Climate change lawyer believes Australia and US will miss out on multi-billion dollar greenhouse trading market by failing to ratify the Kyoto Protocol

TONY EASTLEY: Australian coalminers and exporters are keenly watching what will happen today when, after a decade of haggling and intense lobbying, the Kyoto Protocol to cut back on greenhouse emissions will finally become law.

Countries party to the agreement must now meet their individual targets or face international penalties and diplomatic humiliation.

The protocol also allows for carbon trading which many people believe will become a multibillion dollar industry.

Given Australia and the United states have refused to ratify the deal, legal experts argue that both countries will now be locked out of what could be a very lucrative market.

Environment Reporter Sarah Clarke reports.

SARAH CLARKE: From now on, the 144 countries who ratified the deal are committed to a legally binding agreement to cut back on emissions.

If they fail, they'll face the humiliation of appearing before a United Nations committee to explain. They'll also face possible suspension from a new carbon trading market that many expect will be financially lucrative.

Martijn Wilder is a legal expert in climate change.

MARTIJN WILDER: There are predictions that the global market will be in the hundreds of billions of dollars. No one knows exactly what the size of the market will be, and it depends on the extent to which companies comply, but the market will certainly be, over time, a billion dollar trading market.

SARAH CLARKE: But Martijn Wilder says Australia and the United States will be locked out.

Both countries have refused to ratify the deal, which he says will put them both out in the cold.

MARTIJN WILDER: We simply, as a non-signatory, are not allowed to trade in that market.

SARAH CLARKE: Like the United States, Australia argues it's not in their best interests to ratify, and the Howard Government is meeting the targets anyway.

Environment Minister, Ian Campbell, denies Australia will lose out financially to a multibillion dollar greenhouse trading market.

IAN CAMPBELL: Well the market is just beginning in Europe, it really is fledgling, it involves very few trade, so I think anyone who says that we're missing out on this multibillion dollar market has no idea what they're talking about.

And quite frankly, people who think that the protocol is the solution ignore the fact that during the period that the protocol is in force, that's between 1990 and the year 2012, greenhouse gas emissions in the world will in fact go up by somewhere between 30 to 40 per cent.

So it's ineffective and saying we should sign up to it, I think people who say that are really working against the best interests of the environment.

SARAH CLARKE: Labor describes the position as ludicrous.

Opposition spokesman Anthony Albanese.

ANTHONY ALBANESE: It simply doesn't make sense for us to take what is essentially the pain of reaching the target but not want to the gain of having access to carbon markets and renewable energy technology markets.

SARAH CLARKE: But critics argue that even the Kyoto Protocol won't be enough to make a significant dent in the problem of climate change.

If all countries meet their targets emissions will only be cut by two or three per cent.

Scientists argue a 60 per cent reduction is crucial if governments are to avoid wreaking catastrophic damage to the world's climate systems.

TONY EASTLEY: Environment Reporter Sarah Clarke reporting.