Nov 05, 2015 - 12:30pm
This article originally appeared in The Sydney Morning Herald on 05 November, 2015.
CEO, The Climate Institute
Everything you've been told about international climate-change negotiations is probably wrong. They don't "succeed" or "fail". They don't "drive" pollution reductions – national policies and technological innovations do that. They are about harnessing and focusing action.
With less than four weeks until the Paris climate conference, the United Nations' leading climate official, Christiana Figueres, cautioned against overemphasis on the negotiations, saying, "international agreements don't cause change, they mark it".
Her point is that, across the world, regulators, investors, companies and governments are already acting – investing in new energy technologies and building new industries.
Although this action is happening for a variety of self-interested reasons – from China's air pollution, to Pentagon security concerns, to many countries positioning for economic opportunity – in unprecedented ways, the focus is on climate risks and outcomes.
With Prime Minister Malcolm Turnbull urging us to focus on the ends of climate policy, then the means to get there, it is timely to take stock of the change under way and the level of agility Australia requires.
The 2009 Copenhagen conference, often derided as a failure and looming large in his previous leadership, actually marked a key turning point in climate focus.
Before Copenhagen, climate negotiations had an unquantified objective of avoiding "dangerous global warming". Many a company or country said they would accept the community's determination on objectives, but were happy with the lack of accountability that ambiguity brought. After Copenhagen, the goal of keeping warming well below 2 degrees above pre-industrial levels became part of the policy architecture.
This was a crucial moment in climate politics and carbon economics. It effectively set a cap on the total amount of global greenhouse gas emissions and, therefore, created a benchmark against which to assess promised carbon reduction action.
Risk analysts soon realised that keeping within the global "carbon budget" required rapid, sustained carbon reduction – and that, in a world moving to limit pollution, assets built for a high-carbon economy could become stranded.
This is not anti-fossil fuel. It's pro-maths.
That maths means global emissions need to get to net zero or below, not just to nebulous "low carbon" levels. The US and other G7 countries, the World Bank, the Organisation for Economic Co-operation and Development and the International Monetary Fund have recognised this. These "hippies" were recently joined by the historic Australian Climate Roundtable, where the Business Council of Australia, Australian Industry Group and others recognised that avoiding 2 degrees requires that countries such as Australia achieve net zero emissions or below.
In the past couple of years, investments in oil pipelines, coal mines and power stations have begun to face much greater scrutiny under this carbon maths. Stakeholders with long-term responsibility, such as those managing our superannuation funds, now face questions from groups ranging from the Asset Owners Disclosure Project, which calls for transparency on investors' climate risk management, to the divestment movement, to capital managers themselves. Ernst and Young's recent survey of investors showed almost two-thirds are concerned about the risk of getting caught with stranded assets on their books.
Under pressure from capital, as well as the community, corporations are now beginning to assess whether they can run in a global economy avoiding 2 degree warming. BHP Billiton has recently done so. In signing the "We Mean Business" statement, Origin, BT Group and many others will join in.
Financial and prudential regulators are also taking action. The IMF is to incorporate climate risks in its economic forecasts. France is mandating disclosure of its superannuation funds. A month ago, in a speech at insurance giant Lloyds of London, Bank of England governor Mark Carney called for a far greater focus on climate disclosure. The G20 and its Financial Stability Board, established in the aftermath of the global financial crisis, is also examining these risks.
Unlike others, our prudential regulators have been quiet on climate risks. Our government has been quiet on the requirement for zero emissions. Its initial 2030 pollution reduction target, like some others, is inadequate. It would burn up a 2 degree carbon budget by 2029, leaving us, in 2030, as the highest per capita and highest carbon intensity economy among advanced economies. With global investors and business looking to action the economies of zero carbon and below, this is not a good position.
We need to focus. As Australia moves towards the Paris climate negotiations, it is important to avoid the trap of waiting for a fully formed global agreement before taking sufficient action.
Global initial pollution-reduction commitments have only reduced warming projections from above 4 degrees to just below 3 degrees. The prospects of a framework agreement in Paris that can scale up that action are good, but won't be perfect. That's not an excuse for delay or piecemeal action – especially for high-carbon Australia in a world where the cost of cleaner alternatives are plummeting.
John Connor was CEO of The Climate Institute from 2007 to March 2017. Whilst qualified as a lawyer, John has spent over twenty years working in a variety of policy and advocacy roles with organisations including World Vision, Make Poverty History, the Australian Conservation Foundation and the NSW Nature Conservation Council. Since joining The Climate Institute in 2007 John has been a leading analyst and commentator on the rollercoaster that has been Australia’s domestic and international carbon policy and overseen the Institute’s additional focus on institutional investors and climate risk. John has also worked on numerous government and business advisory panels.