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Warming to the challenge
The role of Australian business in combating global warming.


An address to
The World Business Council on Sustainable Development
and the Australian Business Council Forum
by the
Federal Minister for the Environment and Heritage
Senator the Hon Robert Hill
Melbourne
May 5, 2000

Next year the Intergovernmental Panel on Climate Change, utilising the expertise of more than 600 of the world’s leading climate change scientists and researchers, will bring down its third report on the impact of human activity on the earth’s climate system. This report is expected to provide further evidence that human and industrial activity is contributing to global warming. In other words, the science of global warming is becoming more certain, rather than less certain.

In many ways, the issue of global warming has moved beyond the realms of being a mere scientific or political debate. Around the globe, governments, industry sectors and individual companies are now making serious efforts to cut greenhouse gas emissions.

Australia has already accepted that global warming is a reality and that we must act to reduce our emissions of greenhouse gases into the earth’s atmosphere.

Under the Kyoto Protocol, Australia has signalled its clear intention to make a significant, constructive contribution to this global effort. Our Kyoto target requires us to significantly reduce our emissions from a level of about 43 per cent above 1990 levels, down to just 8 per cent above 1990 levels by 2010. This will impose a cost on our economy but a cost which we recognise as being a fair one and one which is comparable to that being accepted by other developed nations.

The achievement of this target will require a partnership of governments at all levels along with industry and the general community.

Global warming is a shared responsibility and therefore our response must require a shared effort. The role of the business sector in this challenge should not be understated.

Last week in Washington, I addressed a conference hosted by the Pew Centre on Global Climate Change. The Pew Centre represents 21 of the largest corporations in the United States – corporate heavyweights such as Du Pont, Shell, BP Amoco, Lockheed Martin and Whirlpool. These companies have a combined annual revenue of more than US$550 billion.

In signing up to the Pew Centre, these corporations have accepted the principles espoused in the Centre’s mission statement. Two of these principles are particularly relevant to today’s conference. The first states:

“We accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences.”
This simple statement of acceptance by individual companies is an important step in reducing greenhouse gases. I am pleased to say that in general Australian industry has also responded positively to this responsibility.

The success of our voluntary Greenhouse Challenge program is proof of that. The Greenhouse Challenge has already seen companies commit to actions which will deliver estimated reductions of more than 20 million tonnes of carbon on business as usual projections – in fact we are a little ahead of projections.

The program has been expanded in line with the Prime Minister’s pre-Kyoto commitment to involve more than 1000 small businesses by 2005. The response from small business has been so positive that we are already more than a third of the way to reaching that target.

There will of course always be those who hold a different view. The Australian Financial Review recently reported that some Australian business figures were looking to set up a lobby group to actively oppose implementation of the Kyoto Protocol. I note the proposed lobby group had been forced to delay its inaugural meeting. Hopefully this reflects both the Australian business community’s commitment to greenhouse reduction efforts and their commonsense.

For those in the business community who accept the science of global warming but fear the cost of change, the Pew Centre offers its second principle;

“We can make significant progress in addressing climate change and sustaining economic growth by adopting reasonable policies, programs and transition strategies.”
In other words, rather than viewing the Kyoto Protocol as a threat, these US corporate giants are seeing it as an opportunity both to contribute to a better environmental outcome and to move to a more sustainable production base.

This principle is consistent with the Howard Government’s approach to both global warming and other environmental issues. Economic growth and environmental responsibility are not mutually exclusive principles.

As I told the Pew Centre conference, economic growth can actually drive and support a better environmental outcome whether that be in terms of better water quality, better air quality, or better greenhouse outcomes. In turn, as many of you would have learned already, better environmental practices such as reduced energy consumption and waste minimisation can make significant contributions to bottom-line profits by reducing costs.

The words of Rodney Chase, the Deputy Chief Executive Officer of BP Amoco in the United States, reinforce the message that business and the environment can gain from greenhouse gas reduction efforts. Mr Chase said:

“We believe we can meet our greenhouse gas target in a cost-effective way. And we also believe that in taking actions to meet our target we will end up with a stronger, fitter corporation.”
In short, good environmental practice is good business practice.

Of course, what business expects of government is a clearly defined policy direction.

The Howard Government has shown its leadership credentials by ensuring we achieved a target at Kyoto which did not place an unfair or excessive burden on Australian industry. We also played a significant role in ensuring the Kyoto Protocol allowed nations the maximum flexibility to meet their targets – an outcome which is both good for business and good for the environment.

Countries are more likely to be able to achieve their targets, and in doing so contribute to a better global outcome, if they have access to a wide range of abatement measures and can choose a mix of measures which best suits their own national circumstances. A carbon tax, for example, may be suitable to a European nation whose industry has access to nuclear power. It is not, however, appropriate for a nation such as Australia which does not have such access and which historically has relied heavily on fossil fuels.

Access to lower-cost abatement measures also ensures that business will not be deterred from taking action. It could also be the key to the inclusion of developing nations in the Protocol.

Having achieved this outcome at Kyoto, our government believes that it is in Australia’s best interests to bring the Protocol into legal effect sooner rather than later. To this end we have been actively involved in international negotiations to resolve the outstanding issues from Kyoto such as flexibility mechanisms, sinks, and compliance. There is also a need to address the involvement of developing nations in this global effort.

I met last week in Washington with my US counterpart, the UK Deputy Prime Minister and the Environment Minister from the Netherlands as deputed Chair COP 6 to discuss the way forward. I then chaired a ministerial meeting of our negotiating group – Australia, US, Japan, Canada, New Zealand, Norway, Iceland, the Ukraine and Russia. Finally I represented Australia at a high level meeting of selected members of the Climate Change Convention in New York, working towards COP 6 at The Hague in November.

There now appears to be a renewed sense of determination among the international community to have outstanding issues resolved at the next Conference of the Parties. It was decided to hold an additional two ministerial level meetings prior to The Hague COP to further progress negotiations. This is an unprecedented level of ministerial involvement.

The final detail on these issues will be central to determining the ability of member nations to achieve their targets.

Sinks, in particular, present a significant opportunity for Australia in our efforts to contribute to a better global outcome. Our 1990 carbon emissions profile included 33% contributed from land use, land use change and forestry –principally the loss of forests and vegetation. Therefore the removal of carbon from the atmosphere through measures such as reafforestation will do as much to help combat global warming as efforts to avoid emissions from burning coal or petrol. For Australia, this measure has the added environmental benefits of helping us restore degraded lands, reduce salinity in our rivers, and provide habitat for our endangered species.

The use of sinks as a valid tool to achieve Kyoto targets has been accepted by the international community. Australia recently hosted an international forum in Perth to further debate these opportunities and progress issues of definition and scientific certainty. Thirty-three countries participated in this meeting, which I chaired, including almost half at ministerial level. This meeting has reinforced Australia’s leadership role on this important issue.

I would note that while the international community accepts the validity of sinks, some green groups here in Australia believe that such measures aren’t a politically or ideologically correct way to help the environment. They have been left in the ridiculous position of trying to argue that we are being environmentally irresponsible for promoting the revegetation of Australia. Some might say they’re out of their trees!

Apart from exploring sinks as a lower-cost option for carbon reduction, Australia is positively pursuing a domestic agenda aimed at reducing emissions at source.

We have committed almost $1 billion to a range of programs aimed at maximising abatement opportunities across all sectors. We have established the Australian Greenhouse Office – the first of its type in the world – to guide these investments.

We have moved beyond the use of “no regrets” measures, such as the voluntary Greenhouse Challenge program. In the energy sector, for example, we have set a mandatory target to increase the use of renewable energy from the current 10 per cent to 12 per cent. The additional renewable energy that this measure will produce is equivalent to the residential electricity consumption of a city of around four million people.

But it is not only industry which is being encouraged to play its role.

Through our leadership we are engaging local communities – at both a household and local government level – in this challenge.

The Commonwealth has invested $13 million in the Cities for Climate Change program which assists local governments to identify and reduce the sources of greenhouse gas emissions within their boundaries. Already 88 local governments have joined the program – the largest uptake within any country in the world. In fact Australian local governments make up nearly a quarter of the total international membership.

At a household level we are investing $31 million in a program to provide cash rebates for the installation of grid-connected or stand-alone photovoltaic systems to convert sunlight into electricity. This program will also cover schools and other community buildings.

We have also committed $400 million to a new Greenhouse Gas Abatement Program which will make use of competitive bidding processes to identify projects which deliver the maximum amount of carbon reduction at the lowest cost.

It is interesting to note that at last week’s Pew Centre conference, a representative of the International Energy Agency highlighted Australia’s level of investment and mix of policy approaches as an example of leadership on domestic efforts to reduce greenhouse gases.

Having shown this leadership, the Commonwealth expects State and Territory governments to also play their roles.

The States have signed up to a National Greenhouse Strategy which covers all sectors and details actions that can be taken to reduce emissions. Action plans were due to be lodged by June of last year. Three governments have still not done so. Of those who have filed their plans there is a concern that they substantially restate actions the States are already taking.

As I said earlier, there needs to be a shared effort and the Commonwealth, having put its commitments on the table, now needs to see a greater contribution from State governments.

Many of the decisions which will affect Australia’s ability to meet its Kyoto target fall within the constitutional responsibility of the States.

Last year the Prime Minister indicated that the Commonwealth would begin a process of consultation with the States and other stakeholders on the issue of including a greenhouse trigger in its new Environment Protection and Biodiversity Act. This would allow for Commonwealth approval of major developments which could undermine Australia’s Kyoto commitments. The Commonwealth assuming this responsibility is being resisted by the States.

Having already released a discussion paper on this issue and received public submissions, I can now publicly release a document which describes a technical design option for such a trigger. This document gives details of which gases are covered and how they would be measured and proposes an emissions threshold above which Commonwealth approval would be required.

I will be calling a meeting of State and Territory Environment Ministers in the near future to consult further on the issue. As always, the Howard Government would prefer a cooperative approach to resolve these issues. We will not, however, shirk our responsibility to deliver on the commitments we made in Kyoto.

Australia’s efforts to implement domestic greenhouse reduction programs ahead of the ratification of the Kyoto Protocol are being recognised and applauded by the international community.

We are playing a constructive role in bringing together international opinion on the outstanding issues of Kyoto – a role which will help pave the way for ratification of the protocol.

But again, the words of BP Amoco’s Deputy CEO Rodney Chase in describing his company’s willingness to take action are pertinent;

If we accept the case for action on climate change, it’s clear we can’t wait for an international negotiation process to achieve consensus any more than we can wait for the scientists to reach complete and final agreement.

Just as the corporate sector has been one of the driving forces behind the movement towards free trade over the last 50 years, so now I think the corporate sector can help develop the solutions to climate change. There is much that can be done.
For whatever governments might do, it is this growing attitude within the business sector, reflected in the commitment of organisations such as the World Business Council for Sustainable Development, which will really make the difference.

Commonwealth of Australia