Clarity call on carbon policies

Herald Sun
Wednesday 5/12/2007 Page: 43

EARLY movers on climate change have warned governments of developed countries at the UN conference in Bali to avoid policies that will lead to "stranded" investments. A working group that will help to frame binding emissions targets for the renegotiated Kyoto Protocol was also told that developed nations should aim for a short-term 2020 target of cuts between 25 and 40 per cent of 1990 levels. The final figure would be an aggregate target for all first world economies, possibly allowing some, such as Australia, more leeway than those which had already exceeded their protocol commitment, Global Wind Energy Council secretary general Steve Sawyer told BusinessDaily from Bali yesterday.

Mr Sawyer, whose Brussels based association addressed the Bali group on behalf of an alliance of international energy giants, power plant builders, various business councils for sustainable energy and carbon trading investors, said "private capital should do the lion's share of the work" towards achieving nations' reduced carbon emissions. GWEC believes free markets should have the key role in driving greenhouse gas reductions through carbon trading.

But TRUEnergy managing director Richard Mclndoe, who is also in Bali, said credible longterm incentives from government were needed for business to commit capital at the scale necessary to address the climate challenge. Technology deployment can only be accelerated if business has confidence that policy risk will be kept to a minimum," he said. Dr Wulf Bernotat, CEO of Europe's largest privately owned energy company, said he was ready to invest 18 billion ($A30 billion) in new carbon-abating technologies by 2010 as long as there was certainty about future carbon regimes.

Mr Sawyer's powerful international alliance, which is financed largely by multinationals such as General Electric, Siemens, BP and Shell, and the major wind industry companies, addressed delegates who will influence their countries' post-2012 binding commitments. The Bali meeting is the first step before two year-long negotiations on post-2012 targets begin in earnest. Mr Sawyer said the companies he represented, including oil producers and power plant builders, believed industrialised countries needed to radically cut greenhouse gas emissions by between 25 per cent and 40 per cent of 1990 levels by 2020.

"Our position is that reductions need to tighten over time," Mr Sawyer said. "We support a halving of emissions by 2050 on 1990 levels." The Intergovernmental Panel on Climate Change said last month this was a minimum level of cuts to atmospheric carbon dioxide required to stop the climate change that would cause serious environmental damage and in turn harm global economies. "While not all countries will be in a position to make cuts at the top of that range, some like Germany will go further and are already on track to achieve 20 per cent reductions even sooner, by 2012," Mr Sawyer said.

He said this could help nations such as Australia to negotiate lower reductions of 20 per cent from 2000 levels by 2020 as proposed by Australia's Clean Energy Council (CEC ). CEC chief executive Dominique La Fontaine had been due to deliver the GWEC position, but was precluded because of her role on Prime Minister Kevin Rudd's Bali team. Other advisers to Mr Rudd in Bali include an association representing the fossil fuel sector, the Australian Industry Greenhouse Network, plus the National Farmers' Federation, National Association of Forest Industries, Climate Action Network Australia and World Vision.

"The early movers in the business community require governments to send a clear signal from Bali that they are committed to establish the framework for post-2012 Kyoto Protocol will by the end of 2009," Mr Sawyer said. "We want a long term stable framework for investment and that means binding targets to reduce emissions." We don't want chopping and changing every couple of years. "That is bad for business that will lead to stranded investments in the energy and carbon trading sectors." Under the former Howard government's carbon emissions policies, a refusal to extend the Mandatory Renewable Energy Target (MRET) led to investments in wind energy being stranded.

It included the closure of the Portland wind turbine factory owned by Danish giant Vestas earlier this year and the forcing of Victorian companies, such as Pacific Hydro, to go overseas to grow their business. Mr Sawyer said the GWEC alliance represented companies with billions of dollars in financial capital and investments, and a strong commercial interest in the expansion of sustainable energy and energy efficiency markets. "The decisions made here in Bali will have the potential to significantly catalyse business investment in climate solutions." he said.