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COP18: Australia to support Kyoto 2 but climate action uncertainty remains at home

Date
21 November 2012
COP18: Australia to support Kyoto 2 but climate action uncertainty remains at home

In the lead-up to COP18 which takes place in Doha, Qatar, from November 26 to December 7, 2012, our international policy teams will be commenting on key regional positions.

Here, David Perry and Caroline Bayliss from The Climate Group’s Melbourne office provide their thoughts on Australia’s position going into Doha.

Australia goes into the COP18 negotiations having implemented a carbon price as of the first of July this year. The impact on inflation has been negligible, and early experience suggests that pass through in wholesale electricity prices is contributing to a reduction in carbon emissions (along with reduced demand and increased renewables).

It appears likely that Australia will meet its modest Kyoto target, and has indicated support for a second Kyoto period, extending to 2020, based on a bipartisan emissions reduction target of 5% (re: 2000).

Tangible commitment

While this target still exhibits a sizable "ambition gap", it nonetheless demonstrates a tangible commitment from one of the world's wealthiest and most emissions intensive nations. As stated by Christina Figueres, head of the UNFCC: "It would send a very clear message internationally that what Australia is doing … is actually contributing to global interests." Importantly, Australia has left the door open for deeper emissions cuts in the event of a binding global agreement.

The Australian carbon price is currently fixed at AUD$23, but will transition to a cap and trade scheme in 2015. This will include a partial link to the EU scheme, as well as the Kyoto Clean Development Mechanism (CDM), allowing Australian organizations to meet some of their liability using overseas permits. This creates an imperative for Australia to continue participation in Kyoto to maintain access to low-cost CDM abatement.

Australia will likely push for continuation of the favorable conditions negotiated in its initial Kyoto commitment, including the treatment of land use change, which pushed up the effective 1990 emissions baseline, making subsequent emissions cuts easier to reach.

Carbon price debate

Australia aims to eventually form a bidirectional link with the EU carbon market, which may allow European companies access to abatement generated by the Carbon Farming Initiative, under which a number of methodologies and projects have been approved.

The carbon price debate has been hugely divisive in Australian politics, with the opposition conservative Coalition asking more questions in parliament on the Clean Energy Legislative Package than health, education, the economy, infrastructure and defence combined.

With the Coalition making a "blood pledge" to repeal the carbon price should it win the next election, there remains considerable uncertainty for business, and it seems likely that some efforts to reduce emissions, or participate in international carbon markets, have been put on hold.

The Coalition proposes an alternative "Direct Action" approach where voluntary domestic abatement will be purchased in a reverse auction format by the government.

While the Coalition supports a 5% target, it has fixed the Direct Action budget each year, meaning a short fall is possible if abatement is more expensive than anticipated. And while the Coalition has given in-principle support for Kyoto 2, it remains unclear how its scheme will interact with international carbon markets, including the CDM.

FURTHER READING

Damian Ryan, Senior Policy Manager, will also be writing news and analysis and live-tweeting throughout COP18, and providing a more in-depth post-COP Briefing after the events. Keep up to date on our website and by following him on Twitter during COP18.

In the run up to and during Doha we will also be posting a series of articles featuring analysis from our teams in the US, China, Europe, India and the UK on their nations' COP negotiating positions.

Read our pre-COP18 briefing paper now.

Follow a live feed from COP18 below.


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