Download How did we get here?

Climate Change Policy:
The Copenhagen Accord, Cancun
and Beyond
Michael Hitchens, Chief Executive Officer, November 2010
Agenda
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How did we get here?
International negotiations
Domestic policy
Where to next?
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How did we get here?
Domestic policy parallels international events
INTERNATIONAL
DOMESTIC
UNFCCC 1992 (in force 1994)
Ratification of UNFCCC 1992
Berlin Mandate 1995
Carbon tax proposals  Greenhouse
Challenge 1995
Kyoto Protocol 1997 (in force
2005)
National Greenhouse Strategy 1998,
includes MRET (starts 2001)
EU ETS 2003-05
Stern Review 2007
AGO ETS1999-2001;NSW GGAS 2003;
States NETT 2004; QLD GEC 2005;
Bali Roadmap 2007-09
PMs TGET; Ratify Kyoto Protocol;
Garnaut Review; CPRS White Paper 2008
Pre-Copenhagen 2009
RET; CPRS to start 2011
A U S T R A L I A N I N D2010
USTRY
Post-Copenhagen
Multi-Party Committee on Climate Change
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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
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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.”
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Australia’s position
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Busting the myth: -5% is more than our fair
share under the Copenhagen Accord (WRI)
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Myth busting part 2: Emissions/capita
(WRI)
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Myth busting part 3: Emission/$GDP
(WRI)
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Myth busting part 4: Copenhagen Accord
shadow emission prices (McKibbin)
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Domestic policy
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AIGN supports a price on emissions
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Emissions trading has pluses with permit
allocation; least-cost international trading; longterm 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
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AIGN principles
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Managing uncertainty
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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
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CPRS
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Delay until 2013
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Until after the Kyoto period AND
Clarity on major economies’ action (USA, China, India)
What ‘certainty’ did CPRS provide?
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Legislative framework
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Carbon price
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But subject to sovereign risk change (witness RET)
But this was to be set by international markets
Copenhagen limited any ‘certainty’ on that score
Was this the best EITE deal?
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For most TE it was a bad deal
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Are proxy carbon prices now the main
game?
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RET and feed-in tariffs (FIT)
White certificates scheme
Emission regulation
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Contributions to electricity prices
Real $/MWh
2012
Base
Price
2009
Wholesale price
35.00
Transmission/distrib
ution
30.00
Retail costs and
margin
22.00
TOTAL PRICE
87.00
% change
New Network
Investment
Carbon price
White
certificates
scheme
0.00
30.00
7.10
117.00
124.10
34%
6%
Enhanced
RET 2010
Real $/MWh
2020
Base
Price
2012
New Network
Investment
Wholesale price
35.00
5.00
Transmission/distri
bution
Retail costs and
margin
TOTAL PRICE
60.00
20.00
29.10
124.10
Enhanced
RET 2010
?
124.10
?
Carbon price
White
certificates
scheme
45.00
13.40
149.00
?
162.40
?
207.40
% change
20%
9%
28%
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?
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Where to next?
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International
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Cancun
South Africa 2011
USA – China the key
Domestic
 Multi-Party Committee on carbon price
 State action (NSW FIT; Victoria EPA)
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