A summary of the outcome of COP15 and what Australian business should do in response.

1. Copenhagen:
Defeat snatched from the jaws of victory
or a major breakthrough?
Over the last 12 months, climate change Copenhagen. The Opposition had argued further binding commitments to limit
has dominated the national and that the legislation, particularly in its current greenhouse emissions during a second
international political agenda – with good form, was premature until the outcome of commitment period. However, with the
reason: a “no action” scenario is expected Copenhagen was known and that the United States of America still refusing to
to result in catastrophic outcomes around more appropriate time for parliamentary ratify the Kyoto Protocol now or in the
the globe. debate is in February 2010. The future, attending countries sought to find an
independents actively proclaimed the 5% alternate long term co-operative solution.
On a National level, the Australian Senate emissions reduction commitment as a
has twice attempted to pass the Carbon pusillanimous target. The hang-ups remained the four basic
Pollution Reduction Scheme Bill (ETS) since it questions that have dominated
was originally introduced to Parliament on The Copenhagen Accord international discussions for the two years
14 May 2009. The Bill - which aims to create leading up to the Conference. Namely,
an emissions trading system within Australia - how do we:
On the 7th December the 15th Conference
has continued to highlight the ongoing
of Parties (COP) under the United National
Australian political divisions on climate
Framework Convention on Climate • cut emissions (in particular with aim
change.
Change, commenced in Copenhagen. to set emissions target for
The talks are the latest in an annual series of developed countries between 25-
The Government had argued that the UN meetings that trace their origins to the 40% and reduce emissions from
Australian response pre-Copenhagen was 1992 Earth Summit in Rio, which aimed at deforestation especially in South-
essential because it demonstrated how coordinating international action against East Asia);
serious Australia was about reducing its climate change. • help at-risk countries adapt to a
greenhouse emissions and would changed world;
encourage other nations to make similar • share the technology;
In attendance were more than 192
commitments. • and finance these efforts?
counties. The “main players” consisted
largely of the USA, China, India and the
Cynics viewed the sudden push to enact European Union.
the ETS legislation as merely an attempt by
the Rudd government to remedy Australia's
One of the key aims of the Conference was
failure to put in place a comprehensive
to reach a binding extension to the Kyoto Tel 1800 CLIMATE
climate change regime at the time of the
Protocol which expires in 2012, thereby
Kyoto ratification in 2007, prior to attending www.climatecapital.com.au
enforcing developed nations to make
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2. Copenhagen:
Defeat snatched from the jaws of victory
or a major breakthrough?
Regrettably, the Conference did not result 4. Signing countries to nominate how reintroduced in February 2010 is
in any formal, legally binding arrangements they will decarbonise their questionable.
being entered into by the developed and economies by 2050
major developing countries. Instead a non- 5. Assessment of Accord There is the prospect (albeit limited) of the
binding political statement of “agreed implementation by 2015 Rudd government joining forces with the
intent to pursue further negotiations towards Greens and materially modifying the CPRS
a binding agreement”, referred to as the One of the Accord’s more immediate to align with the Greens’ proposed
“Copenhagen Accord” was drafted and requirements is for developed countries to amendments.
subsequently “adopted” by 26 countries nominate, by 31 January 2010, their
including the US and China, which economy wide emissions targets for 2020. Even the Rudd government’s climate
encouragingly at least represents With a current target variance of between change adviser, Professor Ross Garnaut, has
approximately 80% of global emissions. 5-25%, (contingent on the extent of the expressed the view that a double
Although non-binding, this is also other signatories commitment levels), it is dissolution and joint parliamentary
encouraging to the extent that it is the first highly questionable as to whether Australia committee would be necessary before the
time that the major emitters, China and the ( or any of the other 25 member countries) CPRS could be passed in its current form.
USA, have aligned themselves to any form will commit to significant targets until they
of agreement to abate emissions. are completely assured of the level of buy-
We expect that a CPRS will be enacted but
in by the other countries under the Accord.
not until and unless the Rudd government
The Accord is made up of only 12 Whether the members can sufficiently
successfully wins the next election in early
paragraphs. assure one another within one month so as
2011. The start date for the CPRS would
to be able to confidently set their
likely then be deferred to 2012.
Highlights of the document include: independent mid-term targets under the
Accord will be interesting.
1. Reduce carbon output to hold
temperature increase to 2 degrees Will the CPRS Bill be passed in February?
above pre-industrial levels
2. Review target to 1.5 degrees In light of this cloud of uncertainty and the
subject to success of Accord outcome of the proposed US emissions
implementation trading scheme, the likelihood of the CPRS
3. Mexico round of talks in December Bill being successfully passed when Tel 1800 CLIMATE
2010 www.climatecapital.com.au
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3. Copenhagen:
Defeat snatched from the jaws of victory
or a major breakthrough?
Where does this leave us? feature of the operations of all business for Every business needs to understand the risk
many years to come. Learning to navigate that it faces and develop adaptive
In short: the certainty that business has this uncertainty will determine the success strategies to the way the world is rapidly
been seeking has not been delivered. of many businesses. The carbon risk in your changing. These strategies need to be well-
business has not “gone away.” informed. For example, in Europe, the
Copenhagen talks create expectations
With the Rudd Government having
Despite the failure of the Copenhagen talks that all sectors of the economy except
announced its COP15 2020 emissions target
to reach agreement on binding targets and agriculture will be electrified by 2050.
at -5% but facing the challenge of
reintroducing the CPRS legislation next give the Rudd Government the impetus to
month, what is becoming increasingly pass its CPRS, a strong signal was issued by Do you know what strategies may be
apparent is the mounting pressure and call the 26 countries signing the accord. appropriate to preserve value in your
for action from business leaders seeking business?
more immediate resolution on climate Each of the signing countries (including
change issues. Australia) agreed to comprehensively Climate Capital can help you reveal the
review how their economies could be strategic pathways which are available to
Business leaders attending the restructured in the period to 2050 to your business to prosper and create value in
Copenhagen Conference openly significantly reduce carbon footprints. the face of manifest change in the way our
expressed their acute frustration at the lack economy is structured.
of international political agreement to date. Irrespective of whether the Rudd
For many years these leaders have faced Government succeeds in implementing its Contact Climate Capital now to discuss
growing pressure from shareholders, CPRS, there are two major forces at work to these issues further:
consumers, lenders, suppliers and investors ensure that the carbon risk in your business
to be environmentally responsible and they remains real and present: email: admin@climatecapital.com.au
are aware of how quickly these demands
are intensifying. 1. energy price increases show no phone: 1800 CLIMATE.
signs of slowing
Disparate international regulatory 2. public policy is likely to force
frameworks that govern environmental change (e.g. Green Star ratings on
performance have also adversely affected new buildings; high feed-in tariffs for Tel 1800 CLIMATE
their operations. Regulatory and policy household renewables).
uncertainty across jurisdictions will remain a www.climatecapital.com.au
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