Counting costs of a Kyoto snub

By BRIAN FALLOW

Across the Tasman attention is starting to shift from the costs of ratifying the Kyoto Protocol to the costs of not ratifying it, says Dr Clive Hamilton, an expert on climate change policy.

Hamilton, executive director of the Australia Institute, a Canberra thinktank, was in New Zealand recently for the annual conference of environmental group ECO.

He said global warming was a significant threat to Australian agriculture and tourism.

The best estimate of Government climate scientists at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) was that water flows in the Murray-Darling Basin would decline by up to 45 per cent by 2070. Seventy per cent of Australia's water flows through the Murray-Darling system, and most agriculture depends on it.

"Similarly, there are iconic areas which it is believed will be severely threatened by climate change. The Barrier Reef has already had a couple of very severe bleaching episodes, brought about by warming seas. The tourist industry has become concerned.

"And Kakadu National Park is expected to suffer major saltwater inundations during high tides."

Tim Fischer, former Deputy Prime Minister and leader of the rural-based National Party, warned a year ago that climate change would have a severe effect on primary producers and something must be done, Hamilton said.

"So they are starting to wake up in the bush, but they have some way to go.

"There's this bizarre cognitive dissonance in the farming community. The National Farmers Federation backs the Government for refusing to ratify Kyoto, saying any increase in the price of fuel would be disastrous for farmers.

"But as we speak, there is an El Nino event forming over the Pacific. If it is like 1997-98, it will be devastating.

"Climate scientists are confident climate change will increase the intensity of El Ninos - in other words longer and worse droughts."

Even more influential than the farmers in persuading the Howard Government not to ratify the Kyoto Protocol was the aluminium industry, Hamilton believes.

Australia's six smelters account for about 16 per cent of the country's electricity consumption, a similar proportion to New Zealand, but unlike Tiwai Pt they get their power from coal-fired power stations.

"They are constantly threatening to go offshore and the Government appears to believe them."

But although smelters were long-lived assets and the Labor Party had reaffirmed its policy to ratify Kyoto, the industry had just committed itself to a new $1.4 billion smelter in Queensland.

Hamilton said the Labor state Government in New South Wales had just introduced a legally binding cap on greenhouse gas emissions from the state's electricity sector.

Total emissions from electricity sold in New South Wales must be cut by 5 per cent a head from 2000 levels by 2007.

At the national level, the emphasis is on encouraging voluntary investment in atmosphere-friendly technologies through subsidies.

But there is also a compulsory measure - the electricity industry must get 2 per cent of its generation from renewable sources.

That has boosted the renewable energy industry, but Hamilton believes its growth is stimulated more by a sense of where the world must go.

"I think the business community has a much better understanding of this than the Government does. They recognise that we are not going to have 25,000 climate scientists say, 'Oh dear we made a mistake. Sorry'. It can only get worse.

"So they see the international trends and the opportunities for participating in a potentially huge world market for greenhouse technology."

Some alternative energy firms saw Australia's rejection of the Kyoto Protocol as making it harder for them to be taken seriously internationally and had suggested it might be easier to maintain their reputations if they relocated to a Kyoto country.

"But the biggest implication of failing to ratify may be for Japan-Australia trade. Japanese electricity retailers bought rights to the carbon [sink credits] stored in some forests in Australia. They are useless now.

"I'm told that the Japanese, in the negotiations now going on with Australian coal suppliers, are saying: 'We have these obligations to reduce our net emissions. We started to invest forest plantations in Australia with a view to offsetting emissions from Australian coal.

"'We are not happy about doing our dough and we want you to compensate us by reducing the price of coal or by acquiring valid emission credits from other sources'."

Australian companies, including Natural Gas Corp's parent AGL, had also been caught out, said Hamilton.

They had invested in emission-reduction projects in developing countries, expecting to claim credits under Kyoto's "clean development mechanism".

But the Europeans had made it clear that if Australia did not ratify, no Australian company would be able to participate in those markets.

Hamilton said Prime Minister John Howard had embarrassed his countrymen by calling Australia, during the Timor crisis, America's "deputy sheriff".

If the United States changed its mind and rejoined the Kyoto process, Australia would have to follow suit.

Hamilton hopes that will be before the use-by date of the very generous terms Australia negotiated at Kyoto in 1997.