Aug 29, 2005

Speech to Clean Coal Conference, Brisbane

Speech to Clean Coal Conference

Brisbane, 29 August 2005

Introduction

The Stone Age did not end because we ran out of stones.

And – let’s be honest – unless we work out how to use fossil fuels without the current level of greenhouse emissions, it will be the end of the age of fossil fuels.

Australia’s cheap and plentiful coal resources have significantly contributed to our national prosperity, but they have also contributed to one of the biggest environmental, economic and social challenges the planet has faced – climate change.

Addressing climate change does not mean turning our back on the coal sector.

Labor recognises the important economic role the sector has played, providing jobs and export dollars for Australia.

Labor also acknowledges and plays tribute to the critical role the Miners Union have played in the history of the Australian labour movement.

With emerging new technologies, coal can continue to have a role into a carbon constrained future. We must deliver the next generation of technologies so that we can use our resources, while not compromising the health of our planet.

Australia must not only use the new technologies as they come to market, but must play a role in developing them.

To ensure our long term sustainability, we must be at the cutting edge of forward thinking and bring forward the technological development to ensure good progressive outcomes.

Because climate change is as much an economic and social issue as an environmental challenge.

If we don’t lead on this issue, if we bury our collective heads in the sand, then we run the risk of huge carbon shocks to our economy in the future. We have no choice but to confront the issue of climate change head on – including the role of coal and other fossil fuels in our energy future.

So it has been frustrating to watch the Howard Government’s failure to take decisive action on this issue.

The Government’s latest announcement – the Asia Pacific Partnership on Clean Development and Climate – is positive but limited. Technology transfer and working with our Asia Pacific neighbours is critical to delivering outcomes. But we need to be serious about making real progress and not simply re-badging old commitments.

As the vision statement acknowledges it aims to “build on existing bilateral and multilateral initiatives”.

In 1992 – over a decade ago – all the members of the Partnership signed up to almost identical commitments as part of the United Nations Framework Convention on Climate Change. A year after that, Australia, Japan and the US launched the International Energy Agency’s Greenhouse Gas Technology Information Exchange program – GREENTIE. This was followed a few years later by the Climate Technology Initiative. More recently, the Carbon Sequestration Leadership Forum was launched with essentially the same countries and the same commitments.

Even the document itself concedes that the partnership is meant to “complement, but not replace the Kyoto Protocol”.

Those who suggest there are opportunities for Australia through technology transfer are correct, but they miss the main point. You can’t transfer technology without the technology to transfer. New technologies evolve from new markets, not new documents.

All sides of politics agree with exchange of research and collaboration over new technology.

That’s a given.

And everyone in this Conference has been participating in that process.

The question is how do you drive change? The Asia Pacific Climate Pact has no targets, no funding allocation and no market mechanism to drive change.

Technology transfer by itself cannot achieve the outcomes we need – which has been proven over and over again.

Need for environmental productivity reform

Historically it has taken Labor Governments to implement the kind of reforms that have secured Australia’s prosperity – the floating of the dollar to reflect the real price of capital, the introduction of enterprise bargaining to provide a more accurate price of labour.

In my view it is the pricing of our environment and our natural resources which will be the next major economic reform – establishing the real price of production.

And it is critical that we get it right. We need to better price our energy resources, our water, and our timber, so we can achieve sustainability dividends from our investments.

But at the moment, the signals are all wrong. You can get a tax rebate for cutting trees, but not planting them. The price of the most greenhouse intensive energy sources are the cheapest. There is no incentive to do anything other than go for the least cost option.

We have to change this, and factor in the cost to our environment.

We need to ensure that our national resources are directed to uses that maximise benefit for the current and the next generation. And we need to make sure that the technology we develop and apply improves living standards now and into the future.

The economic reforms of the 1980’s did just these things. They moved our national resources up the value chain.

Over the last ten years, there has been a growing understanding of the need for ecological productivity as well as economic productivity, but the Howard Government has been arrogant and complacent. Yet again we will have to wait for a Labor Government to tackle the next real reform agenda – and with it, the issue of climate change.

Labor is not afraid to tackle the tough issues and to work with industry to ensure that we can address the issue of climate change, achieve long term emission reductions and secure a prosperous economy for Australia.

This is not about jobs versus the environment – that’s a false debate. Indeed strong action is vital for our economic future.

Tony Blair talks about the quadruple bottom line – economic growth, jobs, social outcomes and environmental sustainability. That’s Labor’s agenda.

You’ve already heard from two speakers this morning talk about existing and emerging technologies and how we can assess them against the needs and aspirations of Australians – and indeed the global community.

I’d like to talk about the need to put the environment on the energy sector balance sheet as the basis for securing a low emission economy for Australia and a low emission future as the future for fossil fuels.

Climate change is real and Australia has a lot to lose

I don’t want to sound unduly alarmist, but if you look at the science – and the science that even the Howard Government has acknowledged – you can’t help but be concerned.

George Bush has finally admitted it’s happening and we need to do something.

And it is his Republican colleague – Arnold Schwarzeneggar – that has been leading conservative thinking in the United States on this issue.

To achieve this, the ‘Governator’ has put in place aggressive efficiency standards for buildings and transport – saving Californians millions of dollars on their energy bills – and has set ambitious targets to increase the contribution of renewable energy to 33% of electricity supply by 2020.

He has been campaigning strongly on the issue – with massive popular support for his actions.

I don’t want to pretend that what works for California will work for Australia.

Indeed, Australia is unique in the climate policy debate.

Not only are we disproportionately high emitters – but we have disproportionately more to lose from the impacts of climate change.

Our emissions per capita are the highest in the world – and our economy has come to rely heavily on access to cheap fossil fuels. Our task is great. That’s why we need to start now. To do nothing will inevitably cost more. There is an opportunity cost of time.

With our long coast lines, significant agricultural sector and unique animals and plants, we are particularly vulnerable to the impacts of climate change.

This was vividly portrayed in the Howard Government’s own recent report – Climate change, risk and vulnerability – which has been used in court to highlight the Government’s hypocrisy on climate change.

The climate sceptics are increasingly the ‘flat-earthers’ of the 21st century. But they are alive and well on the Howard Government front bench. Just this month the Environment Minister himself made a submission to the Federal Court challenging whether greenhouse gas emissions contribute to global warming.

We are already experiencing climate change. CSIRO data is showing increasing temperatures and decreasing rainfall, which is resulting in increased evaporation and less run off entering our rivers.

Our already stretched water resources will become even more scarce. We will face more frequent and more extreme weather events, like droughts and floods – and we have recently seen the devastating impacts of these events on our regional communities and our national wealth.

Although we are locked into some degree of climate change, the big challenge is to avoid dangerous climate change.

Scientists tell us that to do this and stabilise global concentrations of greenhouse gases we will need to cut global emissions by some 40-60% by mid century.

To allow for growth in developing countries and in recognition that the developed world is responsible for historical emissions that are now impacting our climate, developed countries will need to go even further.

The Labor Party has consistently argued that Australia must ratify the Kyoto Protocol – for a number of reasons:

– to be responsible global players

– to give us a seat at the table for post 2012 negotiations

– because we will meet our target anyway and we should capitalise on the opportunities that global trading presents

– and because, it presents a path to a more prosperous future.

It is simply incoherent to argue that Australia should and will meet our Kyoto target, yet to ratify will destroy our economy – you can’t have it both ways.

No one believes that the Protocol is perfect – but no international treaty ever is. But it’s the best start we have to make the transition to a carbon constrained future.

That’s why I introduced a Private Member’s Bill in Parliament – the Avoiding Dangerous Climate Change (Kyoto Ratification) Bill – which has received a second reading in parliament, but the Prime Minister is unlikely to ever let it go to a vote.

We have to start the transition now to prepare for a prosperous future

The issue of climate change has been the result of centuries of increasing greenhouse gas emissions, but we simply don’t have the luxury of centuries to reverse the damage.

The slower the transition, the more time we have to adapt the economy and the lower the cost will be. But the timeframe must be set by the reality of the science and if we leave it too late, we face the prospect of having to deliver big cuts in emissions in a very short timeframe – leading to what is commonly referred to as ‘carbon shocks’.

We need to start now to prepare our economy and energy sector for a carbon constrained future. The transition to a low emission low carbon future will not be easy.

Australia is blessed with resources – including plentiful fossil fuels and renewable resources – and we are blessed with ingenuity and innovation. We have been dealt a good hand – but we need to play it well.

We should be driving change and leading the world in delivering emission reductions. We should view the challenge as an opportunity.

The Howard government is not interested in making decisions for the long term. This government is only interested in short term political fixes. They have been complacent for ten long years. They have continued to leave the tough work for others.

Technologies of the future

That can’t be said of many in the coal sector represented here today, and I congratulate those responsible for the work on COAL21 – seeking to identify options to reduce emissions from coal generation.

If we can achieve the aim of the COAL21 Action Plan roadmap to get to near-zero emissions from coal-based electricity generation by 2030 – then we will have secured a prosperous future for the coal sector in Australia.

Emerging coal technologies such as geo-sequestration are looking promising, but we need to ensure they can work before we count on them to meet reduction targets.

There are other emerging technologies showing considerable promise as well. Over the next 2 days you will be hearing about many of them. We have to ensure that we spread the risk and invest in a range of technologies.

Our innovative renewable energy industry also needs support, as do energy efficiency technologies that reduce our overall demand for power.

This work is critical in driving the development of the technologies of the future.

But research and development is not enough to drive uptake of new technologies. We also need the right signals in the market and the right regulatory framework, so there is an incentive for uptake and improvement of new technologies.

Indeed, the recent G8 Communiqué talked about the need for technology focus together combined with market based approaches.

We need to provide a long term framework for action and price our resources to include their environmental costs.

We have to give the right signals in the market

The external costs of climate change are currently not factored into many if not most of our energy investment decisions. Without clear direction from the Howard Government, many companies are complacent about future carbon costs.

Protecting industry from real risks is not good policy. We need to better define the risks and how best to minimise the uncertainties.

Given the long life of many infrastructure projects, investors need to start now to consider the carbon liabilities associated with each decision they make. Companies investing now are doing so in full knowledge of the science of climate change and the likely order of magnitude of global emission reductions required to stabilise atmospheric concentrations of carbon dioxide.

Labor believes that the key to driving change is emissions trading.

It seems obvious.

Create an incentive for cleaner technologies and a flexible market mechanism to drive least cost emission reductions. Allow the market to do the job its best at doing – allocating resources.

In fact, emission trading is such an obvious, uncontroversial tool that Federal Cabinet considered a joint submission from four departments supporting a national emissions trading for Australia. The joint submission was put forward by Treasury, Foreign Affairs, Environment and Industry in 2003. The Prime Minister opted instead to maintain the status quo and focus on voluntary programs that – although some are worthwhile – have failed to adequately price the cost of carbon or to adequately slow the rate of growth, let alone start reducing emissions.

The market skeptics position is increasingly as isolated as the climate skeptics.

In the last week the nine north east US States have moved to freeze greenhouse emissions by 2009, then cut them by 10% by 2020. They’ll do that by establishing an emissions trading scheme.

California, Washington and Oregon are looking at a similar deal.

These initiatives are being led by 2 prominent Republicans – California Governor, Arnold Schwarzenneger and New York Governor, George Pataki.

In Australia, all State and Territory governments are working together to develop a national cap and trade emissions trading scheme. The Premiers have agreed a set of design propositions as a basis for further investigation.

There is clearly a lot of detail to be developed, but it is an important step towards preparing our country for the carbon constraints to come and it will be critical that the scheme sets Australia on a trajectory to long term emission reductions.

Of course, it would be best for the market and for the environment if the Federal Government established the national emissions trading scheme, rather than leaving the hard work to State Governments. That’s why we’re committed to doing that work and to make it happen.

I’d like to think that if we can get the signals right now, by 2050 we will have got to the point where we are using low or no emissions technologies that are cheaper and more efficient than the technologies we use today. And that the price of carbon will drop because fewer companies or individuals need to emit any more.

Maybe that is a bit optimistic and it might take a bit longer, but unless we start now, we won’t know whether we could have done it.

But a note of caution, as important as emissions trading is in placing a cost on carbon, it will not remove all barriers to the uptake of new low emissions technologies.

It will go some way to removing one of the most entrenched barriers and that is the price or economic barrier, but there are other barriers – cultural barriers, institutional barriers, lack of access to information and others.

Indeed, it is a well documented fact that there are significant opportunities for profitable energy efficiency projects that remain unimplemented. Capturing these will provide a considerable economic benefit for Australia.

And just as we need technology push to develop solutions and market pull to drive least cost reductions, we also need minimum performance standards to ensure that all new investment meets minimum standards. Just like we have safety and health standards, we already have efficiency standards for many electrical appliances and motors, Labor is committed to ensuring minimum standards are achieved for new developments.

Just recently I announced that I would introduce a new Private Members Bill – Avoiding Dangerous Climate Change (Climate Change Trigger Bill) – to be debated in Parliament next week.

The bill will amend the Environment Protection and Biodiversity Conservation Act to ensure that greenhouse emissions of major projects are considered in the assessment of new projects. It is a necessary reform and one the Government has resisted.

Conclusion

Pricing of our natural resources is one of the most pressing reform agendas facing Australia, and no more so than in the case of climate change.

Having identified the problem, we cannot leave it to our children and grandchildren to act.

Although it is a conservative governor that has taken on climate change is the US, in Australia it appears that only Labor will take on the challenge and accurately reflect the true price of our environment.

The market makes a good servant but a poor master. We have to put the policy drivers in place and harness the market’s energy to deliver the right outcomes for our economy, our communities and our environment.

Labor stands for a strong economy, creating wealth and security for all Australians.

And Labor understands that environmental progress is a necessary component of economic prosperity.

That’s why Labor supports not only the development of clean coal and other low emission technologies, but the market mechanisms to ensure their widespread deployment to drive greenhouse emission reductions.

The push of technology combined with the pull of the market – because when it comes to avoiding dangerous climate change we won’t get a second chance .

I’d like to leave you with a quote from the unlikely environmentalist.

“I ask citizens and governments everywhere to do their part by conserving energy, reducing the use of fossil fuels, reducing waste and taking every opportunity to work together for a cleaner, healthier tomorrow. It is not enough for us to be just caretakers of the world that we have been given, we must leave it a better place for future generations.

This is our duty to those who share this world with us and to those who follow us.”

It’s a pity Prime Minister Howard can’t show the same leadership over climate change that the Governator does.