in Putonghua to ensure his points are not at risk of distortion in translation.

From political speak, the most likely translation of events in China will be on the "success" of the talks resulting in the "… ongoing joint intent and genuine co-operation by Australia in which Australia, US, India, Japan, South Korea, and China agreed to collaborate on strategies to cut greenhouse gas emissions in half by the end of the 21st century within the agreed framework." A major political coup for Mr Rudd?

Australia in perspective

To put Australia in perspective, we must be honest with ourselves. If we are to make a change then Australia must be able to bargain from a position of strength.

Do we have that strength? If so! Where is the stick and where is the carrot?

It is China's insatiable appetite for raw materials and exports of cheap consumer goods that is driving Australia's economy, not vice versa. Do we impose environmental taxes or penalties on our uranium and iron ore? Possibly impose tariffs on imports?

China is not relying on Australia in the medium to long term. It has substantial mineral reserves that include uranium and is negotiating for investors and partners for exploitation. Look closely at China's rapidly expanding rail network and discussions with India, Mongolia, Kazakhstan, Tajikistan and Russia on iron ore, coal, uranium, gas and oil. The Tibet railway and extensions now under construction will transport Tibet's vast mineral reserves to the processing centres in China. Of course China, India and other countries are interested in Australia's uranium. The reserves are high grade and easily mined as well as being the cheapest and most stable source of supply available.

2030 is the key to global survival and is common to all climate change strategies and with good reason. 2030 also plays a key role in China's planning and the real impact of on our future.

This is not a question of China bashing, Australia bashing or pro nuclear. It is a matter of simple awareness and being informed and being able to gauge the relevance and credibility of our politician's statements and policies, as well as being able to gauge the same in deliverances from the many self interest groups, well meaning and otherwise.

China's growing impact

We ignore the real impact of China on global warming at our peril. Without China any global commitment is meaningless.

An extract from the recent study by UCLA:

"The researchers' most conservative forecast predicts that by 2010, there will be an increase of 600 million tonnes of carbon emissions in China over the country's levels in 2000. This growth from China alone would dramatically overshadow the 116 million tonnes of carbon emissions reductions pledged by all the developed countries in the Kyoto Protocol."

Put another way, the projected annual increase in China alone over the next several years is greater than the current total emissions produced by either Great Britain or Germany.

Good intent, honest belief, intense emotion, self sacrifice or extreme activism won’t get us there without the co-operation of key polluting nations on a global scale. Properly channelled these efforts can achieve a green environment for Australia's future generations.

Crunch time

For Mr Rudd, the April visit to China will be more than a courtesy discourse in Putonghua. Now Australia has its seat at the Kyoto table, it will be the time and place for Mr Rudd to demonstrate his powers of political persuasion and deliver on both his and Mr Garrett's electoral promises to use Australia's position as a key player in the fight against climate change by "persuading" China to reduce its emissions.

It is as simple as that.