Paris Agreement turns up heat on Australia

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From the FT:

Envoys in Paris have agreed an international accord to limit greenhouse gas emissions that marks a turning point in more than 20 years of efforts to prevent dangerous levels of global warming.

Delegates from nearly 200 nations cheered and embraced each other on the floor of the convention centre hall at Le Bourget airport, north of the city centre, as Laurent Fabius, French foreign minister, declared the new pact had been formally adopted just before 7.30pm in Paris.

John Kerry, US secretary of state, said: “This is a tremendous victory for all of our citizens . . . It is a victory for all of the planet and for future generations . . . I know that all of us will be better off for the agreement we have finalised here today.”

Xie Zhenhua, China’s chief climate negotiator, hailed the agreement as a “milestone in the global efforts to respond to climate change”, even if it was not perfect and contained “some areas in need of improvement”.

The new pact, to be known as the Paris agreement, for the first time requires virtually every country in the world to set out its plans to avert climate change every five years.

It includes an objective to limit global warming to “well below 2C above pre-industrial levels” and “pursue efforts” to limit the temperature increase to 1.5C.

To meet these temperature targets, the draft says countries should aim to reach a “global peaking of greenhouse gas emissions” as soon as possible and “achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century”.

The text does not define precisely what this means but scientists said it suggested that after 2050, countries could not emit more carbon dioxide — the greenhouse gas produced by burning fossil fuels — than could be absorbed by forests and other carbon “sinks”.

There will be many critics from both sides of politics. The lefties will see it as lacking adequate policing, the loon pond as another move towards world government. The truth is that it is significant step in the right direction in-so-far-as it further embeds an international relations normative that climate is real and must be dealt with urgently and that has its own very significant force so long as it is backed by the super powers of the day, and it is in the EU, China and US. It may be that in the end that is the best outcome one can expect in the nation state system.

The agreement will put a lot more pressure on fossil fuel emissions everywhere even it if remains inadequate. Lenore Taylor sums out what it means for Australia:

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  • We will be under pressure to revise our emission reduction target out to 2030 – the one we brought to Paris – by 2020. Given that we are among the world’s highest per capita emitters and our target has been rated inadequate by the Climate Tracker think tank and other analysts, we are going to be under strong pressure to increase its ambition.
  • To meet even the current target, and certainly a higher one, we will have to get real about emission reductions, including from electricity generation. We will have to find a way to retire the old brown coal-fired generators and start reducing industrial carbon pollution. Australian business and environment groups are begging political parties to come up with some kind of stable, sensible plan. The World Bank, the International Monetary Fund and multiple heads of state in Paris think the best policy is a carbon price, using Paris to launch the carbon pricing leadership coalition. Greg Hunt spent his time in Paris continuing to pretend that his emissions reduction fund (ERF) is a carbon price and also an idea being adopted around the word, but the experts, when asked, said reverse auctions like the ERF were useful additions to a carbon price, but not a good primary policy to drive down greenhouse emissions. The bottom line is that if we are to meet our 2030 target, the ERF is not going to cut it.
  • Fossil fuel use will continue to decline. It won’t stop; even with their accelerating rollout of renewables, India and China are still building coal-fired power stations. But as renewables get cheaper and countries actively shift away from fossil fuels, any government backing for the infrastructure needed by big new coal mines appears increasingly misguided.
  • The smart investment will be in clean technologies, and if Turnbull wants to be active and nimble and innovative and get a slice of it, he needs a credible, clear, transparent domestic climate policy, and quickly. That’s exactly what Jie Zhang, from Chinese firm Hareon Solar, told me he is looking for when deciding whether to make a billion dollar investment in Australia next year.
  • We won’t get away with using accounting rules to reach our emission-reduction pledges for much longer. Five big developed countries announced in Paris that they had voluntarily cancelled emission reduction “credits” achieved by overshooting their first Kyoto protocol greenhouse targets – the same kind of credits Australia is banking to boast it has already “met and beaten” its international pledges. The Paris agreement “encourages parties to promote the voluntary cancellation … of units issued under the Kyoto protocol, including certified emissions reductions that are valid for the second commitment period”. Australia says it is going to ignore that encouragement, but the fact that this statement is in the deal indicates that we are unlikely to get to pull the same swifty in the future.
  • We are also going to be under pressure to stump up more money to help vulnerable countries cope with the impacts of climate change. The government fudged this in Paris, saying it would provide at least $200m a year – which appears to be a figure arrived at by adding up what we are already providing. Canada, by contrast, promised $2.5bn.

That is right, I think. There may be no immediate blowback for Australia but we’ll be steadily boiled alive if we continue to throw out the anchor.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.