Effective leadership that tackles climate change has been sorely lacking, says one of the world’s leading legal minds on the issue, but a last-minute pledge by delegates at the recent climate talks in Durban to reach a binding agreement by 2015 will bolster the momentum for change gathering in Europe, Australia and New Zealand.
Martijn Wilder is head of global environmental markets and climate change at international law firm Baker & McKenzie in Sydney. He is considered by his peers a pioneer in and authority on the development of legal mechanisms and regulations for international carbon markets.
“One of the real challenges is that there have been few leaders who have been in positions to take real action on climate change,” Wilder says. “There’s no doubt we do have countries like those in Europe, and you’ve got Bill Clinton and Al Gore but they’ve been leaders after the event.”
He says the real leaders in the field the scientists have been “basically discredited for no justification” in Australia in particular, but also in the US, a fate not endured by their counterparts in Europe. The work of many of these scientists has provided the fuel for ground-breaking publications such as those by Sir Nicholas Stern, the British Government’s adviser on climate change in 2006, and Australian economics professor Ross Garnaut, in 2008. Governments across the globe have spent the years since digesting and debating the issues.
But the pledge by delegates, from both developed and developing nations, at the UN Climate Change conference in South Africa late last year to sign up to a new agreement to start cutting emissions by 2020 is a significant step, says Wilder, and was much more than the world expected to hear.
“The fact is it sets in place two things,” he says. “It continued the Kyoto obligations as far as the Europeans are concerned, and it saw every country in the world working together to reach an agreement to reduce emissions and that hasn’t happened before. Yes, it will take time, but it really creates the ongoing drive and impetus for that to happen.”
In the meantime, Wilder says the Durban pledge provides critical stimulus at the domestic level for many more countries to develop frameworks such as emission trading schemes (ETS), and that’s where true gains can be made.
While there is a cost associated with reducing emissions, the costs of continuing to pollute are far greater. Martijn Wilder
“It’s much easier for the Australians to say, ‘Look, we’ve got an emissions trading scheme and the whole world is working towards having global agreement’ than to say ‘We’ve got an ETS, but no one is doing anything’.”
Australia and New Zealand have joined the European Union in establishing emissions trading schemes and Wilder says huge value can be attached to that leadership.
“Australia’s leadership is demonstrated in a couple of ways despite all the rhetoric and the political nature of this issue in Australia,” he says. “The simple fact is that over many years we’ve had many policy measures to try to manage our national greenhouse emissions, we’ve had strong policy on renewable energy and, while it’s taken a very long time, it has culminated in the most comprehensive emissions trading scheme that exists in the world. We’re also going to meet our Kyoto target.”
In November last year, after years of passionate debate, the Australian Parliament passed the Clean Energy Act 2011. The Act provides for a tax on carbon, starting in July, with a three-year fixed price of A$23 a tonne. That figure was a political and business compromise, Wilder says, but it’s at a level that is hoped to encourage behavioural change. After 2015 the price will be fixed by markets using an ETS.
The overarching aim is to cut the country’s 2000 greenhouse gas emissions level by 5 per cent by 2020. It also includes a A$10 billion investment in renewable and clean energy. This is a good start, says Wilder, and has a definite chance of success.
“It’s a scheme well designed for the Australian economy,” he says. “It will drive change and create awareness of the importance of action. While there is a cost associated with reducing emissions, the costs of continuing to pollute are far greater. The sooner you start taking action, the less the cost will be.”
New Zealand was an early starter and has had an ETS since 2008.
Wilder dismisses claims there is a trend away from carbon markets, saying countries are choosing emissions trading schemes over carbon taxes.
“You’ve got the Europeans who have just re-endorsed Kyoto for the second period, you’ve got the Australians and New Zealanders, China is developing an emissions trading scheme that will be online in 2015 and they’re doing six regional schemes to be in place by 2014,” he says.
“You’ve got Korea, Japan and California, which have just passed a law for their state-based emissions trading schemes. A load of regions in the US have an emissions trading scheme.” As for business engagement, Wilder says he expects a surge in activity in Australia this year now that the Clean Energy Act has passed. He also notes there has been “huge investment” for projects across Asia under the Kyoto Protocol.
“China, Vietnam and Thailand have all been recipients of significant investment to build projects that reduce emissions,” Wilder says. “Asia has been the primary region for investors under the Kyoto Protocol.”
The EU’s ETS has been in place since 2005 and is the world’s first and most extensive system designed to cut greenhouse gases.
It covers 11,000 power stations and industrial plants across 30 countries and works as a cap-and-trade scheme. The aim is that by 2020 emissions will be 21 per cent lower than in 2005 a much more ambitious target than Australia’s.
This year airlines were brought into the scheme and next year it will be extended to cover petrochemicals, ammonia and aluminium producers.
The price of carbon has dropped as the EU economy staggers through the debt crisis. Production among greenhouse gas emitters has slowed, cutting the level of emissions and thereby pushing the carbon price down.
Martijn Wilder is a keynote speaker at CPA Australia’s Business Outlook.