Mar 9, 2005

Climate Change – Appropriation Bill (No. 3) 2004-2005 Cognate bills:Appropriatio

Climate Change: APPROPRIATION BILL (NO. 3) 2004-2005 Cognate bills:APPROPRIATION BILL (NO. 4) 2004-2005 APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 2) 2004-2005: Second Reading

9 March 2005

Mr ALBANESE (Grayndler) (10.12 a.m.) —In my contribution to the debate on the Appropriation Bill (No. 3) 2004-2005, the Appropriation Bill (No. 4) 2004-2005 and the Appropriation (Parliamentary Departments) Bill (No. 2) 2004-2005, I want to concentrate my remarks on the Howard government’s reckless environmental policies and the impact that they are having on our way of life and the kinds of jobs and the economy that we will be leaving to our children and grandchildren. It is no exaggeration to say the government’s policy on climate change places at risk many things Australians take for granted: our fantastic beaches, waterways and forests; our abundant food stocks and natural resources; and, of course, our fantastic climate, which is the envy of the world.

Last Sunday, some 700,000 Australians did their bit on Clean Up Australia Day. I assisted at the Cooks River at Hurlstone Park. People from the age of 90—a gentleman who helped pick up papers along the walkway—down to little kids were there prepared to do their bit to clean up what is essentially toxic mud in the Cooks River. Undoubtedly this reflects the huge amount of goodwill in the community to help the environment. Community events such as Clean Up Australia prove this point many, many times over. Like Ian Kiernan, I believe that climate change is the greatest environmental threat to the world. Left unchecked, climate change and general environmental degradation have the potential to cripple economies and radically alter human existence on the planet.

At the beginning of this century, we are at a crossroad. The science is clear and compelling: ecological decline is accelerating and many of the world’s ecosystems are reaching dangerous thresholds. Overexploitation of our natural resources, habitat loss from urbanisation and the clearing of forests for farmland, competition from introduced animals and plants, and climate change induced by a 30 per cent increase in atmospheric concentrations of greenhouse gases are threatening the world’s diversity. The facts are these: since the industrial revolution average global surface temperatures have risen by one degree Celsius, the most dramatic rise for over 1,000 years; the five hottest years on record have occurred in the last seven years, the 10 hottest in the last 14; snow cover has decreased 10 per cent since the 1960s; and glaciers that have not retreated since the last ice age 12,000 years ago are now doing so.

The Howard government’s most significant failure is its decision to pursue an isolationist position on climate change. This issue will be front and centre of Labor’s environmental strategy. It is an issue from which others flow. The coming into effect of the Kyoto protocol on 16 February was indeed a historic event. On that day, 140 nations plus the EU joined together in a historic agreement to take international action to avoid dangerous climate change. The significance of this should not be underestimated. The Kyoto protocol is certainly not perfect, and Labor does not argue that this is the case. However, we do argue that it is a critical first step in addressing the climate change issue. Unlike some senior ministers in the Howard government, I believe climate change is real. Labor believes implementation of the Kyoto protocol is only the start of a truly long-term strategy, one that will be handed to our children and grandchildren. The strategy must be to work with other nations to set progressively more stringent time-bound emission targets over the next 50 years. We must assist developing countries to meet those emission reduction targets and we must build regulatory and market based systems that will see Australia meet its commitments, generate economic opportunity and provide model systems for other countries.

The government will have none of those. Instead the government plays the role of the environmental sceptic and uses its transparent, tired old strategies of funding demonstration projects and R&D activities to bury the issue, such as with its proposals in last year’s flawed energy white paper. Without a doubt, reversing environmental degradation and putting our economy onto a low-carbon and sustainable footing will be amongst the most difficult issues confronting Australian governments over coming decades. Labor does not, however, accept the argument that the pursuit of environmental sustainability threatens future economic and employment growth—quite the opposite. In Spain, Denmark and Germany alone the expansion of the renewable energy sector has created about a quarter of a million new jobs in the last few years. The Howard government’s refusal to show leadership at home or be part of international efforts such as the Kyoto protocol is not only reckless environmental policy; it is also bad economic policy. It is clear that stemming environmental degradation requires, above all, leadership. What remains in doubt, however, is whether today’s political and business leaders are going to rise to the challenge or whether we simply leave the problem to future generations.

It is quite clear that there are people in industry with the foresight to acknowledge that a transition to a sustainable global economy is needed. According to a Reuters news report, prominent senior Republican and former US Secretary of State James Baker, who happens to be a close ally of the Bush family, broke ranks with the Bush administration and has called for his country to get serious about global warming. In a speech to an audience including a number of oil company executives, Mr Baker said orderly change to alternative energy was needed. He told the Houston Forum Club:

It may surprise you a little bit, but maybe it’s because I’m a hunter and a fisherman, but I think we need to a pay a little more attention to what we need to do to protect our environment … When you have energy companies like Shell and British Petroleum, both of which are perhaps represented in this room, saying there is a problem with excess carbon dioxide emission, I think we ought to listen.

I remind members that Mr Baker ran presidential campaigns for George Bush Sr and served in his cabinet and led George Bush Jr’s legal fight to win the Florida vote in the 2000 election. It would seem to me that at least part of the reason prominent conservatives such as James Baker are making such strong noises is the strong economic arguments for embracing emissions trading and the forms of energy production which do not damage the environment.

There is no question the establishment of a domestic carbon trading scheme would not only reduce an economic dislocation caused by moving to a low carbon economy but would be a driver of new business opportunities, greater investment and job creation within the Australian economy. By putting a value on carbon, it will create a strong incentive to industry and business to use less and cleaner energy and will send a signal on the value of carbon in the economy.

Carbon trading gives companies the flexibility to meet emission targets according to their own strategy, thus offering the most cost-effective way for energy intensive industries to meet their obligation to reduce emissions. Mr Ric Brazzale, Executive Director of the Australian Business Council for Sustainable Energy, has stated:

Emissions trading will actually drive jobs and investment growth in sustainable energy technologies and practices.

Mr Greg Bourne, former Regional President of BP Australasia, has said:

BP has considerable experience in emissions trading, supports the adoption of similar systems in the markets that it operates in, and has already shared its experience widely.

Rio Tinto Australia believes:

… that market instruments, including emissions trading, offer the best chance for timely, effective and sustainable emissions reductions.

BHP Billiton supports:

… the development of market-based mechanisms such as emissions trading, provided that the measures are broad-based, efficient and are phased in such that industry has time to adjust.

AMP Capital has stated:

While it is clear that carbon trading is not the cure-all to environmental problems in Australia, it is a step in the right direction that we believe will help both the environment and minimise costs to the business world.

The Western Australian Farmers Federation has called for access to carbon trading, outlining the benefits, including revegetation and allowing agricultural industries to better manage the impact of climate change in the future.

Even Treasurer Peter Costello and the former environment minister, David Kemp, supported a national trading scheme. As reported by the Australian on 21 August 2004:

Federal cabinet rejected such a scheme—

an emissions trading scheme in 2003—

… even though Environment Minister David Kemp and Treasurer Peter Costello promoted it, after industry lobbied John Howard.

I asked the Treasurer to confirm this during question time on Kyoto Day, which he did by not refuting it.

The European Union’s carbon trading scheme commenced on 1 January 2005, establishing the world’s largest market in greenhouse gas emissions. Initially, some 12,000 installations across 25 European countries will participate in the scheme. In the United Kingdom, for example, the participating installations collectively emit about half of the economy’s carbon dioxide emissions.

BP introduced an internal carbon trading scheme. It cost $US20 million to implement, yet it saved $US650 million over a three-year period. In the USA a bipartisan group of north-eastern governors from Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont are developing the USA’s first regional `cap and trade’ scheme for carbon dioxide emissions from power plants in their states. The terms of this scheme are expected to be finalised within the next few months.

Also in the US, the bipartisan McCain-Lieberman Climate Stewardship Act 2003 proposed a `cap and trade’ carbon trading scheme. Although it was narrowly defeated in the Senate, it received bipartisan support. It was touted as providing a moderate, affordable and effective approach to addressing global warming by reducing emissions in a market-friendly and innovative way. It has since been reintroduced to the US House of Representatives and another vote in the Senate is expected soon.

Since the Kyoto protocol came into force on 16 February, it has become clear that countries such as New Zealand are taking advantage of Australia’s absence from the game. Recently, the NZ government awarded 39 renewable energy and climate change projects, with a total of 10 million government endorsed credits in return for abatement far above 10 million tonnes of greenhouse gasses. These credits were awarded to project proponents by the New Zealand government under a competitive tender arrangement where project developers bid for credits on a tonnes of greenhouse gas abatement per credit basis. This will give New Zealand business a direct right to participate in international and European emissions trading.

This idea was not a New Zealand policy invention but originally an Australian idea that the Kiwis picked up and ran with. It was first contemplated as Australian government policy in the Australian Greenhouse Office’s November 2000 discussion paper titled `Crediting for early action’, which contemplated the early draw-down of 100 million tonnes of Australia’s Kyoto credits and rewarding GHG reduction action by Australian businesses. Australia first flagged this creative approach but the Howard government dropped the ball and, as we all know, the Kiwis are pretty good at picking up a ball and running with it.

New Zealand companies that have been awarded credits, such as Mighty River Power, Meridian Energy and Palmerston City Council, have sold these NZ credits or have begun negotiations with international carbon purchasers, including the Dutch government. It is worth noting carefully that an independent survey has found that New Zealand is the most attractive investment destination for Kyoto protocol projects, outranking all of the eastern European countries. Frankly, if the Kiwis look good, you could imagine Australia would be a very favourable host country for projects if it were part of the system.

It is also worth noting that there are currently 82 registered or pending clean development mechanism projects, expected to generate between €775 million and €1.03 billion. The clean development mechanism of the Kyoto protocol is becoming an important source of new finance for projects in developing countries. Because the Howard government will not ratify Kyoto, Australian companies cannot access the clean development mechanism, and thus miss out on huge business opportunities.

The clean development mechanism process creates a win-win-win situation—a win for the environment, a win for private industry, and a win for jobs. The first CDM project to be approved and registered is a Dutch funded landfill gas-to-energy project in Brazil. A gas collection system, acid-soil draining system and modular electricity generation plants are being installed at a number of landfill sites in Rio de Janeiro. Methane in the landfill gas will be combusted to produce electricity for export to the grid, and excess landfill gas will be flared. Local benefits include improved water quality, reduced risk of explosion of landfill gas, job creation and 10 per cent of electricity donated for use in schools, hospitals and in other public buildings. This project illustrates the types of projects that can be undertaken through such investment.

Brazil, China and India have the greatest potential for the new mechanism. India has developed more clean energy proposals than any other country, and China recently adopted a proactive approach that is expected to make it a key player. The clean development mechanism is a huge business opportunity for Australian countries. Many of these projects are located in Asia and, with the government’s current position not to ratify the Kyoto protocol, Australian business cannot participate directly in these projects, nor can they hold or trade carbon credits from these projects. It is a significant statement of the despair of the Australian companies that some of them have actually set up offshore subsidiaries. We are sending Australian companies overseas, establishing these subsidiaries so they can participate in this scheme, at a time when we are worried about our current account deficit and the issue of exports.

It is worth noting that BHP Billiton won a prestigious award for best trader in the European Emissions Trading Scheme recently. It was the first company to trade under this scheme. Smart companies like BHP Billiton, Shell and BP take a look at emerging trends and see the writing on the wall. Even in George Bush’s America, energy security and the acceptance of climate change are driving the market towards efficient cars. I agree with Paul Gilding’s assessment in the Australian this week that is one of the reasons Toyota’s market share is increasing in the US, while others are shrinking. In Australia, however, the Howard government is off the game. It is an appalling approach. It is not just anti-business and anti-competitive; it is clearly against the national interest.

The most extraordinary statement I have seen recently, which I draw to the attention of the House, is that of the federal agriculture minister, Warren Truss. In an interview in Queensland Country Life, published on 24 February this year, Mr Truss attacked the Beattie government’s tree clearing laws as `draconian’. This is the only reason why Australia will meet its target under the Kyoto protocol. Minister Truss said: [start page 108]

I am told that it would have been possible to have cleared remnant vegetation at the same rate that has been occurring over the last 20 years in Queensland for another 300 years—before it became endangered.

Let us just stop and think about the minister’s statement. He is saying that it is okay to keep clearing at the current rate, which was at 530,000 hectares per year, for the next 300 years. When you do the sums, that means 159 million hectares of clearing, of which 110 million hectares would be remnant vegetation. It is well known that the entire land mass of Queensland is only 173 million hectares. According to the Queensland government, if all national parks, state forests, reserves, unallocated state land and other crown land under licence are removed, that leaves only 151 million hectares of freehold and leasehold land in the entire state. Yet Minister Truss believes we should clear the lot, down to the very last tree—and not have one tree left standing in the whole of Queensland. This comes from a Queensland federal government minister. I doubt whether many of Mr Truss’s own constituents think this would be a good idea.

Without wanting to put too fine a point on it, making Queensland a dustbowl would not be too good for its economy, let alone its environment. A recent study by ANSTO reported in last Friday’s Sydney Morning Herald showed that deforestation has an observable impact on rainfall. The study confirmed the long-held wisdom: if you cut down rainforest, it rains less. However, aside from the total stupidity of the minister’s statement, the problem is that it is in total conflict with the Howard government’s stated policies. On the one hand, Minister Truss attacks Queensland’s tree clearing laws as draconian and says, `They seem beyond what is necessary to ensure biodiversity and sustainability of agriculture’ and, on the other hand, the Commonwealth government relies upon this very policy to meet its greenhouse gas emission targets. The Howard government simply cannot have it both ways. Minister Truss should be brought into line by the Prime Minister. But this is not surprising, and it is consistent with the views of the Minister for Industry, Tourism and Resources, Minister Macfarlane, who was reported in the Sydney Morning Herald on the eve of the Kyoto protocol coming into force as saying:

Whether or not those emissions are causing climate change, I don’t know. If you go back across history, millions of years, carbon dioxide levels go up and down, and global warming comes and goes. I mean, the Earth is a lot warmer than it was when the glaciers formed.

What a statement. Frankly, the Howard government is incredibly confused about this issue. While Labor see climate change as a serious environmental threat, we also see opportunities for new industries and new jobs. We want to participate as a part of that global economy and we want to participate as a part of taking global action against climate change.