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The Hon Dr Sharman Stone
Parliamentary Secretary to the Minister for the Environment and Heritage
Federal Member for Murray

5th Annual Emissions Trading Summit
Tuesday 29 April 2003

Speech Tanscript: Setting the Policy Scene - the Need for a 20-30 Year Strategy

Transcript of Address by The Hon Dr Sharman Stone MP to 5th Annual Emissions Summit 29 April 2003

I begin by talking on protocols observed by the traditional owners of this country who interestingly, would not have held an important meeting in an enclosure with absolutely no access to the natural light, the natural air, the natural conditions. It is interesting that we meet today to discuss emissions trading and climate change in the sort of room we can’t sustain in terms of energy use.

I feel very privileged to talk with you today, at this Fifth Annual Trading Summit. David Kemp sends his apologies.

Whilst greenhouse emissions and human induced climate change are not part of my portfolio responsibilities, I regard this issue as one of the key things that I must do as a Member of Parliament, and as the Member for Murray. It important for me to contribute to how we go about finding internationally and domestically solutions to this problem that is now probably the greatest threat to Australia’s future.

It is interesting that 10 years ago we would have been sitting here debating whether in fact there was such a thing as human-induced climate change. Now, of course, the jury is out. We agree that there is additional carbon dioxide and other greenhouse gases in the atmosphere that is the direct result of human activities. There is absolutely no contention anymore. What we are debating in scientific circles, particularly amongst my Bureau of Meteorology scientists who play a significant part in the international debate, is what impact do these different gas concentrations have on the global climate and in turn what effect does that impact have on ecosystems, human health, and the economy of different nations.

What are those impacts? How can we ameliorate them and how can we adjust our behaviour over time?

In my electorate of Murray, which is in northern Victoria, I have constituents who are facing the worst drought on record. Murray is an irrigation area and we are now looking at the failure of the irrigation fed dairy industry. When I say the failure, I mean the end of the dairy industry, as we know it, as a result of the fifth year of drought, compounded by the highest temperatures we have had on record and the fact that our water storages have failed.

When we look at the impacts of human induced climate change in Australia one of the key impacts would seem to be where we have had sufficient a rainfall to generate an industry such as a dairy industry but then look at the industry failing because we do not have the water availability that we’ve had in the past.

So it is a very significant issue that we are here to talk about, and as a Government we want to receive advice from people like you.

As a Government we made decision not sign up to the Kyoto Protocol and there has been some growing concern about that amongst some business sectors who see that this may result in lost business opportunities for them.

What we have to also face in Australia is that we have an extraordinary high abundance of fossil fuel energy sources and a substantial industry that has developed as a result of low cost electricity. We are also faced with export competing countries that don’t take comparable action in reducing the impacts of their activities. We have an Australian emission-intensive export industry and they are in the earliest stages of evolution. So in Australia while we have this growing opportunity to use our very good technology and emerging technologies to deal with issues reducing global or domestic emissions we have to decide and work through how are we are going to maximise our business opportunities internationally and domestically while at the same time not cutting our throats in moving too quickly given the competitive environment that we work and as a country that is export dependent.

It is an extraordinarily difficult policy area to work in as you can imagine.

On the other hand we know what climate change impacts are having on our industry and so we have to work through them. How are we going to achieve the optimum policy mix? No, we have not signed Kyoto. But we are one of the world’s most engaged countries in terms of how we are trying to drive through changes in our domestic policy by voluntary, regulatory, stimulated market based changes to get our emissions down. We only contribute less than two percent of global emissions as a country but we have one of the biggest per capita emissions profiles. We cannot be proud about that! This is a result of course of our extraordinary dependency over the last two hundred years on coal burning fossil fuel and our transport sector’s impact on the economy. We are a huge country with the tyranny of distance. We have to work to be good corporate citizens because it is ethically and morally right to do so but it is in our national interest as a continuing society. We need to bring down our own domestic emissions and to help others to do likewise.

Our top priority internationally is to have in place a global framework for greenhouse gas reduction that includes all major users, current and emerging and which actually delivers results.

As you know the Kyoto Protocol does not cover seventy five percent of global emissions. Major emitters are outside the Protocol, the United States in particular. We know they emit about twenty four percent of emissions; China about thirteen percent, and India has about four percent but unfortunately this represents an increase of over fifty percent in the last decade. Developing country’s carbon dioxide emissions from fuel combustion increased by thirty percent in the last decade. We know that developing countries are where the action needs to be. They are, at this point in time not captured by the Kyoto Protocol and we are concerned that even with all the best intentions of all the countries who have currently signed Kyoto, or who may be signing in the near future, by 2012 Kyoto will have brought about a one percent reduction in the world’s overall emissions.

Just one percent when we know that to slow up human induced climate change that is threatening icons like the Great Barrier Reef, our alpine and coastal environments, threatening our biodiversity, threatening our current temperate based agriculture and water supply, we need to reduce emissions by sixty percent by the end of this century.

We have to do more. We’ve got to continue, in some instances if you like alone, and we’ve got to work as hard as we can with like-minded countries to develop an international response. At the present time we want to make sure that we do not economically disadvantage Australia, but on the other hand we reduce our emissions.

We were disappointed at COP 8 in New Delhi last November that the developing countries continue to be very reluctant to discuss the framework, however we have gone ahead and worked with China. And as you know our LNG contract with China will reduce their emissions by around seven million tonnes per year, a substantial net gain for global emissions, but just like Singapore, India, China were not keen to actively engage COP 8. They, like Australia, understand that they have very significant problems in air quality, water quality, and like us they will work very hard to bring about the changes they have to.

Australian business leaders are concerned about discriminatory action against Australian companies because we have not signed Kyoto. We understand this. We talk with those companies every day and we want to make sure we can do all we can as a government to make sure that discrimination does not occur. Under Kyoto rules there is absolutely no provision or expectation or pre-emption of discrimination between companies based on their country of origin. But we also understand that there can be a form of discrimination in some countries. At this point, we are also weighing up what is to be gained and what is to be sacrificed in terms of how we can continue to support our current stand on Kyoto.

We believe there should be scope for Australian companies to be involved in overseas projects, particularly under the Clean Development Mechanism. We believe our companies are well placed with leading edge greenhouse technology and expertise to assist technology transfer to developing countries. So let me assure you, despite what you read in the media from time to time, our Government, is absolutely committed to a greenhouse gas emissions policy that will reduce our emissions very significantly and well within the target that was set for us at Kyoto. We are on track to do that, and we are also committed to working in action partnerships with countries like the United States, the biggest emitter in the world, to try and with practical collaboration advance our technology and address climate change. We also have very close relationships, with Japan and New Zealand.

Let me assure you that with most of our research in the Antarctic, which is very much a canary with what is going on with climate change, our international collaboration is very significant. This research is led by Australia. Our IPCC [Intergovernmental Panel on Climate Change] contribution is most significant. We were the first country to have a dedicated Australian Greenhouse Office. One billion dollars was committed to that. We have already seen market forces deliver lower cost emissions in Australia through our greenhouse policy design. Trading provisions are designed to reduce the compliance costs associated with our two percent renewable energy target – a cornerstone of our strategy.

We have a four hundred million dollar Greenhouse Gas Abatement Program that uses competitive tendering to target the lowest gas abatement project. This greenhouse friendly program allows participants to achieve certification for products whose whole-of-life emissions have been fully offset through associated abatement actions.

We’ve got the Greenhouse Challenge Program, a voluntary greenhouse abatement program, which represents a partnership between industry and government. It’s got significant coverage in key sectors – including one hundred percent of aluminium and cement production, ninety eight percent of oil and gas, ninety one percent of the electricity sector and ninety one percent of the coal mining industry. We are targeting the sectors that we need have to evolve.

The energy efficiency and performance standards for residential and commercial buildings, and the ongoing development of minimum energy performance standards and labelling for domestic appliances, and commercial and industrial equipment are terribly important. We’ve committed up to $382 million between now and 2010 to boost the commercialisation of renewable energy technologies and help build the capacity of this sector.

Have we succeeded so far? Well we have a lot of excitement about our wind turbines at the moment, for example. Of course you could say we came from a standing start. We abolished our windmills, we came back to wind turbines, and we have in fact had a significant increase in alternative energy sources. But let me give you one statistic. The measures we have put in place will produce a reduction in greenhouse gas emissions of some sixty million tonnes of carbon dioxide every year by 2010. That is the equivalent to taking all Australia’s cars off the road.

Our most recent national inventory showed Australia’s greenhouse emissions grew by 2.1 percent in 2000, but the economy grew by 3.4 percent. So emissions per dollar of gross domestic product are twenty four percent lower in 2000 than they were a decade before. We are within striking distance of achieving the target of one hundred and eight percent of 1990 emissions that was negotiated at Kyoto. In 2000, Australia’s greenhouse emissions stood one hundred and five percent of 1990 levels. Given our current settings, Australia is projected to reach around one hundred and eleven percent of 1990 emission levels by the end of the decade. We are deadly serious about what we do.

Let me just quickly talk about what we are trying to achieve and what our policy will be for the next twenty years.

The Minister for Environment and Heritage, Dr David Kemp, met with the Government-Business Climate Change Dialogue roundtable for the second time on 14 April. The first meeting was on 21 August 2002. There are five Working Groups comprised of key business representatives, presenting their views to Government on the future of greenhouse policy in Australia.

The role of the Roundtable is to advise on long-term strategies and approaches for greenhouse. The groups examined the areas of energy and resources, energy-intensive manufacturing, transport and infrastructure, agriculture and land management, and cross-sectoral issues. Let me assure you we will be coming to conclusions in the coming months about the broad policy direction for climate change and let me emphasise that all policy options are still open for consideration. They’re all on the table. The Government is not pre-disposed towards any specific policy approach. We haven’t got any sacred cows. We are looking at anything that could achieve the outcomes that we want. The range of options includes voluntary programs, incentives and grant programs, and regulatory mechanism.

What we come up with will have to be as a result of collaborative projects with the sectors in our economy. We must engage the whole of our society. They must be using the best information available so that the world’s leading policy is achievable.

We have had a number of industry reports and we asked for this help so we could understand how we are going to maintain Australia’s international competitiveness, which is critical. We have to do that at the same time as we have this policy development. We have to develop technology solutions and foundations for a longer-term response. We have got to have cost effective abatement opportunities, and we have got to balance policy flexibility with the investment certainty. So we welcome your views throughout this workshop. The diversity of views is understandable. There will be different interests that form the views that will be part of the national interest.

The reports submitted by industry working groups have already communicated a wide range of views on climate change policy. There was a particular focus on emissions trading achieving a nationally consistent framework for the long-term outlook. But there is also recognition among industry participants that from an economy-wide perspective, market-oriented approaches could have the potential to deliver greenhouse objectives at a lower cost than more prescriptive regulatory approaches. We understand that.

There is no doubt, as our introductory speaker said, there would be a mix. There will be voluntary, and there’ll be market based. We have already found that that mixed approach is beginning to work.

Contrary to what was reported in the national press following the 14 April Roundtable, we understand that participation does not imply that all industry support an emissions trading scheme. The emissions intensive industries in particular, considered that conditions are not yet right for an economy wide market based approach. However, of the options available in that realm, emissions trading, through not attractive now in their view, had in-principle support as a future policy option and I want to stress that to you.

So the Government will be looking to make a decision in coming months about broad policy and will take on board your considered opinions, your informed views, the views of businesses, States and Territories and the wider community.

This Conference is of extreme importance to us. It’s well timed, because we are right now developing this policy. It is a complex area.

There are winners and losers potentially, and as a Government you can imagine that we are not going to be able to satisfy all parties in the short term. But if we don’t help in the longer term to reduce the global emissions, then life as we know it in Australia may not be as enjoyable, our quality of life may not be what we have been led to expect in this generation. We will have to learn about adaptability.

Clearly, we are not going to be able reverse a lot of the damage that has already been done. We are not going to be able to slow what has already been generated over perhaps several generations of human induced change but if we do not do it then quite clearly we are leaving future generations with a legacy that they don’t deserve.

I thank you very much.

Commonwealth of Australia