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Much of the material listed on these archived web pages has been superseded, or served a particular purpose at a particular time. It may contain references to activities or policies that have no current application. Many archived documents may link to web pages that have moved or no longer exist, or may refer to other documents that are no longer available.

Media Release
Minister for the Environment and Heritage
Dr David Kemp

23 October 2002

Kelvin Wrong Again - We're Still in the Trading Game


Claims by Labor's Environment spokesman, Kelvin Thomson, that new European Union legislation changes the rules for trading of carbon credits are wrong.

The international rules for the trading of carbon into Kyoto Protocol countries have been known since last November when the Seventh Conference of the Parties to the United Nations Framework Convention on Climate Change met in Marrakesh.

Carbon trading markets in countries that ratify the Kyoto Protocol will be formally closed to carbon credits generated within countries not ratifying the Protocol, a position that was known and weighed up in the overall assessment of where Australia's interests stood on the matter of the Kyoto Protocol.

However, under the Kyoto rules, Australian businesses can still earn carbon credits by initiating abatement projects in developing countries through the Clean Development Mechanism of the Protocol.

The Howard Government is currently engaged in a dialogue with business to examine how we can maximise their involvement in these types of projects and promote Australia's greenhouse technologies and expertise.

Australia also continues to attract foreign investment in forest plantations, as both carbon and economic assets. Just last week, a Japanese power company Kansai announced investment in WA's oil mallee plantings. Over a 20 year period the 1000 hectares of Kansai plantings would absorb approximately 860,000 tonnes of CO2.

The Government is continuing to develop and invest funding in domestic programs to meet the target agreed to at Kyoto of limiting greenhouse emissions to 108% of 1990 levels over the period 2008 - 2012 and is acting on the need for Australia to focus upon the longer term.

It is clear that Australia has more to lose by ratifying the Protocol in its current form than it would gain by joining it. The Protocol is not an effective global treaty as it excludes 75% of world greenhouse emissions. The Howard Government has consistently stressed that to be effective, a global response to climate change that includes participation by all major emitters of greenhouse gases is needed.

Should Australia abandon its requirements for a more comprehensive global response, it would send a signal to investors that Australia is prepared to expose itself to binding legal commitments that could in the future impose costs not faced by our major regional trading partners and competitors.

European countries don't face this dilemma. Most of their trade is with other European countries - all of whom share those commitments. European countries, therefore, will suffer no competitive disadvantage by ratifying. Thus, the European Parliament is putting in place legislation that will create a domestic carbon emissions trading system as part of implementing the Kyoto Protocol.

In the case of Australia, however, investors would see ratification as a sign that if they support industries and projects in our country they could face uncertain and costly penalties that they would not face elsewhere in the region. Their investments would be directed accordingly.

For Australia this is not a trivial matter. Foreign direct investment in greenhouse intensive industries such as natural gas, alumina and aluminium production, coal and metals processing is of great significance to our economy. These Australian industries are also very clean and any shift of these activities to countries with lower environmental standards would paradoxically increase global greenhouse emissions.

Australia is at the forefront of efforts by nations to reduce emissions of greenhouse gases with the Commonwealth investing almost $1 billion to fight greenhouse. By the end of this decade, we will deliver about 60 million tonnes annually in emissions reductions, forming a strong platform on which to develop Australia's longer-term strategy.

Labor, by contrast, will do nothing to reduce greenhouse gases in our atmosphere. Just last week, in the Cunningham by-election campaign, it warned voters that effective greenhouse abatement would cost jobs.

Labor promises to ratify Kyoto - and then it will wash its hands. Ratifying in itself, will produce not one gram of abatement - it takes hard work, which is completely beyond the ALP.

Media contact:
Catherine Job (02) 6277 7640 or 0408 648 400

Commonwealth of Australia