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Climate Change Policy: The Copenhagen Accord, Cancun and Beyond

Climate Change Policy: The Copenhagen Accord, Cancun and Beyond. Michael Hitchens, Chief Executive Officer, November 2010. Agenda. How did we get here? International negotiations Domestic policy Where to next?. How did we get here?. Domestic policy parallels international events.

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Climate Change Policy: The Copenhagen Accord, Cancun and Beyond

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  1. Climate Change Policy: The Copenhagen Accord, Cancun and Beyond Michael Hitchens, Chief Executive Officer, November 2010

  2. Agenda • How did we get here? • International negotiations • Domestic policy • Where to next? A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  3. How did we get here? Domestic policy parallels international events A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  4. International negotiations • Australia’s Kyoto Protocol progress • Average of +8% on 1990 over 5 years • Perhaps 50 million tonnes to sell (but no buyers?) • Copenhagen Accord • Developed versus developing country paradigm • Pledges add to 17% reduction, at best • 2oC thought to require 25% by 2020 • ‘Binding’ agreement before 2012 unlikely • USA – China the key A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  5. Australia’s position “… reduce Australia’s emissions by 25 per cent on 2000 levels by 2020 if the world agrees to an ambitious global deal capable of stabilising levels of greenhouse gases in the atmosphere at 450 ppm CO2-e or lower…and… to unconditionally reduce Australia’s emissions by 5 per cent on 2000 levels by 2020, and to reduce emissions by up to 15 per cent by 2020 if there is a global agreement which falls short of securing atmospheric stabilisation at 450 ppm CO2-e, and under which major developing economies commit to substantially restrain emissions and advanced economies take on commitments comparable to Australia’s.” A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  6. Australia’s position A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  7. Busting the myth: -5% is more than our fair share under the Copenhagen Accord (WRI) A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  8. Myth busting part 2: Emissions/capita (WRI) A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  9. Myth busting part 3: Emission/$GDP (WRI) A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  10. Myth busting part 4: Copenhagen Accord shadow emission prices (McKibbin) A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  11. Domestic policy • AIGN supports a price on emissions • Emissions trading has pluses with permit allocation; least-cost international trading; long-term price discovery (but medium term price instability) • Emission tax may offer less uncertainty on price • The policy problem is the transition to a comprehensive global price A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  12. AIGN principles • Managing uncertainty • National – there is a real problem with multiple Federal and State measures • Stable policy settings and institutions • Long-term price discovery • Trade exposure • Compensation • Investment in RD&D • Investment in adaptation A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  13. CPRS • Delay until 2013 • Until after the Kyoto period AND • Clarity on major economies’ action (USA, China, India) • What ‘certainty’ did CPRS provide? • Legislative framework • But subject to sovereign risk change (witness RET) • Carbon price • But this was to be set by international markets • Copenhagen limited any ‘certainty’ on that score • Was this the best EITE deal? • For most TE it was a bad deal A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  14. Are proxy carbon prices now the main game? • RET and feed-in tariffs (FIT) • White certificates scheme • Emission regulation A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  15. Contributions to electricity prices A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

  16. Where to next? • International • Cancun • South Africa 2011 • USA – China the key • Domestic • Multi-Party Committee on carbon price • State action (NSW FIT; Victoria EPA) A U S T R A L I A N I N D U S T R Y G R E E N H O U S E N E T W O R K

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