Still seeking the right shade of green

Age
Thursday 15/11/2007 Page: 14

THE world's most unlikely environmental pin-up boy, Arnold Schwarzenegger, was celebrated two years ago for a range of world-leading climate change policies, pledging to slash greenhouse gas emissions by mid-century and encouraging the development of new technologies. Australia, by comparison, has avoided setting targets for as long as possible.

Does this matter? There are two views. One says Australia was right not to ratify the Kyoto Protocol; that cutting greenhouse gases is meaningless unless all major players, including China and India, are on board; that Australia is a minor emitter globally; and that given it is built on coal, it is a special case. The other view, largely supported by climate scientists, says nothing can be achieved unless developed countries lead the way; that targets can be self-fulfilling, triggering investment in areas that would help cut emissions; and that Australia is lagging badly.

Energy policy expert Hugh Saddler says Australia has recently improved its climate change performance, but not by enough. We are definitely ahead of where the US is at the national level, but behind California and behind the majority of European countries," he says. Others, such as Canberra economist Warwick McKibbin, say this may be justified given the "natural endowment" Australia is sitting on. We have to get emissions down, no doubt, but not necessarily by as much as people think if you take a global perspective," he says.

Greenhouse Gas Emissions
With its extraordinary supply of cheap coal, gas and aluminium, Australia pumps out greenhouse gases at a rate above its weight. According to a recent OECD report, it has the highest carbon intensity in the developed world. Per capita, Australia is second in emissions, behind tiny Luxembourg. Given the nation's resource wealth, the Howard Government was able to win a concession at the Kyoto negotiations to increase Australia's greenhouse gas emissions by 8 per cent by 2012 compared with 1990 levels. But unlike 175 other countries, Australia refused to ratify the treaty, following the lead of the US.

The Government argues that Australia is on track to meet its target, while many significant emitters that did ratify Kyoto, such as Canada and Japan, have performed poorly. However, by mid-year, 25 of 37 regions or countries appeared set to meet their Kyoto target, mostly through a mix of domestic policies and international carbon-trading mechanisms.

In September, Prime Minister John Howard persuaded China and the US to agree in principle to setting "aspirational" targets. He says he intends to wait for Treasury modelling after the election before setting his own. Opposition Leader Kevin Rudd says he based Labor's long-term target - a 60 per cent cut on 2000 levels by 2050 - on UN recommendations and will set a 2020 target after receiving a report by economist Ross Garnaut next year.

The European Union has led the way in greenhouse emission reduction targets, setting a 20 per cent target for 2020 and pledging to lift it to 30 per cent if other countries come on board. In the US, states are setting the agenda, with California getting most of the attention since Schwarzenegger declared a 25 per cent cut in emissions by 2020 and signed an executive order demanding an 80 per cent reduction by 2050. As a developing nation, China does not have a binding emissions target under Kyoto.

Renewable Energy
Australia was among the first countries to set a Mandatory Renewable Energy Target - an enforceable goal for the proportion of electricity that must come from new sources. It was not particularly high, though. The Howard Government's target of about 2 per cent by 2010 has been met early, but the Government rejected a recommendation that it double it by 2020. In September, Howard settled on a goal of about 15 per cent of energy from clean sources, including "clean" coal and nuclear, by 2020. Labor set a higher target 20 per cent from renewables only by the same date.

Climate experts say that on a global scale the Coalition's goal is a start and Labor's goal is competitive but far from world beating. Europe leads in promoting new energy sources, and much local private investment in renewable technology goes offshore to Germany, Spain and Britain. Germany has encouraged renewables for the past 16 years by guaranteeing companies that charge a higher premium for energy generated by new technologies. Germany recently lifted its renewables target to 27 per cent by 2020.

Austria already produces an extraordinary 70 per cent of its energy from renewables and has a 2010 target of 78 per cent. Globally, 10 per cent of investment in clean energy last year was in China. While the large developing nations are often criticised for inaction, Climate Institute Australia policy and research director Erwin Jackson says the reverse should be true. "China and India are emerging as the new clean energy superpowers," he says.

Carbon Trading
The Coalition and Labor have committed to national emissions trading schemes, under which companies will be required to buy permits allowing them to emit a certain level of carbon dioxide. This sort of scheme, which allows companies to sell permits if their emissions are kept below the set limit, is already in place in Europe and is planned by some US states. Globally, emissions schemes have been favoured over carbon taxes as a means of forcing businesses to clean up.

Neither Australian party has set targets. Howard says the Coalition's scheme would be in place by 2012; Labor says it would bring its scheme in two years earlier. If a taskforce report into an Australian scheme from earlier this year were accepted, Australia would have the most comprehensive system in the world in terms of the sectors included.

David Pearse, director of consultancy the Centre for International Economics, says much of the groundwork has been laid, including an Australian Greenhouse Office inventory that estimates emissions. Carbon trading is a growing market. The World Bank estimated the value of traded carbon credits was $US10 billion in 2005; the figure grew to $US25 billion last year. Again, the EU led the way, but its initial scheme was widely seen as flawed, issuing credit permits too liberally.

In the US, the Western States Climate Initiative, including California, plans an emissions trading scheme by August next year. Japan launched a voluntary domestic scheme in 2005. It is also trading using the Kyoto clean development mechanism, which involves Kyoto signatories investing in emission-cutting projects in developing countries in return for credits.