Disillusioned commentary on Australian financial sector, politics, business, media... with attention occasionally distracted to the world outside... and intermittent reminder that rage is a more life-conserving irrationality than despair.

Thursday, February 03, 2005

Kyoto, or bust

The FIN had an article yesterday, "Industry faces changing climate", discussing possible impacts of the Kyoto Protocol on Australian business:

In a fortnight, the federal government will be able to stand proud as the protector of Australia's resource-dependent industry, having stemmed the environmentalist tide by refusing to ratify the Kyoto protocol.

The fear among some businesses though, is that they well still be swamped by the reality of a global push to cut greenhouse gases.

Internationally, resources giant Rio Tinto has swung its support behind carbon trading, even as the Australian arm publicly says it neither supports nor opposes Australia ratifying the Kyoto Protocol while lobbying behind the scenes to prevent it.

The article quotes leading Australian climate scientist Graeme Pearman as saying, "In Australia [businesses] see a state government preparing a statement with regard to energy and energy futures, they see a federal government and they see and international framework an a Kyoto framework, none of which are in agreement."

But regardless of federal government position, there is growing pressure from investors, conservationists and, indeed foreign customersto take greenhouse gas abatement seriously.

I tend to the view that the Australian position is due to intellectual laziness - the unwillingness of companies, particularly those in the extractive industries, to devote serious effort to finding ways to comply. The article notes that:

According to data gathered by the Climate Group, DuPont, Alcan, British Telecom, IBM and Norske Canada have already saved more than $US5.5 billion between them by cutting carbon emissions by 60 per cent or more.

Granted, not all companies will find that cutting carbon emissions saves money, but at least for the ones where it will, why aren't they already doing it?

The Copenhagen Consensus study finds the economic case for implementing the Kyoto protocol unappealing. Kline's paper on the subject uses a figure of $94 trillion as the net present value of the implementation cost. While the experience of the five companies cited by the Climate group is not a representative sample, is it possible that sustained innovation could yield a massive reduction in that figure?


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