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Thursday, 30 October 2003
Page: 17360

Senator EGGLESTON (4:17 PM) —The government agrees with Senator Brown and Senator Lundy that climate change is an issue of significant international concern that should be addressed in the economic, environmental and social interests of all humankind. However, unlike Senator Brown, the government does not agree that the ratification of the Kyoto protocol is in Australia's national interest or is the most effective means of reducing Australia's greenhouse gas emissions.

There is no doubt, however, that human activity, as Senator Brown said in his speech, has led to climate change. According to the Intergovernmental Panel on Climate Change:

Since 1750, the beginning of the industrial era, atmospheric concentrations of carbon dioxide and methane have increased by around 31% and 150% respectively. During the 20th century, global mean surface temperatures increased by around 0.6 degrees C, while the global mean sea level rose at an average rate of 1-2 mm per year. There have been more hot days and fewer cold days during this time, heavy rainfall has become more common, and the frequency and severity of droughts has increased. In places, snow cover and ice extent have decreased, growing seasons have lengthened, and plants and animals have changed their patterns of breeding, migration and habitat. These trends ... are likely to continue during the 21st century.

There is no doubt that there has been change in our climate but, recognising these effects, the Howard government is committed to reducing greenhouse gas emissions and accordingly has instituted a wide range of effective policy measures to achieve this goal. The Howard government is firmly of the belief, however, that it is not in Australia's interests to ratify the Kyoto protocol at this stage. The Kyoto treaty is fatally flawed, in our view, and it requires extensive revision before Australia would be prepared to ratify it.

Senator Ellison —Good point.

Senator EGGLESTON —As Senator Ellison says: a very good, practical, realistic point. Perhaps I am adlibbing a little and enhancing his comment but there we are—that is what he meant to say! For a start, the Kyoto protocol is not a genuine global agreement. A mammoth 75 per cent of global emissions are not covered by the Kyoto protocol, severely limiting its efficacy. It is estimated that Kyoto will probably reduce global greenhouse gas emissions by a mere one per cent by the end of the first commitment period in 2012. This compares to a need, based on the best science currently available, to reduce global emissions by some 60 per cent based on 1990 levels. Yet the Kyoto protocol is aiming to cut emissions by only five per cent. So, as I have said, senators will understand that the Kyoto protocol is fatally flawed and will go nowhere near to reducing greenhouse emissions by the amount needed.

Under Kyoto, developing countries, whose emissions will exceed those of the developed world in this decade, do not have to meet the same stringent obligations required of developed nations. Unlike developed nations, developing nations do not have to meet the emission reduction targets but can choose to participate in emission abatement activities through clean development mechanisms. This is a serious weakness in the existing Kyoto arrangements. It is also a serious weakness that there is currently no pathway for the involvement of developing countries in serious greenhouse gas reduction. I ask senators to remember that these developing countries have greenhouse gas emission levels which will exceed those of the developed nations by the end of this decade.

If the Kyoto protocol is to have any chance of making significant reductions in emissions, a means must be found to include developing nations in the protocol. It is not only inequitable but surely pointless that developing nations can go merrily on their way increasing their emissions while the developed nations are being asked to reduce theirs, because the net effect on the world will be an increase in greenhouse emissions. It is disappointing that many developing nations are very reluctant to even discuss the framework that must come into place after 2012. Climate change, as I am sure Senator Brown will heartily agree, is a global issue requiring a genuinely global response. Developing nations, particularly China, India and Indonesia, should be required to meet global emission targets. What is needed is a genuinely effective global response to climate change encompassing all major global emitters. Unfortunately, the Kyoto protocol falls dramatically short of achieving this objective.

The Howard government is, however, actively engaged in international forums with major strategic and trade partners to address climate change. The Montreal Protocol on Substances that Deplete the Ozone Layer is a good example of the merits of a truly global approach. Unlike the Kyoto protocol, the Montreal protocol includes obligations for developed and developing countries alike. Immediately upon ratification, the Montreal protocol had 82 per cent of global emissions of ozone-depleting substances properly covered within the global framework. It has full compliance from the world community. Without it, ozone depletion would have reached at least 50 per cent in the northern hemisphere's mid-latitudes and 70 per cent in the southern mid-latitudes by the year 2050, about 10 times worse than previous levels, putting Australians at far greater risk of skin cancers and eye cataracts.

Senators should understand clearly that the ratification of the Kyoto protocol could affect Australian industry and our economy—in contradistinction to the remarks made by Senator Lundy. There is a real danger that, if Australia were to ratify the Kyoto protocol, industries would move offshore to developing nations, resulting in job losses and seriously damaging Australia's economic growth and prosperity. As Mr Rob Millhouse, a spokesman for Woodside Petroleum, has said, if we were to ratify Kyoto, a lot of Australian companies are going to experience a severe disadvantage against many of our competitors, who will not be bound by the same rules as we are.

If these arrangements continued over the longer term, Australian industries could be driven overseas by competitive pressures to countries that might not have as stringent environmental standards as Australia. Rather than a reduction in greenhouse gas emissions, the net result would actually be an increase in global greenhouse emissions. This is exactly the opposite of what the treaty is intended to achieve.

I can see that Senator Brown is so stunned by the power of my arguments that he has decided to leave. He has returned—I am very pleased, because I would not like him to miss any of these words.

Senator Forshaw —You kicked a goal then, didn't you?

Senator EGGLESTON —I thought so. I will continue. This government has no intention of going down in history as being the government responsible for the wholesale transfer of industries—and the jobs associated with them—offshore. As the federal Minister for the Environment and Heritage, Dr David Kemp, has said:

Australia does not want to give future investors in Australia who make decisions under long time-frames the message that we're prepared to impose legal obligations on them which they wouldn't face if they invested in many of our competitor countries. We don't want to drive jobs overseas or industries overseas.

The Australian Bureau of Agricultural and Resource Economics—ABARE—has estimated that ratification of the Kyoto protocol could increase electricity costs by one-third in Australia, with consequent severe implications for energy-intensive industries, such as our bauxite, alumina and aluminium producers—with annual export earnings of around $9.5 billion a year—putting pressure on them to move offshore. Australia is one of the world's largest energy exporters. The ratification of the treaty would add to the costs of these industries, making it more difficult for them to compete in what is already a very competitive international environment.

As for liquefied natural gas, LNG, the great majority of LNG exporters are in developing nations. This brings me to another flaw in the Kyoto protocol. There is no mechanism to recognise that, although certain actions might result in a domestic increase in greenhouse gas emissions, the net result will actually be a decrease in global emissions. Australia, for example, exports LNG to Japan, resulting in significantly lower levels of greenhouse gas emissions in Japan than if Japan were to use coal to generate electricity. This is because the life cycle emissions of natural gas are about 50 to 60 per cent those of conventional fossil fuels. The recent $25 billion LNG contract with China illustrates this point well. The contract will add around one million tonnes of carbon dioxide annually to Australia's emissions but, by replacing coal-fired power stations in China, it will reduce China's emissions by around seven million tonnes annually. On a global basis greenhouse gas emissions will be reduced by around six million tonnes—a substantial net loss in global emissions.

The Australian Chamber of Commerce and Industry has indicated that it does not support the ratification of the Kyoto protocol until such time as it can be demonstrated to be in Australia's national interest. Professor Warwick McKibbin produced an economic model of the implications of ratifying the treaty. He has said:

My report on the impacts of Kyoto on the Australian Economy confirms the government's decision not to ratify the Kyoto Protocol. The report shows that in the first few years from 2008, the impacts on Australia of the Kyoto Protocol is dominated by the reduction in our fossil fuel exports resulting from other countries cutting emissions.

Further down he says:

By any calculation, the sum of the future costs to Australia of ratifying Kyoto far outweigh the sum of the future costs of not ratifying. More importantly there is a great deal of uncertainty about the extent of these costs. Even our most optimistic assumptions support the government's decision about the long term costs of ratification. A key finding is that Australia needs to convince the rest of the world to try an alternative approach to Kyoto because Kyoto is clearly not in Australia's economic interests.

Australia is by no means the only developed nation to express concern about the detrimental economic effect of the ratification of this treaty. The United States of America has indicated that it will not ratify the Kyoto protocol.

As Senator Brown said, Russia, which was previously regarded as a certainty to ratify the treaty, has now cast very serious doubt on its intention, questioning the economic impact on the Russian economy of ratification. The Russian presidential economic adviser has complained that countries with much higher rates of greenhouse emission than Russia are not required by the Kyoto protocol to reduce their emissions. He has expressed concern that the treaty would constrain Russia's economic growth, saying that adhering to the provisions of the Kyoto treaty and achieving economic growth are incompatible objectives.

Senators will surely agree that ratifying a flawed international treaty is no substitute for making the hard decisions and taking concrete action as the Howard government has done. The Howard government is committed to Australia meeting its Kyoto protocol target of limiting growth in greenhouse gas emissions to eight per cent above the 1990 levels by the period 2008-12. This is a fair target given Australia's particular circumstances, including our high rates of population and economic growth in comparison to those of most developed nations as well as our strong, resource-based economy and our dependence on coal generated electricity and given that, for sound safety and economic reasons, Australia has decided not to go down the path of nuclear power.

Under the Howard government, Australia has a long-term climate change agenda, with four key elements. Firstly, at every opportunity we will seek a much more comprehensive global response to climate change than that provided by the Kyoto protocol. We are firmly of the view that future global action must acknowledge the different circumstances and economic and social priorities of different nations. In particular, it is important that ways be found for developing nations to reduce their greenhouse emissions without affecting their rates of economic growth. Australia is collaborating with the United States of America—which, incidentally, produces some 25 per cent of global greenhouse emissions—in addressing climate change, via the Australia-US climate action partnership. We have increased our level of climate change related financial assistance to developing nations and pledged no less than $68.2 million to the Global Environment Facility. Australia is also assisting Pacific nations to build their capacity to adjust to the consequences of climate change.

Secondly, Australia must achieve a lower greenhouse signature. Thirdly, domestic policy settings must be flexible, with sufficient certainty to allow decisions on investment and technological development with an emphasis on cost effectiveness. Lastly, the Howard government will implement policies to assist adaptation to the consequences of climate change that are already unavoidable.

There we are: the Howard government has a very comprehensive plan to deal with the increase in greenhouse gases. We have led the way by setting up a Greenhouse Office as part of our Department of the Environment and Heritage. We have contributed more than $1 billion to greenhouse gas abatement measures. As I said, we have a $400 million Greenhouse Gas Abatement Program which delivers large-scale and cost effective abatement measures across all sectors of our economy.

The government's programs and policies have been effective in reducing the rate of Australia's growth of greenhouse gas emissions. This has been despite a period of strong economic growth. Today Australian emissions are at 1990 levels and we are on track to meet the Kyoto protocol target regardless of the fact that we have not signed that treaty.

In conclusion, the answer of Senator Brown and the Labor Party to reduce Australia's greenhouse gas emissions is to ratify the flawed Kyoto treaty but the Kyoto treaty will come nowhere near reducing global emissions by the required amount. It is not a genuinely global agreement and has the potential to seriously damage Australia's continued economic prosperity. Put simply, it is not in Australia's national interests to ratify the Kyoto protocol. The agreement is flawed and will not meet its objectives.