Cancun can-do is a con

Bookmark and Share Economics & Deregulation, Deregulation Unit, Energy and Climate Change | Alan Moran
Australian Financial Review 4th February, 2013

Ross Garnaut says carbon dioxide emissions are on track to meet targets set at the 2010 Cancun international climate change meeting. True or not, it is irrelevant.

Unlike the 2007 Bali climate change meeting, where Kevin Rudd basked in international adulation by signing Australia up to the doomed Kyoto agreement, Cancun imposed minimalist disciplines. Friends of the Earth described it as "a weak and ineffective agreement [which] gives us a small and fragile lifeline".

Recognising the reality of fossil fuel use, developing countries at Cancun simply committed to greenhouse gas emission levels based on business as usual. China is central to this. Soon after 2030, China's dominance of world manufacturing will bring greenhouse gas emissions in excess of those of the US and EU combined.

But China is taking no steps to mitigate emissions. Its Cancun targets are expressed in terms of CO2 emissions per unit of GDP, the aim being to cut its 2020 emission intensity by 40-45 per cent compared with 2005. Meeting that will take China to only Australia's current level of emissions per unit of GDP.

China's emission reductions owe nothing to income-sapping carbon tax and mandatory renewable policies - in 2020, wind and solar will contribute only 0.3 per cent to electricity supply.

Commercial decisions are the sole deliverers of lower carbon emissions per unit of GDP. These include closing outdated plant and rapid expansion of more efficient plant. China, unlike Australia, also has no moratorium on new hydro capacity and nuclear power.

Zero carbon-emitting nuclear power under the five-year plan will raise its share of electricity from 1 per cent in 2010 to 6 per cent by 2020. Although coal's market share will decline, it will still represent more than two-thirds of electricity supply and its generating capacity will double.

Developed countries are also avoiding new emission abatement measures. While politicians enjoy the accolades of the green commentariat, cold reality usually dominates policy. Thus, Canada's Kyoto commitment was to cut emissions by 6 per cent below their 2000 levels by 2012. But with emissions tracking at 30 per cent above this, Canada simply abandoned the pledge. Last month Japan became the latest country to drop its greenhouse reduction targets.

Europe, the epicentre of climate orthodoxy, is now re-examining its greenhouse gas abatement policies. These are aggravating the region's economic demise. They are hurtling it towards Angela Merkel's nightmare in which Europe becomes merely "an interesting place to visit".

Like Europe's emission policies, ours are also causing economic damage. We have a carbon tax which, at $23, more than doubles the wholesale electricity price and is five times the EU's carbon tax. We share with the EU crippling requirements for the use of wind-generated electricity, which costs more than twice as much as electricity from coal. The costs these measures bring do not affect emissions at the global level but do cause relocation of industry and lower income levels.