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Carbon trading chief backs ETS timetable -

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Carbon trading chief backs ETS timetable

Eleanor Hall reported this story on Thursday, August 27, 2009 12:30:00

ELEANOR HALL: The head of the world's carbon trading association has backed the Federal
Government's push to have its emissions trading legislation through the Parliament before the
international climate change meeting in Copenhagen in December.

But Henry Derwent says the targets for reduction will be more important than the mechanism for
achieving them.

Mr Derwent is the CEO of the International Emissions Trading Association. He is in Australia this
week and he joined me earlier in The World Today studio.

Henry Derwent how critical is this next international meeting at Copenhagen?

HENRY DERWENT: It is very important indeed but I think you can get things wrong if you overestimate
the importance of it.

Let me explain. There are international ministerial negotiations on this subject every year and the
reason that this one is so important is because it is generally assumed that if you don't actually
get a clear set of emissions reduction targets ready to go from when the current Kyoto period
stops, that is to say from the 2013 onwards, you are going to have a gap when the world does not
have any agreed targets and that will be really bad news for confidence and for people knowing what
they are doing.

But these are always very difficult negotiations and getting through one with a full set of targets
given the state of negations at the moment is probably a pretty ambitious thing to be doing.

ELEANOR HALL: This will be the first meeting in many years when the US leadership is coming to the
table. Can the meeting be a success if the US and China do not come to some form of agreement?

HENRY DERWENT: I don't think that there is any chance of an agreement across the world unless there
is some understanding between those two. It is really important.

ELEANOR HALL: And how likely do you think that is?

HENRY DERWENT: Over time I think it is probable. Things could still go completely wrong but I think
that they both really are sophisticated about where the others are actually coming from even though
the rhetoric on both sides tends occasionally to be a bit extreme.

ELEANOR HALL: What is the risk if Copenhagen fails?

HENRY DERWENT: It is really important to peak the world's emissions as soon as possible but it is
not, like you say, if it is not actually done by the last day of December 2009 then we can all just
pack up for another planet.

ELEANOR HALL: The Australian Government is trying to get its emissions trading legislation passed
into law before the Copenhagen meeting. Does it matter to the rest of the world whether Australia
comes to Copenhagen with or without a trading scheme?

HENRY DERWENT: I think it does matter. I think that the most important thing is the level of
emissions reduction ambition that developed countries like Australia bring to the table. I think
the other parties to the negotiation will be less interested in the precise means that a developed
country has chosen to deliver that set of emissions reductions.

ELEANOR HALL: Well the targets that Australia is taking to this negotiation in Copenhagen are far
smaller than the targets already agreed to by EU countries. Is that disappointing to the other
members at the negotiating table?

HENRY DERWENT: There has been a lot of back and forth about the level of targets that people have
put on the table. I think the merit of what Australia has put forward is that it is a range, a very
wide range, but the top end of the range at 25 per cent is at least within the 25 to 40 per cent
range which most scientists believe is the appropriate level of reduction that you should be
expected to see from developed countries if we are to stop climate change increasing beyond a
number of potential tipping points.

ELEANOR HALL: Now you say that the mechanism doesn't necessary matter but of course carbon trading
is a mechanism being looked at by the majority of countries. But where is the evidence that
emissions trading actually reduces carbon pollution and doesn't just allow wealthy countries to buy
carbon credits in poor countries and keep on with business as usual?

HENRY DERWENT: I think that you have to remember that this is a global problem. That means the
atmosphere really doesn't care where the emissions have actually taken place or where they are
reduced provided that the total sum going into the atmosphere is less. And therefore the notion
that there is something wrong about paying for reductions which happen elsewhere just doesn't have
any scientific basis.

ELEANOR HALL: Would you accept though that one of the goals of an emissions trading scheme is in
fact to change investment decisions and reduce use and output of carbon dioxide?

HENRY DERWENT: Absolutely. There is an enormous amount of additional investment expenditure that is
going to be necessary on adopting low carbon solutions to the problems which lead to the need for
investment at the moment.

Unfortunately investing in most forms of renewables is more expensive. It is true to say that
ultimately the best test of whether a policy is working is whether you are moving away from high
carbon investment towards low carbon investment.

These are investments which are a) very expensive and b) sort of maybe 40-year life spans so don't
expect them all to be taken all at once as a result of just a few years of an emissions trading
scheme.

What you need to do is make it absolutely clear that there will be a price of carbon which will
increase and increase over a multi-decadal framework. Once you have got people to understand that
then you have the changes you need to see.

ELEANOR HALL: Henry Derwent, thanks very much for joining us.

HENRY DERWENT: Thank you.

ELEANOR HALL: That's Henry Derwent, the CEO of the International Emissions Trading Association.