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Where to for climate policy if Copenhagen fails ?

- Wednesday, October 14, 2009

While there are many who have high expectations about the forthcoming Copenhagen climate conference (December 7 - 18 in Copenhagen) resulting in agreement about future global climate change policies beyond 2012, there is a growing chorus of experienced commentators saying that a clear outcome is very unlikely. What this might mean for Australian domestic policy decisions is an interesting question, given that so much importance has been placed on 'waiting to see the outcome from Copenhagen'.

Michael Levi, a Senior Fellow of the US Council on Foreign Relations, writing in the most recent edition of "Foreign Affairs" believes a comprehensive outcome from the Copenhagen talks is highly unlikely, and reminds readers that the last climate deal (The Kyoto Protocol) took eight years to finish. Agreement was reached on the text in Kyoto in 1997, the fine details were negotiated in Marrakech in 2001, and further side-deals were negotiated that resulted in the Treaty coming into force in 2005.

In the absence of an agreement at Copenhagen, what then for international and domestic policy ? To some extent the Kyoto Protocol is given exaggerated significance, in that it really imposes no legally enforcable emission reduction requirements on participants (as Canada has demonstrated), and the real imperative for nations to reduce emissions depends entirely on domestic political considerations. It is quite conceivable that any future international climate policy might simply consist of some loose agreement that individual nations will develop their own domestic emission targets, and report progress against those.

This would require individual nations to make decisions about how emissions are counted, and a related decision about which nation's emission credits would be accepted in a domestic emission trading scheme. Confidence in an emissions market would depend on the strength of legislation establishing the market, and the tendency of governments to make changes to that. As seen in the Australian water market, ad hoc rule changes by Government would quickly erode market confidence and render ET schemes ineffective.

Whether the Australian Government would be as enthusiastic to proceed with legislation in the absence of an agreement at Copenhagen is an interesting question. A relevant consideration is that Treasury modelling projected that most of the net emission reduction in the first few decades of the CPRS would come from the purchases of forestry and international offsets by Australian companies. That becomes a bit more problematical in the absence of an international agreement. Perhaps all the more reason to broaden recognition of domestic offsets, including those available in agriculture but currently not recognised due to Kyoto Protocol emission accounting rules.This would also reduce concerns about the conversion of large areas of productive agricultural land to carbon sink forests, which seems a possibility given governments tendencies to increase coal-fired electricity generation capacity, and the very real questions that surround the potential success of carbon capture and storage technologies.

 
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