Chapter 5 Australian action in a global context
Australian action on climate change is part of an international response. The sum of countries’ actions on climate change determines whether or not it will be possible to limit global warming, relative to pre-industrial levels, to below 2 degrees.
While current global action – as measured by countries’ 2020 pledges – is not on track to meet this objective, there is a clear trend to increased action, with more countries taking on targets and implementing policies than ever before.
Australian 2020 targets of 15 or 25 per cent would be broadly comparable with the current actions of other key countries, including major emitters, Australia’s trading partners and neighbours.
A stronger Australian target could also have a positive influence on the actions of other countries by demonstrating that emissions-intensive economies, such as Australia, can pursue and achieve ambitious targets.
The Authority’s analysis of the Government’s target conditions show that the conditions for moving beyond 5 per cent have been met. Whether the conditions for 15 per cent have been met is unclear – some elements have been met, others are marginal. The conditions for a 25 per cent target have not been met. While the Authority has taken these conditions into account, it is also required to examine a broader range of considerations.
Chapter 4 considered the overall trends in global action to reduce greenhouse gas emissions. This chapter builds on that assessment to consider the implications of global action for Australia’s emissions reduction goals.
Australian action is part of a broader international response. In considering recommendations for Australia’s emissions reduction goals, it is relevant to consider how different goals compare with the action other countries are taking – this places Australian action in context. It is also important to consider whether, and how, Australia’s targets influence other countries’ efforts.
This chapter sets out:
- Australia’s place in the world, including its international obligations and undertakings;
- Australia’s target conditions and the extent to which they have been met;
- how Australian targets of 5, 15 and 25 per cent below 2000 levels compare with the targets of other key countries; and
- Australian influence on other countries’ climate action.
5.1 Australia’s place in the world
Australia is prosperous compared with most countries. It has the 12th highest gross domestic product (GDP) per person in the world and a high standard of living.
Australia is also a high-emitting country in absolute and per person terms. Australia has the highest emissions per person of all developed countries and is responsible for about 1.3 per cent of the world’s emissions of greenhouse gases. While this may sound like a small proportion of the global total, Australia is the 15th highest emitter of greenhouse gases in the world. Some of this reflects Australia’s relatively high share of fossil fuels in its energy supply. In 2011–12, coal represented nearly 60 per cent of Australia’s total primary energy supply (Bureau of Resource and Energy Economics 2013) compared with an OECD average of 20 per cent (IEA 2012). Australia is one of 19 countries that emits more than one per cent of the world’s emissions. The combined emissions from these countries is more than two-thirds of the world’s total emissions.
Box 5.1 provides a snapshot of Australia’s place in the world, both in economic (capacity) and emissions terms.
Box 5.1: Key climate and economic facts about Australia
|Per cent of global emissions: 1.3 (15th in the world in 2009) Emissions per person: 25 tonnes of carbon dioxide equivalent (t CO2-e) (11th in the world in 2009, highest of any developed country)|
|Development and economy|
|Human Development Index ranking: 2 GDP (Int$, PPP): $971 billion (18th in the world) GDP (Int$, PPP) per person: $42 640 (12thin the world)|
|Australia’s top five export markets: 1. China (27 per cent) 2. Japan (17 per cent) 3. Republic of Korea (7 per cent) 4. United States (5 per cent) 5. India (5 per cent)||Australia’s top five import markets: 1. China (15 per cent) 2. United States (13 per cent) 3. Japan (7 per cent) 4. Singapore (6 per cent) 5. Germany (4 per cent)|
Sources: Emissions data from World Resources Institute 2013, 2009, excluding land use; International Monetary Fund Australian Bureau of Statistics; United Nations Development Programme.
5.1.1 Australia’s international undertakings and 2020 target conditions
Australia has made an international undertaking to the United Nations Framework Convention on Climate Change (UNFCCC) to reduce its emissions by 5 to 15 or 25 per cent by 2020 relative to 2000 levels. The 5 per cent target is unconditional and a policy has been set for when Australia might move beyond 5 per cent or to 15 or 25 per cent. This policy is set out at Box 5.2.
Different readers legitimately might come to different conclusions about whether the conditions are met. This was demonstrated in submissions to the Issues Paper, where stakeholders expressed differing views. For example, the Australian Aluminium Council (submission, p. 1) did not consider the conditions to move beyond 5 per cent were met; nor did the Australian Industry Greenhouse Network (submission, p. 3). On the other hand, The Climate Institute considered that, based on the Government’s conditions, Australia’s minimum 2020 target should be 12 to 15 per cent (submission, p. 21). Other groups, including the Australian Conservation Foundation (submission, p. 8) and Oxfam Australia (submission, p. 15) did not consider the existing conditions to be an appropriate basis for setting Australia’s 2020 target.
Box 5.2: Australia’s 2020 target policy
Reduce emissions by 5 per cent relative to 2000 levels
Reduce emissions beyond 5 per cent
Conditions: The Government will not increase Australia’s emissions reduction target above 5 per cent until:
- the level of global ambition becomes sufficiently clear, including both the specific targets of advanced economies and the verifiable emissions reduction actions of China and India;
- the credibility of those commitments and actions is established for example, by way of a robust global agreement or commitments to verifiable domestic action on the part of the major emitters including the United States, India and China; and
- there is clarity on the assumptions for emissions accounting and access to markets.
Reduce emissions by 15 per cent compared to 2000 levels
Conditions: International agreement where major developing economies commit to restrain emissions substantially and advanced economies take on commitments comparable to Australia’s. In practice, this implies:
- global action on track to stabilisation between 510 and 540 ppm CO2-e;
- advanced economy reductions in aggregate in the range of 15–25 per cent below 1990 levels.
- substantive measurable, reportable and verifiable commitments and actions by major developing economies in the context of a strong international financing and technology cooperation framework, but which may not deliver significant emissions reduction until after 2020;
- progress towards inclusion of forests (reduced emissions from deforestation and forest degradation) and the land sector, deeper and broader carbon markets and low-carbon development pathways.
Reduce emissions by 25 per cent relative to 2000 levels (up to 5 percentage points through Government purchase)
Conditions: Comprehensive global action capable of stabilising CO2-e concentrations at 450 ppm CO2-e or lower. This requires a clear pathway to achieving an early global peak in total emissions, with major developing economies slowing the growth and then reducing their emissions, advanced economies taking on reductions and commitments comparable to Australia’s, and access to the full range of international abatement opportunities through a broad and functioning international market in carbon credits. This would involve:
- comprehensive coverage of gases, sources and sectors with inclusion of forests (reduced emissions from deforestation and forest degradation) and the land sector (including soil carbon initiatives (for example, biochar) if scientifically demonstrated) in the agreement;
- clear global trajectory, where the sum of all economies’ commitments is consistent with 450 ppm CO2-e or lower, and with a nominated early deadline year for peak global emissions not later than 2020;
- advanced economy reductions, in aggregate, of at least 25 per cent below 1990 levels by 2020;
- major developing economy commitments to slow growth and to then reduce their absolute level of emissions over time, with a collective reduction of at least 20 per cent below business as usual by 2020 and a nomination of peaking year for individual major developing economies;
- global action which mobilises greater financial resources, including from major developing economies, and results in fully functional global carbon markets.
Note: ‘Advanced economies’ refers to Annex I Parties to the UNFCCC and at least some other high–middle income economies; ‘major developing economies’ refers to non-Annex I members of the Major Economies Forum.
Source: Commonwealth of Australia 2013
In the Authority’s view, a strong case can be made that the conditions for moving beyond the 5 per cent target have been met:
- as set out in Chapter 4, since the target conditions were set, there has been significant process ‘clarifying the level of global ambition’, with all major emitting economies putting forward 2020 emissions reduction goals under the UNFCCC;
- a robust international framework for measurement, reporting and verification of targets and actions was established in 2011 at the Durban Climate Conference; and
- a clear framework for markets and accounting has been established for second commitment period targets under the Kyoto Protocol. For targets outside the Protocol, countries will set out their rules for accounting and markets in biennial reports and biennial update reports, due to begin 1 January 2014.
Whether the conditions for moving to a 15 per cent target are fulfilled is less clear. In the Authority’s view, some elements are met; for example, there has been strong progress developing a global framework including targets by all major emitting economies; measurement, reporting and verification of emissions; and action on finance and technology for developing countries.
Some elements of the 15 per cent target conditions are marginal, including global action on track to stabilisation between 510 and 540 ppm. Studies generally estimate that the level of global effort is on track to stabilisation at around 550 ppm (Project Catalyst 2010); however, there is significant uncertainty surrounding these estimates. First, there is uncertainty about the exact level of emissions reductions implied by the UNFCCC 2020 pledges (UNEP 2012). Second, the stabilisation outcome depends on the shape of the world’s long term emissions trajectory; this means it is difficult to relate 2020 emissions levels to particular stabilisation outcomes without making significant assumptions about action after 2020 (Rogelj and Meinshausen 2010). Given these uncertainties, stabilisation between 510 and 540 ppm cannot be ruled out.
The condition regarding aggregate Annex I Party action is also marginal. Recent analytical work estimates aggregate Annex I Party action to currently be 12–18 per cent below 1990 levels by 2020 (compared with the 15 to 25 per cent reductions listed in the conditions) (den Elzen et al. 2012, p. 9). This work concedes that there is uncertainty regarding these estimates, which could pull the aggregate up or down.
In the Authority’s view, the conditions for 25 per cent have not been met at this time. In particular, while stabilisation of greenhouse gas concentrations at around 450 ppm remain technically feasible, most assessments consider this is only possible with wide spread use of negative emissions technology after 2020 (UNEP 2012). For this reason, most studies do not consider that the current 2020 pledges are on track to stabilisation at 450 ppm. The aggregation of Annex I targets, even under the most ambitious assumptions, is also unlikely to be ‘at least 25 per cent’ reductions on 1990 levels.
Table 5.1 sets out the Authority’s assessment of the target conditions in detail.
These conditions have been long-standing Australian policy and have provided guidance to stakeholders about the likely Australian target. However, as noted in Chapter 1, the Authority is legislatively required to take into account a broader range of factors in making recommendations about Australia’s 2020 target, including estimates of the global greenhouse gas emissions budget; economic efficiency; equity and the impact on households, business, workers and the community (Climate Change Authority Act 2011, s 12). The Authority is also required to take account of ‘the level of global action to reduce greenhouse gas emissions’ more broadly.
Therefore, while the above assessment is an important factor in the Authority’s deliberations, it is only one input to its recommendations about Australia’s appropriate 2020 emissions reduction target.
Table 5.1:Assessment of Government target conditions
|Reduce emissions beyond 5 per cent relative to 2000 levels|
|The Government will not increase Australia’s emissions reduction target above 5 per cent until:|
|The level of global ambition becomes sufficiently clear, including both the specific targets of advanced economies, and the verifiable emissions reduction actions of China and India||Since the conditions were set, the level of global ambition has become significantly clearer – 99 countries, covering 80 per cent of global emissions have pledged to reduce or limit their emissions before 2020. Countries have also provided further information clarifying their pledges and the potential emissions reductions outcome. All Annex I Parties have committed to specific targets under the UNFCCC or Kyoto Protocol. Many developing countries, including China and India, have pledged 2020 emissions reductions targets or actions under the UNFCCC. They have also agreed to increased measurement, reporting and verification of their emissions and their pledged action through biennial update reports, including national inventories. Details of pledges can be found at www.unfccc.int||Condition met|
|The credibility of those commitments and actions is established, for example, by way of a robust global agreement or commitments to verifiable domestic action on the part of the major emitters including the United States, India and China||In a series of UNFCCC decisions, countries have agreed to a robust international method for measuring, reporting and verifying emissions and progress towards pledged targets and actions through biennial reports. This supports the credibility of all countries’ commitments and domestic actions. The United States, India and China have all agreed to these rules – the United States released the draft of its first biennial report detailing its emissions and actions to reduce them on 27 September 2013; China and India’s first biennial update report is due December 2014. There is clear evidence, as outlined in this report, of domestic action on climate change in support of targets, including in major emitting economies (see Chapter 4).||Condition met|
|There is clarity on the assumptions for emissions accounting and access to markets||The Authority’s understanding is that this condition was aimed at ensuring Australia had clarity regarding the underlying rules before it committed to a target. Under the second commitment period of the Kyoto Protocol, there is a clear framework for accounting for Australia’s target and clear access to Kyoto market units. Australia recently set out the underlying accounting assumptions for its UNFCCC 2020 emissions reduction commitment in its 2013 National Communication and Biennial Report.||Condition met|
|Reduce emissions by 15 per cent relative to 2000 levels|
|International agreement where major developing countries commit to restrain emissions substantially and advanced economies take on commitments comparable to Australia’s. In practice, this implies:|
|Global action on track to stabilisation between 510 and 540 ppm CO2-e||Many studies (Project Catalyst 2010 and a range of studies pending publication) estimate the current 2020 pledges are on track to stabilisation at around 550 ppm CO2-e; however, given the uncertainties surrounding these estimates, stabilisation at 510 to 540 ppm cannot be ruled out, depending on the level of post-2020 action.||Condition partially met|
|Advanced economy reductions in aggregate in the range of 15–25 per cent below 1990 levels by 2020||Most aggregates of Annex I Party pledges suggest they fall partially within this range. For example, den Elzen et al. 2012 estimates aggregate Annex I Party pledges to be in the range of 12–18 per cent below 1990 levels by 2020. Uncertainties surrounding these estimates could pull them up or down.||Condition partially met|
|Substantive measurable, reportable and verifiable commitments and actions by major developing economies in the context of a strong international financing and technology cooperation framework, but which may not deliver significant emission reductions until after 2020||All major developing economies have pledged targets and actions under the UNFCCC. As discussed above, these pledges are backed by the new measurement, reporting and verification framework, which requires countries to submit biennial reports detailing their emissions and progress towards their pledge. Since 2009, significant progress has been made on financing and technology cooperation, including a collective commitment by developed countries to provide new and additional resources approaching USD 30 billion over 2010–2012 and a long-term commitment by developed countries to mobilise jointly USD 100 billion per year by 2020 to address the needs of developing countries.||Condition met|
|Progress towards inclusion of forests (reduced emissions from deforestation and forest degradation) and the land sector, deeper and broader carbon markets, and low carbon development pathways||There has been significant progress towards developing a framework for reducing deforestation and forest degradation in developing countries, both in the UNFCCC and through bilateral pilot programs. In addition, the Kyoto Protocol second commitment period also sets rules that cover emissions from land-based activities more comprehensively than the first commitment period. Since 2009, many countries have implemented carbon markets and many more have plans to do so (GLOBE 2013). All countries agreed in the Cancun Agreements to establish low-carbon development strategies.||Condition met|
|Reduce emissions by 25 per cent relative to 2000 levels (up to 5 percentage points through Government purchase)|
|Comprehensive global action capable of stabilising CO2-e concentration at 450 ppm CO2-e or lower. This requires a clear pathway to achieving an early global peak in total emissions, with major developing economies slowing the growth and then reducing their emissions, advanced economies taking on reductions and commitments comparable to Australia’s, and access to the full range of international abatement opportunities through a broad and functioning international market in carbon credits. This would involve:|
|Comprehensive coverage of gases, sources and sectors with inclusion of forests (reduced emissions from deforestation and forest degradation) and the land sector (including soil carbon initiatives (for example, biochar) if scientifically demonstrated) in the agreement||All Annex I Parties targets comprehensively cover gases, sources and sectors. Non-Annex I Party pledges vary in their coverage of gases, sources and sectors. The Kyoto Protocol second commitment period comprehensively covers greenhouse gases (not covered by the Montreal Protocol), sources and sectors. The second commitment period of the Kyoto Protocol allows countries to elect grazing land, which would include removals from soil carbon initiatives (Australia has chosen to elect grazing land for its second commitment period target). As discussed above, significant progress toward developing a framework for reducing deforestation and forest degradation in developing countries.||Condition partially met|
|Clear global trajectory, where the sum of all economies’ commitments is consistent with 450 ppm CO2-e or lower and with a nominated early deadline year for peak global emissions not later than 2020||As discussed above, most studies estimate the pledges aggregate to a stabilisation of around 550 ppm CO2-e. These studies generally show that, while a 450 ppm stabilisation is still technically feasible, it would require extensive use of negative emissions technology post-2020. There is no agreed global peaking date.||Condition not yet met|
|Advanced economy reductions, in aggregate, of at least 25 per cent below 1990 levels by 2020||As discussed above, den Elzen et al. (2012) considered Annex I Party reductions to aggregate around 12–18 per cent levels. Even accounting for uncertainties that could pull this estimate up, it is unlikely to aggregate to ‘at least 25 per cent’.||Condition not met|
|Major developing economy commitments to slow growth and to then reduce their absolute level of emissions over time, with collective reduction of at least 20 per cent below business as usual by 2020 and a nomination of peaking year for individual major developing economies.||Recent analysis suggests that aggregate major developing economy commitments are currently around 13–16 per cent below business as usual by 2020 (den Elzen et al. 2013). Most individual major developing economies have not yet nominated peaking years (South Africa has and many others are actively considering one).||Condition not met|
|Global action which mobilises greater financial resources, including from major developing economies, and results in fully functioning global carbon markets||As discussed above, significant work has been done to mobilise greater financial resources; however, the role of major developing economies is unclear. While a wide range of markets has been established in the last few years (GLOBE 2013), they are still developing and domestic and regional markets are not yet fully linked.||Condition not yet met|
Note: The Government has defined ‘advanced economies’ as ‘Annex I Parties to the UNFCCC and at least some other high-middle income economies’. The Authority has used Annex I Parties as a proxy for ‘advanced economies’ in its analysis.
Annex I Parties are: Australia, Austria, Belarus, Bulgaria, Canada, Croatia, Czech Republic, Denmark, European Economic Community, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom of Great Britain and Northern Ireland and United States of America
The Government has defined ‘major developing economies’ as ‘non-Annex I members of the Major Economies Forum’. These countries are Brazil, China, India, Indonesia, Republic of Korea, Mexico and South Africa.
Source: Climate Change Authority
5.2 Australia’s 2020 target range in a global context
In considering an appropriate 2020 target for Australia, it is relevant to consider how different Australian targets compare with the 2020 targets put forward by other countries. This provides context to Australia’s target range and an idea of where different Australian targets sit on the international spectrum of effort – whether Australia is behind, ahead or in the middle of the pack.
The Authority has considered Australian targets of 5, 15 and 25 per cent in the context of the targets of the key country set identified in Chapter 4. The countries are those with similar levels of development to Australia, major emitting economies and Australia’s major trading partners and neighbours.
Countries have put forward targets in different forms with different reference years, which makes them difficult to compare directly. The Authority has therefore translated the 2020 targets of key countries to the same four key measures:
- absolute emissions reductions or limitations;
- emissions intensity;
- deviations from business as usual; and
- changes in per person emissions.
Each of these measures provides different information about countries’ targets. Changes in absolute emissions provide a straight assessment of the overall emissions reduction levels, which is directly relevant to the international goal. Most developed countries have absolute emissions reduction targets under the UNFCCC.
Emissions intensity reflects the ratio of economy-wide greenhouse gas emissions per unit of GDP. Reductions in emissions intensity demonstrate a country’s intended rate of economic decarbonisation. China and India have framed their UNFCCC targets as reductions in emissions intensity.
Changes relative to business as usual emissions levels give a comparative measure of the effect of targets on emissions and the effectiveness of climate change policies. Many developing countries (including South Africa and Indonesia) have UNFCCC targets as reductions from business as usual projections.
Per person reductions removes population growth as a variable and provides links to the contraction and convergence and equity discussions in Chapter 9.
While comparing Australia’s target helps put it in the international context, there are two important caveats to this analysis – first, no one measure – or even set of measures – can capture the full meaning of a country’s action. For example, none of the above measures takes into account a country’s development level or its previous action or emissions levels. Second, different countries’ actions will vary over time due to a range of circumstances (including economic and political conditions); therefore, any one ‘point in time’ comparison cannot capture the full international context across time.
5.2.1 How Australia’s 2020 target range compares across four measures
This section summarises the findings of the Authority’s comparison work – further information can be found at Appendix B.
The Authority has chosen 2005 as the base year for comparison. This is the base year for the targets of China and the United States. Base years can change how a target is perceived – earlier base years put more emphasis on previous emissions reductions, whereas later base years emphasise the future effort. For example, if Australia was to match the US 2020 target of 17 per cent reduction on 2005 levels, the equivalent level is either around 10 or 20 per cent depending on whether a 2000 or 2005 base year is used. Further information on the choice of base year is in Appendix B.
Absolute emissions reductions
Figure 5.1 shows most countries’ targets result in emissions reductions, as measured as a percentage change by 2020 compared with 2005 levels, except for India and China.
An Australian 5 per cent target is not as strong as the targets of New Zealand (including its newly announced 5 per cent unconditional target and 10 – 20 per cent conditional target range), Norway, Japan, the United States and Canada. A 15 per cent target for Australia implies stronger reductions than the United States and Canada. While a 25 per cent target is at the stronger end of the countries compared, it is not as strong as the targets of New Zealand and Norway.
Developing countries’ targets generally result in less strong absolute emissions reductions (and growth in the case of China and India), in line with their lower development status.
Australia has a relatively high emissions intensity compared with other countries (Figure 5.2). This is particularly acute when compared with other developed countries with high levels of fossil fuel production and use – Australia’s 2005 emissions intensity is higher than that of the United States and Canada.
An Australian 5 per cent target reduces its emissions intensity to similar levels as South Africa’s in 2020. An Australian 15 per cent target is generally in line with Canada’s target, while the Australian 25 per cent target is stronger than Canada’s target. All of Australia’s targets result in 2020 emissions intensity levels that are more intensive than the EU, US and Japanese targets. The implied rate of reduction from Australia’s targets is, however, stronger than those three countries’ and is similar to the reduction rates of China and South Africa.
Reductions from business as usual projections
Considering targets in terms of changes to projected emissions is complicated. Different assumptions can lead to substantially different estimates of projected emissions (see Appendix B for further discussion). The uncertainty is much higher for developing countries, which are often in the process of building large-scale infrastructure to lift their populations out of poverty. The way such infrastructure is built can have a significant impact on a country’s future emissions levels.
All key countries’ targets, excluding India, are estimated to result in emissions reductions from their business as usual (BAU) level (see Figure 5.3).
An Australian 25 per cent target is estimated to be the strongest reduction from business as usual of all the countries compared. An Australian 15 per cent target remains one of the strongest targets of the countries compared. While the Australian 5 per cent target is not estimated to be as strong as South Africa, the US and Indonesia’s targets, it is on par with Japan, and stronger than Canada and the EU’s minimum targets.
Per person emissions
Australia has the highest per person emissions in 2005 of the key countries compared.
Figure 5.4 shows that Australian 5 and 15 per cent targets would see Australia continue to have the highest per person emissions of the group in 2020. An Australian 25 per cent target means Australia would have the second highest emissions per person in 2020 after Canada.
5.2.2 Conclusions on target comparisons
The effort of Australia’s target range relative to other key countries looks very different on each measure. Figure 5.5 provides a summary of the earlier analysis of how Australian 2020 targets of 5, 15 and 25 per cent rank relative to other countries’ targets and how this varies across each measure.
Australia’s 2020 target range, particularly the 5 per cent target, does not look comparable when measured by emissions per person and emissions intensity. The same target range looks more ambitious when assessed against deviations from business as usual. The variability of the conclusions indicates the difficulty of ‘calibrating’ Australian effort directly to a country or group of countries.
At a very general level, this analysis shows that Australia’s 5 per cent target tends to be at the weaker end of the group against most metrics. A 15 per cent target is broadly comparable, as is Australia’s 25 per cent target, which is at the more ambitious end of the group, but not consistently stronger than other countries across all metrics. As noted above, this analysis does not take into account countries’ development levels.
Appendix B sets out the Authority’s comparison analysis in greater detail.
Figure 5.1: Countries’ 2020 targets relative to 2005 levels
Sources for figures 5.1–5.4: Historical greenhouse gas emissions: Australia – The Treasury and DIICCSRTE 2013; Annex I Parties – United Nations Framework Convention on Climate Change (2013); remaining countries – World Resource Institute (WRI). This analysis uses WRI Climate Analysis Indicators Tool (CAIT) version 7. This differs from elsewhere in the report because of uncertainties over the accuracy of land use change data and because CAIT 2.0 does not include the full set of anthropogenic activities related to land use change emissions. The version 7 has been previously used in similar analysis and so allows for greater confidence in the land use change data. GDP: International Monetary Fund 2013; EU (27) GDP for 2020 estimated by CCA from OECD 2013. Population: United Nations 2013; Australia – The Treasury and DIICCSRTE 2013. Projected BAU 2020 emissions: The Treasury and DIICCSRTE 2013 where available (EU projection is for EU (25)), otherwise national projections. To allow comparison across all countries, all emission estimates are using assessment report (AR2) methodology. The EU results do not include Croatia; however, this is not expected to change the results for figures 5.1–5.4 given the relative small size of its economy and emissions.
Figure 5.2: Emissions intensity of countries, 2005 levels and 2020 targets
Source: See Figure 5.1
Figure 5.3: Percentage change in emissions under countries’ targets relative to BAU levels at 2020
Notes: The Republic of Korea is not included in Figure 5.3 as it is not part of The Treasury and DIICCSRTE 2013 modelling. It has a target of 30 per cent below its business as usual, which is close to Australia’s 15 per cent target.
Source: See Figure 5.1
Figure 5.4: Per person emissions of countries, 2005 levels and 2020 targets
Source: See Figure 5.1
5.3 Australia’s comparative economic cost of emissions reductions
The Business Council of Australia emphasised the importance of taking the cost of emissions reductions into account when considering Australia’s target (Business Council of Australia submission, pp. 2–3).
As discussed in other parts of the Review (chapters 9 and 13), most studies – both Australian and international – show that Australia has relatively high costs of emissions reductions (see Chapter 9 for further discussion). McKibbin, Morris and Wilcoxen (2010, p. 30) compared the cost of countries meeting their minimal pledged 2020 targets and found Australia has the highest cost, in terms of impact on GDP in 2020 under its 5 per cent target. These results, however, did not include international trade in emissions reduction units.
These findings are important, but need to be balanced against three factors – first, that the magnitude of the costs may be ameliorated to a very significant effect by access to international emissions reduction units. Second, that emissions reduction costs – and their distribution across households and industry – depend heavily on policy design. Policies can be designed to assist households and moderate the costs on businesses. Third, that while Australia’s costs may be relatively high, it also has relatively high development levels and therefore greater capacity to meet them. Chapter 9 discusses these issues in greater detail.
Figure 5.5: Summary of Australia’s position on four different measures
Source: The results are adapted from figures 5.1–5.4
5.4 Australia’s influence
Countries do not make decisions about climate targets and policies in a vacuum; they are influenced by the level of global action and the policies and targets of their neighbours, trading partners and countries with similar economies.
Influence can be positive – encouraging greater action – or negative; countries could use the absence of action in another country as a reason to delay further action or defer existing commitments.
Australia is a small, but important, part of the global picture on climate change. While Australian influence on global efforts should not be overstated, there are certain ways Australia can influence other countries. First, it has strategic roles in international groups. In the UNFCCC, Australia chairs the Umbrella Group – one of the major negotiating blocs including the United States, Russia, Canada, Japan and Norway. Australia is also a founding member of the Cartagena Dialogue for Progressive Action; an influential group of developed and developing countries committed to working together to resolve negotiating deadlocks and drive progress in the UNFCCC. Australia’s role in these groups means its actions are more likely to be noticed by other countries. Outside the UNFCCC, Australia is active in complementary initiatives that ensure its views are heard in a range of forums (see Appendix B for a list of these initiatives).
Second, Australia also has some influence because of its particular circumstances – it is an emissions-intensive economy with a relatively high cost of emissions reduction. If a country in these circumstances chooses a stronger target – and achieves it – it is likely to have a disproportionate effect spurring action from others. Conversely, Australia is a highly developed country with a high capacity to act. If Australia fails to take strong action, other, poorer countries are more likely to characterise climate change action as unaffordable and unachievable. Demonstrating that a high-emitting and fossil fuel-dependent economy can successfully cut emissions and achieve a strong target may be one of the most effective ways Australia can influence other countries.
Third, Australia can have influence by demonstrating that climate policies can be effective. Countries observe and copy the successful policies of other countries. Successful Australian demonstration can be seen across a range of policies including plain packaging for cigarettes (now being considered or introduced in Ireland, Canada, India, New Zealand, Turkey and the European Union) and Australia’s Renewable Energy Target, with similar models adopted in the United Kingdom and some US states. The demonstration effect of robust climate policies is likely to increase other countries’ confidence that they can adopt effective policies, and take on stronger targets in the future.
Timing should also not be overlooked. Australia is uniquely placed to influence global climate action over the next few years. The international climate change framework is in a developmental phase, and many countries are putting in place new climate policies and looking for examples to model. These factors are likely to mean that action now will be especially influential. Australia’s current international roles – chairing the G20 in 2014 and its position on the United Nations Security Council mean Australian action in the next few years is likely to be noticed by more countries.
Australian influence on collective action can be positive or negative at this critical time. On the positive side, a stronger Australian target underpinned by robust policy is likely to support a sense that countries are serious and committed to achieving their targets. This may help encourage countries to stand by their commitments or do more. Drawing back from our international commitments would have a negative influence; an effect that is likely to be heightened due to Australia’s high level of development. And, in some ways, negative action can be more influential in collective forums than positive action – the US failure to ratify the Kyoto Protocol and Canada’s subsequent withdrawal has received far more attention than the approximately 36 countries that look likely to comply with or exceed their first commitment period targets.
C.4 The Authority’s analysis of the Government’s target conditions show that the conditions for moving beyond 5 per cent have been met. Whether the conditions for 15 per cent have been met is unclear – some elements have been met, others are marginal. The conditions for a 25 per cent target have not been met. While the Authority has taken these conditions into account, it is also required to examine a broader range of considerations.
C.5 Considering a range of measures, an Australian 5 per cent target is low compared with the targets of other key countries. A stronger 2020 target of 15 or 25 per cent is broadly comparable with other countries’ targets, including that of the United States. This is especially the case given Australia’s high level of development, relative wealth and governance capacity.
Chapter 5 concludes Part A of the draft report. Part B considers Australia’s policy and progress to date.