Junk Kyoto and the carbon tax

Bookmark and Share Economics & Deregulation, Deregulation Unit, Energy and Climate Change | Tim Wilson
The Australian 10th December, 2012

From Doha it's clear the rest of the world cannot sustain the UN-led model for cutting greenhouse gas emissions, and Australia should recognise it by junking the Kyoto Protocol and the carbon tax it helped create.

Late on Saturday, the UN negotiations to cut global greenhouse gas emissions ended without any clear commitment to cut emissions. Countries agreed to extend the enfeebled Kyoto Protocol beyond December 31, but they did so because most have walked away from their obligations to cut emissions.

Canada, Japan, New Zealand and Russia signalled that they won't be bound to cut their emissions from next year. Some countries negotiated the transfer of their unused credits into the second phase of Kyoto, ensuring they can talk the emissions cutting talk without the walk.

That leaves only a core group of countries, including Australia, the EU, Norway and Switzerland, still flying the Kyoto flag from next year to 2020.

Combined, these countries represent a mere 15 per cent of global emissions and don't include any of the major growing emitters in the developing world.

By sticking with Kyoto, Australia, with Europe, has adopted a high-cost pathway to cut emissions while others won't do the same. Europe and Norway are only sticking by Kyoto for the same reason as Australia.

Off the back of the framework of Kyoto they've established carbon taxes and emissions trading schemes in the hope that the rest of the world will follow their lead. Instead other countries have seen the consequences of a fraught model and are walking away.

At last year's Durban summit, countries set a time line for a successor agreement to Kyoto to be resolved by 2015 and to be in force by 2020. With only a couple of years to go, the outcome from Doha suggests this time line won't be met.

Instead of narrowing the focus of a post-2020 regime that countries can agree to, in Doha it has been broadened again. With every broadening of the agenda, negotiations become more complex and an outcome becomes harder to achieve.

In Doha countries agreed to a program for developed countries such as Australia to financially contribute to the loss and damage incurred by developing countries from a changing climate. The details have not been worked out.

The Americans are understood to believe any commitment will be included in their share to the already spectacular $US100 billion-a-year Green Climate Fund. The fund was set up to help developing countries adapt to a changing climate.

Unsurprisingly, developing countries want a blank cheque. Doing so would give life to the comments at the start of the summit from the chief of the UN climate body, Christiana Figueres, that "in the whole climate change process is the complete transformation of the economic structure of the world".

If anything will ensure failure to secure a new global treaty to cut emissions, it is that statement. But for many countries a "complete transformation of the economic structure of the world" is what they are hoping to achieve with climate change as their Trojan horse. It's a contributing factor to why some countries are now looking away from the top-down, UN-led process to cutting emissions.

Last week Australia's most seasoned UN observer and former ambassador Alan Oxley argued in this newspaper that countries were shifting focus on cutting emissions from the UN to the Major Economies Forum on Energy and Climate.

The MEF, launched in 2009, brings together all of the major existing and emerging greenhouse gas emitters, including the US, China, India and Europe, as well as Australia.

Outside the UN, countries could agree on how to practically cut emissions based on a co-operative bottom-up process of commitments based on their national circumstances.

It may not be the MEF. Countries may decide to develop an alternative institution. But we can be confident that so long as Tuvalu and a band of other Pacific Island states hold veto rights over a deal struck between China and the US, the negotiations will go nowhere.

The irony is that there was a forum set up to achieve similar objectives - the Asia Pacific Partnership for Clean Development and Climate, or AP6 - which included a similar country pool to MEF. AP6 focused on using technology, which remains the only realistic way to cut emissions.

It's only when capturing and storing carbon is proven and cheap, and generating energy from renewable resources is competitive and reliable, that emissions in developed and developing countries will fall.

AP6 was tainted for Kevin Rudd and Barack Obama because it was set up by John Howard and George W. Bush.

But wherever negotiations head, Australia will still be lumbered with its carbon tax and post-2015 emissions trading scheme built on the architecture of the ailing Kyoto Protocol. We should abandon both.

In the lead-up to Doha, both the government and opposition flagged support for extending Kyoto.

The government had politically boxed itself in. It was untenable to go to the 2013 election opposing ratification to continue the same treaty they popularly rode into office on in 2007.

The opposition gave in-principle support because it is unlikely it wanted to relive the 2007 election with an unratified Kyoto hanging around its electoral neck.

Worse, the government deliberately brought forward the capacity for business to purchase European permits into the Australian carbon scheme, to make it harder for Tony Abbott to unravel.

But whether they were credible in the scheme was dependent on continuing to support Kyoto.

It would be hard to identify a more naked example of a government and an opposition putting their political interests ahead of the national interest. We should have followed New Zealand's lead and not made a decision on a treaty until we had seen the final text. It is not a novel concept.

Now that we have, like the first iteration of Kyoto, it is not in Australia's interests to be a member.