By Frank Jotzo

At the Doha COP, Australia announced it will come on board Kyoto 2, with a commitment to reduce national emissions to an average of 99.5% of the 1990 level during 2013 to 2020. Does it matter, and is it a meaningful commitment? 

It may not sound like much of a reduction. But it is well below current emissions levels which are near to the Kyoto 1 target of 108%. And it is in the context of a fast growing population, and an economy that is expanding in energy-intensive industries like natural gas extraction and liquefaction.

Government projections have business-as-usual growing apace, with a massive gap to Australia’s unconditional national target of a 5% reduction at 2020 relative to 2000 levels (1990 emissions were about the same level as in 2000). On this basis, Australia would not just need stringent domestic policies to meet the target, but would also import substantial amounts of international emissions units. Australia’s government has also flagged the possibility of moving to a 15% or possibly even 25% target, depending on the commitments and actions of other countries.

On the other hand, Australia has a reputation for using the inclusion of land-based emissions to comply with Kyoto commitments. Inclusion of reductions in land clearing made it possible for Australia meet the Kyoto 1 target, and this time around it is the accounting for forest management activities that could help out. On top of this, Australia has a considerable amount of surplus units from the first commitment period, which might be used towards Kyoto 2. So perhaps the target will not be that much of a stretch after all.

None of this detracts from the fact that there is a substantial domestic policy effort. Australia has just put in place a national carbon pricing scheme, covering a broader range of emissions than the EU ETS, and starting out with a fixed price of A$23/t (€18/t), well more than double the recent prices in the EU. In 2015, the Australian scheme will be linked with the EU ETS, and Australia will probably be the net buyer (at EU ETS prices). However, there is substantial policy uncertainty. The opposition party has pledged to repeal the carbon price when in power. Expert views are divided over the likelihood of repeal.

But does Australia matter? Probably more than its small population of 23 million and around 1.5% of global emissions might suggest. Australia is much more highly visible in the international climate debate than many other countries of that size.

And more importantly, it is a potent signal if a country that is so resource rich and fossil fuel reliant can implement meaningful climate policy. Australia is the world’s second largest coal exporter, and is home to a large resource industry that has strong political influence. If decent climate policy can be done here, then that alone is reason for some optimism.

A review of Australia’s Kyoto 2 target is here {}.

Working papers about Australia’s climate policies and other topics can be found on the site of the Centre for Climate Economics and Policy {} at the Australian National University.

About the author

Frank Jotzo, Australian National University and Climate Policy Editorial Board member