Australia’s reputation at risk over Kyoto credits following Biden win

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A major climate policy decision looms for the Morrison government following the election of Joe Biden as the next US President, promising a pro-climate agenda – commit to greater emissions reductions and abandon use of controversial Kyoto 'carryover credits' or risk damage to Australia's reputation.

Australia has committed under the international Paris climate agreement to reduce its greenhouse gas emissions by at least 26 per cent, based on 2005 levels, by 2030.

President elect Joe Biden has pledged the US will eliminate carbon emissions from the electricity sector by 2035 and achieve net zero emissions by 2050.Credit:AP

On the current trajectory it will have to draw on 411 megatonnes of 'carryover credits' which were accrued in 2008 by overachieving on the emissions reduction targets under the Kyoto protocol. Australia is the only country that has said it intends to use carryover credits for its Paris target.

Mr Biden is poised to make climate commitments that will outstrip Australia's, pledging the US will eliminate carbon emissions from the electricity sector by 2035 and achieve net zero emissions by 2050.

Mr Biden's presidency means Australia's five largest export markets, covering 70 per cent of trade, will have net zero targets for 2050 or 2060 including the US, China, Japan, South Korea and the UK.

Carbon Market Institute chief executive John Connor, a former diplomat for Fiji in United Nations climate change negotiations, said Australia would face international pressure to abandon carryover credits.

"It's not inevitable Australia will abandon carryover credits, but other countries will be looking for credible emissions reductions and frankly using carryover credits would come at lasting cost to our reputation," Mr Connor said.

The Morrison government has not set emissions reduction deadlines, focusing instead on reducing the cost of low emissions technologies to increase their usage.

Energy and Emissions reduction Minister Angus Taylor said Australia would "only rely on past overachievement to meet future targets to the extent necessary".

"We beat our Kyoto-era targets by up to 430 million tonnes and we'll meet and beat our 2030 Paris target."

Countries will present their plans to meet their Paris Agreement commitment in November 2021 when the UK hosts the next round of United Nations climate talks in Glasgow.

Kyoto credits explained

  • Australia’s carryover credits come from its participation in an international climate agreement to reduce carbon emissions and curb global warming, known as the Kyoto Protocol.
  • The credits are the amount Australia exceeded its emissions reduction target for the first Kyoto period (2008-12) and the projected overachieved for Kyoto 2 (2013-2020). The latest calculation is 128 million tonnes of greenhouse gas for Kyoto 1 and about 280 million tonnes for Kyoto 2.
  • The Morrison government is counting the surplus towards Australia’s commitment to the 2015 international agreement, the Paris accord, where Australia pledged to cut 2005-level emissions by 26-28 per cent by 2030.
  • Australia played hardball in negations over Kyoto targets. It was one of three nations – along with Norway and Iceland – permitted to increase its 1990 emissions by 2020 and was permitted to count savings from reduced land clearing, which has supplied almost all Australia’s Kyoto “over-achievement”.
  • Taken from 1990 to 2012 Australia’s emissions from industry grew by about 28 per cent, but the reduction in emissions generated by land-clearing restrictions dragged Australia’s emissions below the 8 per cent increase permitted. 

Australia's former top climate diplomat, Howard Bamsey, said the UK and other allies would expect Australia to present a "credible" plan to increase its climate action.

"On current settings with no policy change I'd say many other governments would think if it's not illegal to use carryover, they regard it as unreasonable because it's hiding in the thickets of the Paris agreement and dodging the issue in a way that encourages exploitation of loopholes," he said. "It would have a serious impact on Australia's credibility."

However, Australia's former ambassador for the environment Patrick Suckling, currently a senior partner at climate investment advisory Pollination Group, said while he expected the Biden administration to exert pressure on Australia "it won't be confrontational".

He also said the Coalition's shift to be more active on climate policy and the evolution of carbon abatement and renewable energy technologies "provides the government room to move to not use carryover credits".

Steven Hamilton, a senior economist at the Blueprint Institute, which includes former Liberal MPs Christopher Pyne and Robert Hill, said Australia would need to "massively" increase its current rate of reductions to meet its 2030 Paris target.

"Over the next decade Australia will be required to reduce emissions by 15 per cent to meet its target, but the current trajectory is projected to reduce emissions by just 4 per cent," Mr Hamilton said.

"If you wanted to meet the target without carryover credits you'd have to bring forward the closure of something like six coal plants."

Conservative lobby group Coalition for Conservation executive director Leo Shanahan said "the global trend is only going one way – towards net zero".

"The Morrison government should commit to net zero by 2050 and a clean energy mix that makes it possible before the (Glasgow talks). This would not only avoid being left out in the cold diplomatically, but negate the very real threat of carbon tariffs."

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