In December 1997, the member states of the UN Framework Convention on Climate Change (FCCC) assembled at Kyoto for the Third Conference of Parties (COP III). At that meeting they agreed to the text of the Kyoto Protocol, an international treaty which, if ratified by a sufficient number of states, will bring into effect an international regime of carbon withdrawal which will require the developed countries (but not the developing countries) to reduce their emissions of CO2 and other greenhouse gases to prescribed limits.
Australia agreed at Kyoto to limit its emissions of greenhouse gases to 108% of its 1990 levels by the year 2010. Present indications are that without a carbon tax, or some other regulatory mechanism for limiting emissions, Australia will emit between 140 and 150 percent of 1990 levels by 2010. We have already exceeded 108%. These “commitments” are, of course, contingent upon ratification, and the Howard Government stated before the last election that Australia would not ratify unless and until the US ratified. The Government, however, did sign the Kyoto Protocol in May 1998.
Foreign affairs observers are increasingly doubtful of the prospects of the Kyoto Protocol obtaining the support necessary for ratification. For example, James DeLong wrote recently “The Kyoto Protocol is almost certainly a dead duck. . . . It establishes goals that are both unmeetable and undesirable, contains inadequate mechanisms for the emissions trading that might cut implementation costs and has no workable amendment mechanism to improve them, and contains numerous other flaws.”
The US Senate voted 95-0 in August 1997 against US participation in an international carbon withdrawal regime unless there were guarantees that US competitiveness would not be compromised, and unless all nations were included in the regime. Since then the Clinton Administration, despite repeated requests, has refused to submit the Kyoto Protocol to the Senate for its consideration.
Despite the doubts and uncertainty surrounding the future of the Kyoto Protocol, the Federal Government is moving rapidly towards unilateral compliance with the Kyoto objectives. Implementation of a policy which will require a 2% increase in the proportion of “renewable” energy in Australia’s electricity supply mix by 2010 is the subject of legislation to be brought forward in the forthcoming session. Electricity industry estimates of the additional cost of this mandate (over and above investment decisions made on commercial grounds) range from $4 to $5 billions.
Beyond that the Australian Greenhouse Office (AGO) is moving to complete, for Cabinet consideration as early as April next, a submission on the introduction of an emissions trading scheme in Australia. This regime will have, at its core, the requirement that emitters of greenhouse gases must have permits for those emissions, and that those permits will be tradeable; the theory being that those emitters who value them more, will buy permits from those who value them less, and that any economic damage will thus be minimised.
The AGO is now considering various options concerning the allocation of these permits. These options range from, on one extreme, grandfathering permit quotas in perpetuity to current emitters, to holding annual auctions which will be open to all bidders, at the other. The permits are, of course, designed to limit the quantity of Australian greenhouse gas emissions to the levels deemed necessary by the AGO to bring us into line with the Kyoto targets agreed to in December 1997. A recent AGO publication estimated that a reasonable estimate of the face value of such a permit would be $30 per tonne of carbon dioxide equivalent, although that figure was at the low end of the range of figures which a variety of consultants had produced for the AGO. A $30 per tonne impost on emitted CO2 translates to a tax of between $65 to $80 per tonne of NSW black coal, depending on carbon content; $25 per tonne on Latrobe Valley brown coal depending on moisture content; $93.50 per tonne on diesel fuel, and $82.50 per tonne on methane.
This desire to limit emission of carbon dioxide and other so-called greenhouse gases is predicated on the assumptions that,
It seems that the belief in government circles in Canberra is that introduction of an emissions permit trading regime will result in very minor economic dislocation, although the figure of $12 billions annually is cited by the AGO as the expected revenue to government from such a scheme.
We have become concerned that there is very little ongoing public debate about these proposals. We are of the view that the science behind global warming policy is far less certain than its protagonists claim, and we also believe that the economic damage which Australia would suffer, if a carbon tax of the magnitude canvassed in AGO documents were imposed, would be far, far greater than is currently appreciated in Canberra.
A workshop/seminar was held in Melbourne on 23 May and and 24 May 2000 at which the science, the politics and the economics of unilateral action by Australia to implement a carbon withdrawal regime, as envisaged by the Kyoto Protocol, was addressed.
We hope that arising out of these discussions a consensus will emerge which will provide the basis for the establishment of an organisation, provisionally called The Lavoisier Group , which will provide a focus for stimulating a much needed public debate on these important issues.
RAY EVANS
on behalf of
Harold Clough AO
Bob Durie
Bob Foster
Bruce Kean AM
Peter Murray
Brian Tucker
Ian Webber AO
open letter, 2 May 2000
workshop/seminar program
Two parliamentary inquiries into greenhouse
inquiries regarding the Lavoisier Group:
C/- P O Box 424
Collins Street West Victoria
8007
Tel: 03 9685 6479
Fax: 03 9685 6400
other inquiries melb@aie.org.au
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