Big greenhouse gas emitters could pay more under the Gillard’s carbon price if Australia refuses to sign up to a second round of the Kyoto Protocol, a leading climate think tank has said.
In a report to be released this morning, the Climate Institute says that Australian businesses would have more difficulty accessing cheap international carbon permits unless the government joins “Kyoto 2”.
The Kyoto protocol, the international agreement that sets legally binding targets for developed economies, is set to expire at the end of this year. Countries are now negotiating a possible second round.
Erwin Jackson, deputy CEO of the Climate Institute, said Australian businesses would face considerable uncertainty in accessing the United Nations-backed carbon permits.
“The government can’t guarantee that companies will have access to international markets to reduce the cost of meeting emissions liabilities unless we take on a second Kyoto commitment,” he said.
“International trading is based in Kyoto protocol rules and the spirit of those rules suggests that only those countries that have new Kyoto targets could have access to these mechanisms.”
The first round of Kyoto is regarded as far from perfect in that it mandates targets only for developed countries, while large-emitting emerging economies such as China, India and Brazil are exempted. The United States refused to ratify the deal.
Nontheless, Kyoto provides the only clear set of rules on international carbon trading. Advocates say a second round is a vital stepping stone to a broader agreement covering all big emitters, which is due to be negotiated after 2015.
A spokesman for Greg Combet said the government would decide “at an appropriate time” whether to sign up to round two, but said that important rules still needed to be agreed to.
A diplomatic source with knowledge of international negotiations said: “Australia needs to guard its international reputation in the negotiations. If it wants to be seen as progressive, it needs to show that it is. And part of that is signing up to a second commitment period.”
