The chair of Australia’s largest super fund has called on the federal government to abandon the use of carryover credits, saying it would be dangerous to use the carbon accounting measure alongside other “deadbeat” countries.
AustralianSuper chair Don Russell told the Centre for Policy Development’s climate forum on Monday evening that Australia should avoid being a “free rider” on climate at the next United Nations COP26 conference.
“It’s going to be particularly dangerous for Australia to be flirting with things like carryover credits,” he said. “That puts us in very bad company with a whole stack of other deadbeat countries at a time when the world will be wanting to lift global standards.
“It will be very much in Australia’s interest to draw a line in carryover credits and sign up with the rest of the right-thinking members of the world community.”
Mr Russell said the fund’s action on climate was informed by creating “long-term value” for members, adding American foreign policy under President-elect Joe Biden will be more structured and aggressive.
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.
“It’s easy for us, now that we’re all caught up in the circus of the transition, to forget a little bit just how important this election was.
“It’s fair to say the world was teetering on the edge of something really chaotic. Another four years of the Trump administration would have done lasting damage to US institutions and it also would have set back the chances of any global cooperation on a whole range of issues for a very long time.”
Mr Russell said Mr Biden’s climate policies will be constrained by a Republican-heavy Senate but predicted the Democrat president would continue to use executive power to pass climate policies.
“Australia will not want to be seen to be actively opposing the US in the run up to COP26, we will be in a tricky position so we will need to trim our policies so we are not voting against the US,” Mr Russell said.
Over 200 countries, businesses and non-government organisations will meet in Glasgow next November to discuss the implementation of the Paris Climate Accord, signed in 2016 to limit global warming to 2 degrees this century.
Australia is the only country that has said it intends to use carryover credits – an accounting mechanism that uses historical emission reductions to meet current targets – for its Paris target. Last December, a bloc of 32 countries including Germany, France, the UK, and New Zealand lobbied to ban the use of carryover credits.
Prime Minister Scott Morrison last week flagged it was his government’s goal to soon abandon their use but stopped short of making any firm commitment.
Outgoing executive board member at the Australian Prudential Regulation Authority Geoff Summerhayes, also speaking at the forum, called on the Australian government to show leadership like that displayed during COVID-19 to prepare the economy for “the next industrial revolution”.
“To a low carbon future, which like previous transitions will not only require massive investment, it will also create a wealth of opportunities and leave a raft of stranded assets weighing on those that didn’t see it coming.”
Mr Summerhayes said Australia’s financial system depends on companies managing and responding to climate risk.
“Financial regulators recognise the material risk presented by climate change for the finance sector, and are acting to support the industry as it addresses these risks and also the opportunities where they occur.”
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