Thursday, July 2, 2009

The effects of climate talks in Italy will reverberate for Rudd

NEXT week Kevin Rudd is back on the international road, briefly visiting Germany and then going to Italy, where his prime destination is L'Aquila — near the site of this year's earthquake — for Thursday's major economies forum on climate change.

The forum is an important step on the way to December's Copenhagen climate change conference; progress or lack of it at L'Aquila will make that road less or more rocky.

The L'Aquila result could also affect the debate in Australia, where the Senate is due to vote in mid-August on the emissions trading scheme.

If L'Aquila goes well, the Opposition may be under greater pressure to deal early rather than hang out.

The forum, which is just three hours on Thursday afternoon (local time), among meetings squeezed around the G8 summit, will be attended by some 17 economies, plus the United Nations and Denmark, host of December's conference.

The meeting will aim to give a kick along to the Copenhagen process, including making progress on pollution targets, on clean energy technology transfer and perhaps on international financing to assist developing countries in reducing emissions, crucial to getting agreement with these countries.

Australia is well placed on technology — the carbon capture and storage institute Rudd has set up is going down a treat internationally; now he can leverage his budget's about $1.5 billion Solar Flagships program. He may also indicate Australia's preparedness to help financially, following Gordon Brown's promise last week that Britain would contribute its "fair share" to climate financing.

The big question is what the leaders will say about their overall goal. Will they be willing to be as precise as Brown was last week when looking to Copenhagen? "We know … that an increase of more than two degrees centigrade (on pre-industrial levels) is dangerous," he said. "Our goal must be 'no more than two degrees' … that means stabilising greenhouse gases at about 450 ppm. And this in turn means that global emissions must peak no later than 2020 and be cut by at least half on 1990 levels by 2050." Anything with that level of specificity would be ambitious next week; the alternative would be a vaguer statement, which tried to keep the language robust.

After L'Aquila, Rudd will attend a UN-convened meeting in New York on September 22, just before the G20 leaders summit in Pittsburgh. By then the signs for Copenhagen may be clearer, although these things always go down to the wire. The present expectation is that Copenhagen, like Kyoto in 1997, won't reach complete agreement but a general framework agreement to form the basis for further negotiations.

Rudd goes to L'Aquila without the ETS legislation. Does this matter for our international clout? Not so much at this stage; the legislation is still being debated in the Parliament. But if it is rejected, that will be a setback for the Government's international credentials at Copenhagen, especially if it had been twice rejected. Or to put it another way, Australia's credentials would be strengthened if the Government had the scheme through by then.

Although the Opposition has, importantly, backed the emissions reduction target range the Government is taking to international talks, it is not excessively cynical to think it isn't too worried about Australia's Copenhagen "cred". It is being driven more by the push and pull of domestic politics. On one hand, there is the push of polling that shows even Liberal voters want action; on the other hand, there are fears in terms of jobs and other downsides.

The pressure on the Liberals has been strengthened by last week's passage of cap and trade legislation through the US Congress' lower house, although they have seized on it to claim higher emitters would receive a more generous deal than their Australian counterparts (but it can be argued it is also more generous on the green side).

Meanwhile, before the August Senate vote, there is yet another flurry of last-minute work. Coalition emissions trading spokesman Andrew Robb left yesterday to study latest US developments; he will go on to China. The Opposition and independent Nick Xenophon have commissioned fresh modelling.

The Opposition's policy is to vote against the legislation if it can't get it deferred until after Copenhagen. But Turnbull has strongly indicated he wants to avoid a double dissolution trigger. The expectation is the Opposition would defeat the bills in August and perhaps deal second time around.

Last weekend, however, Turnbull appeared to hint that he might even consider a deal when the legislation comes up in August, if the Government were willing to accept amendments the Opposition put up — although Robb quickly said there was no such timetable. The Opposition's signals remain confused, mainly because its ranks are so divided.

One thing is obvious, though: if there is to be a deal, whenever it is, the Nationals would need to be decoupled so they can vote against. One Liberal calls this a "velvet divorce", as happened on the international wheat marketing legislation.

If you were giving a weather forecast for the climate issue over the rest of this year, internationally and domestically, it would surely be: turbulence all round.

Michelle Grattan is political editor.

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