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Global greenhouse challenge: the way ahead for Australia.

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Joint Media Release Minister for the Environment and Heritage Dr David Kemp & Minister for Foreign Affairs Alexander Downer

15 August 2002 K128

Global Greenhouse Challenge: The Way Ahead for Australia With greenhouse emissions projections now showing that Australia is within striking distance of the target agreed to at Kyoto, the Government today is announcing a climate change action agenda to ensure Australia continues to cut greenhouse emissions even further while building a strong, competitive economy.

The Government will continue to develop and invest 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.

We have always recognised that Australia’s 108% target was challenging but fair, reflecting the world’s recognition of Australia’s particular national circumstances such as high rates of population and economic growth that are among the fastest in the developed world, a strong natural resource base to the economy, and no reliance on nuclear power. Important regions and economic activities in Australia are vulnerable to the impacts of global warming.

The Government is today announcing a climate change agenda that will also focus upon the longer term, covering not just the next few years but a twenty to thirty year time horizon.

Four elements underpin the development of Australia’s forward climate change strategy: • Australia will strive for a more comprehensive global response to climate change; • We will work towards one, which involves all major emitters, while contributing responsibly to the global effort.

• In international negotiations we will continue to work towards a pathway for the involvement of developing countries. For an effective global response the United States will be a key player. • Australia will position itself to maintain a strong and internationally competitive

economy with a lower greenhouse signature; • The Government will facilitate Australia’s energy-intensive and trade-exposed sectors to respond to the challenges posed by greenhouse. For example, we will continue to encourage the development of promising low emissions technologies

such as coal gasification, geological sequestration, coal gas to liquids and the hydrogen economy, based on the work of centres such as the CRC for Coal in Sustainable Development, the CRC for Clean Power from Lignite and GeoScience Australia. Over $13m has already been committed to these projects, and there will be a strong focus in our work under the Climate Action Partnership agreement with the US on technology development.

• Domestic policy settings will balance flexibility with sufficient certainty to allow key decisions on investment and technology development, and also emphasise cost effectiveness; • Government policies will continue to ensure that clear signals are provided of the

need for the economy to move to a lower greenhouse signature while businesses retain flexibility to plan efficient pathways to achieve that. • The Government will work closely with key business leaders, States and Territories, and with groups such as the National Environment Consultative

Forum, to ensure the best way forward for Australia, at the lowest cost and delivering maximum benefits. • Australia will implement policies and programs that assist adaptation to the consequences of the climate change that is already unavoidable. • As a first step, research will be undertaken to improve our understanding of likely

impacts on Australia, and on mitigation and adaptation options. The Government is working with States and Territories on studies into key sectors such as agriculture and tourism, and natural systems such as water resources in the Murray Darling Basin. Studies have already been completed on wheat cropping and native pasture. • Australia is also working with other countries in the Pacific to assist them to make

effective responses to climate change •

During the coming week key business leaders will meet with Government at a roundtable discussion and a special greenhouse briefing is being conducted for the National Environment Consultative Forum. Discussions are ongoing with the States in Ministerial Councils and at officials level. COAG is scheduled to discuss energy reform and greenhouse measures at its future meetings.

Need for a global response

Climate change is important and must be tackled in a way that is fair and economically efficient encompassing all major global greenhouse gas emitters.

It is clear that the Kyoto Protocol does not at this time provide an effective framework. It will make only a modest contribution - around 1% - to reducing the growth of global emissions. Even as a first step, it does not provide a clear path towards developing countries’ commitments and the US has indicated that it will not ratify. Together, these countries already produce most of the world’s greenhouse gas emissions.

Therefore, the Government has taken the decision not to ratify the Kyoto Protocol because under present arrangements, excluding both developing countries and the United States, it is not in the national interest to do so.

If Australia were to abandon our long expressed and clearly articulated requirement for a more comprehensive global response it would send a signal to investors that Australia was prepared to expose itself to binding legal commitments that could in the future impose costs not faced by neighbouring regional economies. For Australia this is not a trivial matter.

Investment in greenhouse intensive industries such as natural gas, alumina and aluminium production, coal, paper and metals processing is of great significance to our economy. Furthermore, our processing industries are relatively energy efficient. Any greenhouse penalty not shared by our competitors could see Australia lose plants offshore, with no benefit to the

global greenhouse effort. For example, the new steel making technologies being adopted in Western Australia are among the most greenhouse-friendly in the world. Any shift of this production offshore would cause significant harm to the Australian economy but undoubtedly would also increase global greenhouse emissions.

At the same time, many of the greenhouse emissions arising in Australia help others to lower their emissions. For example, Australia's recent success in concluding an LNG deal with China will mean that although Australia will emit around 1.5 million extra tonnes of carbon dioxide annually to produce the LNG, China will emit 7 million tonnes less than if it had used coal. The global atmosphere benefits, even though Australia's emissions increase.

Australian industries are world leaders in greenhouse responses. They should not be penalised when there will not necessarily be a benefit in global emission reductions. Indeed, many of the countries that would benefit from investment leaving Australia have lower emission standards than Australia’s.

It remains in Australia’s interest to have an effective international response to climate change and we will continue to work in international forums and cooperate with major strategic and trade partners to address climate change.

The Climate Action Partnership between the US and Australia is an example of practical collaboration that will advance our efforts to address climate change.

The US and Australia have agreed on 19 projects under the Partnership, which include exchanging experience on the research and development of hydrogen fuel cell and clean coal technologies and facilitating the installation of sustainable remote power in developing countries. Details of these projects are attached.

Reports released

We have today made available the 2000 National Greenhouse Gas Inventory, the Third National Communication report under the United Nations Framework Convention on Climate Change (UNFCCC) and land use change estimates from the National Carbon Accounting System.

The figures show Australia’s economy is becoming less greenhouse intensive, with projections showing a 43% improvement from 1990 to 2012 in emissions per dollar of GDP. But we recognize there is still work ahead of us.

With almost $1 billion being invested on domestic policies and measures, Australia has developed world class infrastructure for monitoring, analysing and responding to climate change with real reductions. For example, Australian scientists have developed the world’s leading National Carbon Accounting System (NCAS) - and delivered it two years ahead of schedule and with capabilities extending far beyond its initial scope.

The projections released today confirm that this Government has built a strong platform on which to develop Australia’s forward strategy.

This is in stark contrast to Labor’s position - a position framed without bothering to wait for the full picture, presented today.

In his climate statement, released yesterday, Simon Crean promised no more than the Government is already demonstrating that it can achieve - the 108 percent target agreed at Kyoto.

Mr Crean’s only other proposal is to take the politically easy but policy lazy route of ratifying the Kyoto protocol without meeting the pre-conditions that Australia has always insisted on including a clear path for the fast growing developing economies to take on commitments. Mr Crean’s course will risk Australian jobs, investment, national prosperity and potentially produce worse global greenhouse outcomes.

This issue is too important to go for quick fixes. A practical and effective response requires clear leadership and sustained effort, working closely with industry and the community. We can protect jobs and improve the environment. Only the Howard Government is delivering this.

Media contacts: Catherine Job Dr Kemp’s office (02) 6277 7640 or 0408 648 400 Chris Kenny Mr Downer’s office 0419 206 890

Key Elements of Australia's Forward Strategy Australia is particularly exposed to climate change. We have competitive advantages in industries that are currently high emitters of greenhouse gases, as well as industries that are linked to vulnerable ecosystems. It is in Australia’s interests to see an effective international response to address climate change. To contribute to global greenhouse efforts, Australia will continue to develop and implement domestic programs to meet the target agreed to at Kyoto and to achieve its longer term climate change goals.

The following elements will inform Australia’s climate change policy: Australia will strive for an effective global response to climate change • Addressing greenhouse will require a long term global effort • An effective global response must involve all major emitters

• without a global response, efforts to address climate change will be ineffective, and there would be risks for Australia’s emission-intensive, trade-exposed industries if they face costs that their competitors do not • Australia will contribute responsibly to the global effort

Australia will position itself to maintain a strong and internationally competitive economy with a lower emissions signature • The Government will facilitate Australia’s resources and energy intensive sectors to respond to challenges posed by greenhouse

• Recognition will be given to the nature of different business sectors, including those that are trade exposed • Cost-effective low-emission technologies will be encouraged to enhance our competitive advantages • In the absence of an effective global response, Australia will work to limit emissions in a

manner consistent with a strong and internationally competitive economy

Domestic policy settings will balance flexibility and certainty, and emphasise cost-effectiveness • Policy settings will balance:

• flexibility on policies and measures to adapt to an evolving future, and • reducing uncertainty to assist decision making on investment, asset replacement and technology development • Policy settings should avoid greenhouse gas abatement policies that:

• will distort investment decisions between particular projects and locations • unduly limit access to the most cost effective greenhouse gas mitigation options • disadvantage early movers and discriminate against new entrants • Shorter term policy settings will help meet longer term policy objectives • Greenhouse policy will be considered in relation to other national objectives • Policy settings will take into account international developments • Policy choices will be transparent

Australia will anticipate adaptation needs • Australia will prepare for unavoidable climate change impacts, including on agriculture, tourism, insurance, infrastructure, and on natural ecosystems • Research will be undertaken to improve understanding of likely impacts, and on

mitigation and adaptation options