In March this year President Bush
announced that he opposed the Kyoto Protocol because it would impose an
unacceptable cost on the U.S. economy and did not include developing countries
in mitigation efforts.� He also said
that the U.S. would be undertaking comprehensive reviews of its climate change
and energy policies. Given that the U.S. is the world�s largest economy and
accounts for 25 percent of global greenhouse gas emissions, its rejection of
the Kyoto Protocol has called into question the entire negotiating process.
I will go into more detail later about the U.S. decision, the reaction of Australia and other key countries and the
prospects for the resumed session of COP6.�
But first allow me to sketch briefly what happened at COP6 in the Hague
last November and what has happened since.
COP 6 was supposed to be the culmination of
three years of negotiations since the Kyoto Protocol was adopted in 1997.��� It was to settle the outstanding issues
and allow countries to move toward ratification of the protocol.� The key issues at the Hague were:
- The extent to which countries should be allowed to meet their targets
through market-based mechanisms such as emissions trading, as distinct from
domestic measures; - The extent to which greenhouse sinks should contribute to meeting
targets; - What compliance system should apply and what should be the consequences
of non-compliance; - The extent to which developed countries need to respond to developing
countries� demands for transfers of resources and technology. - There was also the question of how and when
developing countries should take on commitments under the protocol. Australia
and the U.S. made this a live issue at COP6.
As you would be aware, there was no concrete
outcome from the talks in the Hague.�
The key political differences which had separated the main negotiating
groups since Kyoto remained insuperable.�
COP6 President Pronk attempted to forge a deal by producing a compromise
paper on the key contentious issues late in the second week.� However, this did not provide the
breakthrough needed.� In the final
hours, a negotiation between the umbrella group and the EU started to develop a
compromise proposal on some elements of sinks, use of the flexibility mechanisms
and compliance.
In the context of that proposal, the umbrella
group made a number of concessions.� But
EU member states could not reach a consensus on the proposed compromise
package.� Several EU members held to a hard-line
on capping the use of market-based mechanisms, limitations on the use of sinks
and a punitive compliance system.� There
is a widespread view that the EU missed an important opportunity at COP6 to do
a favourable deal with the outgoing Clinton administration.
Even if the EU and umbrella group ministers
had reached agreement in the Hague, getting the G77 onside would have required
a lot more work, as well as significant financial concessions.� The EU did not have a coherent approach to
dealing with developing countries.� The
umbrella group attempted to bring the developing countries on board at COP6
with a proposal for additional funding conditional on their taking action to
reduce emissions.� The G77 never really
engaged on this offer.
At the close of the Hague meeting, it was
agreed that the cop should be resumed later in 2001 and the dates were
subsequently set as 16-27 July in Bonn.
As I have already mentioned, the announcement
by President Bush that he opposes the Kyoto Protocol has changed the entire
negotiating context.
The EU has responded to the president�s
announcement by re-asserting its determination to ratify the protocol by 2002
in time for the tenth anniversary of the Rio Conference, with or without the
U.S.� the EU maintains that it is
feasible to work towards entry into force of the protocol on the basis of ratification
by the EU, the east European countries, Russia and Japan.
This may theoretically be true.� But it is not clear that EU industry and
economic ministries would allow the EU to risk its global competitiveness by
bringing the protocol into force without the U.S.� There are even bigger question marks over ratification by Japan
and Russia in the absence of the U.S.
Ratification and entry into force of the
protocol could be of benefit to Russia because it would put a price on its
carbon credits.� Without the U.S. in the
protocol, however, Russia would lose the biggest potential buyer of its credits
and thereby significantly reduce its potential revenue.� But it might see reduced revenue as better
than nothing.
As for Japan, ratification would be consistent
with that country�s strong political commitment to Kyoto.� However, without the U.S., Japanese industry
too would have serious competitiveness concerns.� To achieve Japanese ratification, the EU would need, most likely,
to compromise its hard-line positions on sinks and mechanisms and, possibly
guarantee Japan access to Russian emissions credits.�
The EU�s stated desire to bring the protocol
into force without the U.S. ignores the reality that to be effective any global
framework must include all major emitters.�
It does not make environmental sense to have a global framework on
climate change without the world�s largest emitter.� Without U.S. involvement, the protocol would not foster the same
dynamic market-based approach to addressing climate change.� If the protocol entered into force, there
could, of course, be an international emissions trading market, but its volume
would be significantly smaller without demand from the U.S.� this likely would mean a low carbon price
and put into doubt the viability of projects in developing countries under the
clean development mechanism.� With the
U.S. outside the regime, it is hard to see how developing countries could be
persuaded to take on commitments.
An immediate EU objective is likely to be to
demonstrate to the world, and to its own environmental constituencies, its
commitment to addressing climate change.�
Despite strong signals from the U.S. administration, some in the EU
believe that ultimately they can draw the U.S. back into the Kyoto framework even
if the outcome of the U.S. review proposes an entirely different approach.
Despite the EU statements of its intention to
ratify the protocol in 2002, there must be some uncertainty as to the path it
will follow in response to the U.S. review.�
While the EU is not prepared yet to indicate any acceptance of a move
away from Kyoto, it knows that ultimately it would have to bring the U.S. into
an international agreement on climate change
In response to President Bush�s stated
opposition to Kyoto, key members of the G77, including China and India, have
reiterated their opposition to suggestions they move quickly to participate in
climate change mitigation efforts.�
Other developing countries, notably the small island states, are
concerned that the stalemate over Kyoto could postpone international action to
address climate change.� Developing
countries also remain concerned that they were not part of the EU/umbrella
group discussions in the Hague and about Pronk�s efforts to work with major
players only to develop a compromise proposal.�
The G77�s focus continues to be on securing new and additional funding
for capacity-building, technology transfer and adaptation to climate change.
Consistent with the EU approach, COP6
chairman, Dutch environment Minister Jan Pronk, has been working for an outcome
from the resumed COP6 meeting in Bonn that would allow the EU and G77 countries
to ratify the protocol.� He has
circulated a revised compromise paper based on the document he produced near
the end of COP6.� Pronk�s revised paper
is heavily slanted towards EU positions and will not help re-engage the U.S.
In an attempt to move his process forward,
Pronk convened a meeting of some 40 ministers responsible for climate change
last month in New York.� The Minister
for the environment and heritage, Senator Hill, represented Australia at this
meeting.
This was the first opportunity in a
multilateral setting for countries to express their views on the new U.S.
position toward Kyoto.� The EU repeated
its intention to ratify the protocol in 2002 and urged Pronk to continue in his
efforts to reach agreement on Kyoto implementation issues at the resumed COP6
in Bonn.� Pronk�s paper was not
discussed in any detail.
Pronk has proposed that ministers from those
countries with emission targets under the protocol meet on 5 June and that
there be a broader ministerial meeting on 27 and 28 June.� He hopes that these meetings will discuss
the substantive crunch issues outlined in his paper before the resumed session
of COP6.� In our view, these meetings
will only serve a useful purpose if the U.S. is in a position to discuss the
results of its review.
Let me now turn in greater detail to the
position of the U.S. and its climate change policy review.
It goes without saying that the outcome of
this review will be of major importance, irrespective of how the work being
undertaken by Pronk unfolds.� The U.S.
review is being undertaken at cabinet level under the direction of Vice
President Cheney and appears to be looking at a wide range of policy options
for addressing climate change.� It is
closely tied to the cabinet-level development of a domestic energy policy.
In a CNN interview last week, Cheney�s basic
message was that the energy policy review is likely to point to the need for
greater self-reliance on domestic energy sources and to make recommendations on
the appropriate mix of different energy sources for electricity generation,
including a reassessment of the role of nuclear power.� Cheney also highlighted the central role of
technology in promoting more efficient use, and conservation, of energy.
The results of this review are expected to be
released tomorrow (17 May) and will provide some important pointers to what
might emerge from the climate change review.
An outcome on climate change is not expected
until late May/early June, probably in time for the EU/U.S. summit in Sweden on
15 June.� Even then, it might only take
the form of some broad-brush principles that set out the general direction of
the administration�s thinking.
We need to see the results of the U.S. review
before we can start making educated guesses about the likely outcome of the
resumed COP6.� It would be a mistake to
pre-judge the findings of the review and we can only speculate about what
elements are under consideration.
Following the U.S. announcement that it
opposed Kyoto, Prime Minister Howard wrote to President Bush on 11 April
outlining Australia�s approach to climate change.� The letter, which is in the public domain, states that:
- Australia remains committed to dealing effectively with climate change;
- Since signing the Kyoto protocol in 1998, we have worked towards
realising its potential as a global framework to address climate change; - A workable international framework to address climate change needs to
be economically manageable and include developing countries; - U.S. leadership is essential if efforts to address global climate
change are to be successful.
The Prime Minister outlined five key elements
which any effective global framework to address climate change needs to
include:
- Commitments from all major emitters;
- Unrestricted market-based mechanisms, including emissions trading;
- An approach to carbon sinks that captures both economic and
environmental opportunities; - A facilitative, rather than punitive, compliance system; and
- Assistance for the most vulnerable countries to adapt to climate
change.
So, will the resumed session of COP6 provide
business with more certainty?
There must be considerable doubt about
this.� As I have already indicated, much
depends on the outcome of the U.S. review.�
However, given the short lead-in time and the comprehensive nature of
the U.S. review, it is unlikely the outcome will be agreement on a global
climate change framework in Bonn.