Global Climate Leadership Review 2013


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This presentation summarises The Climate Institute’s report, Global Climate Leadership Review 2013. It provides an overview of Australian climate policy in a global context, as well as elaborating on the implications of global climate diplomacy and domestic actions for Australia. For more information, visit

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Global Climate Leadership Review 2013

  1. 1. TheClimateInstitute IN PARTNERSHIP WITH Global Climate Leadership Review 2013 1
  2. 2. Global Climate Leadership Review 2013 March 2013 “The key message from this review is important and clear: a great competitive margin in the world is going to be over carbon and energy productivity. Countries that slip behind…are going to damage themselves and their competitiveness and prosperity in the coming years.” Lord Nicholas Stern Chair of the Grantham Research Institute on Climate Change and the Environment, London School of Economics and author of the seminal 2006 Stern Review on the Economics of Climate ChangeThis presentation summarises The Climate Institute‟s report, Global Climate Leadership Review 2013. It provides anoverview of Australian climate policy in a global context, as well as elaborating on the implications of global climatediplomacy and domestic actions for Australia. The lead author for this content is Erwin Jackson, Deputy CEO of TheClimate Institute, with contributions from other staff and using research from Vivid Economics. IN PARTNERSHIP WITH Images: Michael Hall, Creative Fellow of The Climate Institute 2
  3. 3. Key FindingsMegatrends towards greater international action on climate change continue but at an insufficient pace.For example, weighted average effective carbon prices on energy in OECD countries are currently PPP*$34/tonne and global clean energy investments, particularly in Asia, remain high and reached US$270billion in 2012.Even with current commitments, the China‟s dramatic rise up the Low-world is still on the path to a global Carbon Competitiveness Index istemperature rise of 3-4 C, well beyond the result not only of its majorthe risky “guardrail” of 2 C. investment in clean energy, but also growth in its high technology exports. China hosted just under half of total global public equity investment in clean energy. The Climate Institute/GE Low- Carbon Competitiveness Index indicates that France, Japan, China, South Korea and the United Australia has seen a fragile Kingdom are currently best reversal of its score on the Index. positioned to prosper in the global However, Indonesia improved low-carbon economy. more to overtake Australia, which is now 17th in the G20. IN PARTNERSHIP WITH *National currencies, other than US dollars, have been converted to international dollars or purchasing power parities (PPP). 3
  4. 4. The momentum for climate action has shifted away from Europe and the United States toward the emerging economies of Asia.One of the many wind farms inthe Hexi Corridor, in remoteGansu province. Although it isthe world’s biggest CO2emitter, China is also erecting36 new wind turbines a day andbuilding a robust newelectricity grid to supply thecities of the east withrenewable energy from the IN PARTNERSHIP WITHdeserts of the west. 4
  5. 5. Global TrendsThe climate system will continue to confront us with the risks of our current economicdependence on pollution.Threats/Impacts As the World Bank warned in late 2012:• Carbon dioxide levels in the atmosphere “The projected impacts (of 4oC global are now at their highest levels in at least 15 million years,40 per cent above pre- warming) on water industrial levels. availability, ecosystems, agriculture, and• Countries around the world were subjected human health could lead to large-scale to a year of unusually severe displacement of populations and have droughts, floods, heat waves and fires. adverse consequences for human security and economic and trade systems.” IN PARTNERSHIP WITH 5
  6. 6. Global Trends“ is the countries that prioritise green energy that will secure the biggest share of jobsand growth in a global low-carbon sector set to be worth $4 trillion by 2015." David Cameron, Prime Minister, United Kingdom, 2013 Opportunities/Solutions • Asia is on track to replace Europe as the world‟s largest clean energy investment region, with more than one third of the world‟s clean energy investment in 2012. • Progress at the international negotiations and on the level of national policies has been significant but insufficient. • To keep warming below 2oC, three key conditions need to be met: • reduced energy demand through significantly greater efficiency, • widespread deployment of carbon capture and storage technologies and renewable energy • and action to reduce emissions by all majorSource: Bloomberg New Energy Finance emitters. IN PARTNERSHIP WITH 6
  7. 7. Policy Snapshot 2012 “In 2012 developing countries passed twice as many green laws as rich ones did.”JANUARY The Economist, January 19, 2013China’s central government orders seven cities and provinces toimpose limits on their emissions ahead of pilot emissions tradingschemes (ETS). MAY South Korea passes legislation to launch an MARCH ETS in 2015. The US releases a draft carbon pollution standard for The UK’s Energy Bill 2012 bans new new fossil-fuel power stations that would require new conventional coal plants. coal plants to incorporate carbon capture and storage.JULY SEPTEMBERAustralia’s carbon price comes into effect. The EU Parliament passes a binding energy efficiencySouth Korea announces that its ETS will not accept directiveinternational offset credits until after 2020. OCTOBER NOVEMBER Norway announces that it will nearly double its US: The first auctions occur under California‟s emission carbon tax on offshore oil and gas operations trading scheme, with units trading at US$11 per tonne. DECEMBER Bahrain, Qatar, Saudi Arabia, and United Arab Emirates pledge to reduce carbon emissions as part of a strategy to diversify their economies. IN PARTNERSHIP WITH 7
  8. 8. Policy Snapshot 2012 For a full list of policy developments in 2012 see the report: global-climate-leadership-review-2013.htmlOr visit the interactive Global Climate Action Map whichallows you to track and compare national IN PARTNERSHIP WITH 8
  9. 9. Who’s leading the low-carbon economy?In 2009, The Climate Institute commissioned leading London-based analysts Vivid Economics tomeasure and rank the low carbon competitiveness of G20 countries.The resulting Climate Institute/GE Low-Carbon Competitiveness Index has been updated thisyear using publicly available 2010 data.Why is low-carbon competitiveness important? Global fossil fuel reservesIn order to have a decent chance of limiting global warming to 2 C, inthe absence of carbon capture and storage technology, the IEAestimates that only 1/3 of fossil fuel reserves can be used.In a world where we succeed in limiting temperatures rises, the right toemit carbon will become a scarce and valuable resource and prosperitywill depend on generating maximum value for each tonne of carbonemitted. What portion of IN PARTNERSHIP WITH fossil fuels can be used 9
  10. 10. Who’s leading the low-carbon economy? IN PARTNERSHIP WITH  10
  11. 11. Who’s leading the low-carbon economy? 2008 v 2010 IN PARTNERSHIP WITH  11
  12. 12. Who’s leading the low-carbon economy?+ France, Japan, China, South Korea and the UK are currently best positioned to prosper in the low carbon economy. France retains the top ranking it received in + China has leapt into the top five best the previous assessment. Japan, South Korea prepared nations. China‟s dramatic rise and the UK have also maintained similar up the Index to third place is the result not scores and positions. only of its major investment in clean energy, but also growth in its high technology exports .+ The United States has fallen behind. One of six countries whose absolute score has worsened since 2008, the US has fallen behind by almost as much as China has leapt ahead, + Australia has slightly improved its and is now in 11th place, down from ninth in score, but not its ranking. Slight 2008. This drop is due in large part to declining improvements across all three categories high-tech exports and a major surge in its have not been enough to prevent reliance on air freight. Australia being overtaken by Indonesia and consequently falling from 16th to 17th place. IN PARTNERSHIP WITH  12
  13. 13. China has leapt into the top five best prepared nations for competitiveness in the low-carbon global economy. Workers at the Goldwind wind turbine assembly plant in Gansu province. Goldwind isIN PARTNERSHIP WITH the largest manufacturer of wind turbines in China and the second largest globally.  13
  14. 14. Emerging Trends• Trends in clean energy benefit Asian economies: A widespread reallocation of investment in renewable energy outlined in the introduction has contributed to an increase in low-carbon competitiveness in Asian economies and a fall in low- carbon competitiveness elsewhere.• The financial crisis reduced the carbon competitiveness of Western economies: The negative effect of the financial crisis has been more severe in developed countries and so the crisis has contributed to the catch-up of developing countries.• High performing extractive economies reinvest resource income: Some of the G20 economies are more dependent on generating income through the depletion of non-renewable resources than others. In 2010, nine countries in the G20 – including Australia - received more than four per cent of their national income from extracting non-renewable resources. Extractive economies have an opportunity to increase their future competitiveness by channelling income derived from non-renewable resources into investment in education and physical capital, including investment into renewables. IN PARTNERSHIP WITH  14
  15. 15. Case Studies France’s policy mix France‟s climate policy is linked to that Norway’s reinvestment of of the EU. By 2020, the EU plans to oil income achieve 20 per cent of its energy Japan’s focus on energy Since discovering oil in the consumption from renewable 1960s, Norway has taken a energy, improve energy efficiency by efficiency 20 per cent and reduce emissions by range of steps to ensure that As an energy importer Japan the income from its resource 20-30 per cent on 1990 levels. has a strong incentive to extraction is used to benefit its minimise its fuel bills. The citizens over the long term. France has also set domestic policies country‟s ongoing focus on to reduce greenhouse emissions by 75 improving energy efficiency is Last year, the carbon tax on per cent by 2050. These include a an important factor in its high offshore oil and gas operations mandatory energy efficiency ranking on the Low-Carbon was roughly doubled to PPP scheme, renewable energy targets and Competitiveness Index. $42 per tonne. incentives, efficient building This additional revenue will be regulations, tax breaks and loans for used to promote renewable energy efficient buildings, financing energy investment and and upgrading of public housing, tax emissions reduction credits for low emitting cars, tax domestically and globally. penalties for high emission cars and substantial investment in high speed rail networks. IN PARTNERSHIP WITH  15
  16. 16. Countries that did well in the index rankings are those whohave recognised the inextricable link betweeneconomic and resource security and climate changepolicies and are acting accordingly. A solar farm under construction and near completion, in the remote Gansu Province, China. The government is working towards a plan to supply PARTNERSHIP WITH IN 15 per cent of the country’s energy from alternative and renewable sources by 2020.  16
  17. 17. How is Australia doing?Australia’s low-carbon competitiveness has improvedslightly since 2008.• Australia‟s performance has slightly improved in all three Index categories, but progress is fragile• Improvement is driven by an increase in high technology exports and an unusual increase in the energy efficiency of the transport sector, in part this is likely to be being driven by higher fuel prices shifting consumer preferences towards more efficient modes of transport.• Australia‟s public equity investment in clean energy in 2010 totalled US $250 million. Compared with other countries this was a relatively small amount: less than 1/10 of public equity raised in the United States, though higher than South Korea, Brazil and France.• This data, however, does not include the impact of the Clean Energy Future laws that took effect in 2012. These have the potential to significantly improve the nation‟s low- carbon competitiveness as carbon pricing promotes low-carbon investment and discourages allocation of resources to high-carbon technologies and activities. With A child’s bicycle is the only recognisable item left in what was once a family home in the Clean Energy Future package carbon productivity broadly keeps Tasmania. Over 25,000 hectares were burnt in pace with global trends. the Forcett region alone, during one of more than 40 fires that were ignited in Tasmania during the January 2013 heat wave. IN PARTNERSHIP WITH  17
  18. 18. Are we going it alone? Australia’s carbon price of $AU 23 comes in near the bottom of the list of 34 OECD countries. Australia is not alone on pricing carbon. OECD research published in January 2013 found that 29 of its member countries have higher „effective‟ carbon prices than Australia. In fact carbon pollution – whether through a tax, market mechanism, or other policy – is priced in every OECD country. The weighted average of all OECD countries is EUR 27 ($AU 35) per tonne. Australia‟s carbon price of $AU 23 comes in near the bottom of the list of 34 OECD countries. Source: OECD, Taxing Energy Use: A Graphical Analysis, 28 January, 2013 IN PARTNERSHIP WITH  18
  19. 19. The Doha Climate SummitDomestic action and international agreements are mutually reinforcing.The action that countries take to reduce emissions and drive low-carbon competitiveness does notoccur in isolation of cooperation between other nations.The UN Doha Climate Summit in 2012 was an opportunity to finalise the negotiation of the 2007 BaliAction Plan and begin its full implementation. It was also an opportunity to finalise amendments to theKyoto Protocol that would see the beginning of new binding commitments for some developedcountries. In achieving these outcomes Doha can now help governments focus on finalising the post-2020 binding agreement in 2015.The years 2013 and 2014 will focus international scrutiny on Australia commits to build global ambition.In Doha, countries agreed:• Australia and other developed countries should demonstrate how they will scale up investments to deliver the agreed US$100 billion in public and private sector finance by 2020.• In 2014, Kyoto countries must revisit their national targets and communicate to other governments their intention or not to increase ambition. This will occur in parallel with international review of the adequacy of actions to meet the goal of avoiding 2 C. This will include key inputs from groups like the Intergovernmental Panel on Climate Change which releases its Fifth Assessment of the science, impacts and economics of climate change over the 2013-14 period. IN PARTNERSHIP WITH  19
  20. 20. Bringing it home“Australia’s fragile improvement in low carbon competitiveness has occurred against a backdrop ofdelicate but important progress in UN climate negotiations, cuts in clean energy costs, growth inglobal carbon pricing and other policies and continuing strong investment in clean energy.” John Connor, CEO, The Climate InstituteThree key conclusions can be drawn from the analysis provided in the Global Climate LeadershipReview 2013:1. Policy implementation to reduce emissions and drive low pollution investment around the world continues. Many countries recognise that reducing their dependence on high emission industries is in their economic self-interest.2. The engine room of clean energy investment and carbon policies is shifting to Asia, particularly China.3. Australia‟s sliding carbon competitiveness had a fragile reversal between 2008 and 2010 but the next few years will be critical to sustaining this trend and our historical legacy in crucial global climate negotiations due to conclude in 2015. IN PARTNERSHIP WITH  20
  21. 21. Bringing it homeBuilding national low-carbon productivityAustralia has not been not well prepared to remain competitive in a world moving to constrain carbonemissions and encourage clean energy. The Clean Energy Future package is a break from decadesof delay and inaction and provides a platform for ongoing economic growth. There are signs that thepackage is already having an impact on emissions in the power sectorPolicy readiness for greater ambition and cooperationIn 2012, both major parties supported Australia making a legally binding international commitment toreduce national emissions over the period from 2013-2020. With Coalition support Australia includedits full bipartisan-supported target range of 5 per cent to 25 per cent reductions on 2000 levels by2020 into the Kyoto Protocol. From 2013 to 2015, whoever wins government will be under intensedomestic and international scrutiny on performance against these commitments.Australian leadership in 2013Addressing climate change in Australia and globally is a marathon not a sprint. Stable and long-termpolicy settings are needed to deliver investment and growth in the industries central to Australia‟slong-term prosperity. IN PARTNERSHIP WITH  21
  22. 22. Photo EssaySince the last Global Review, The Climate Institute has launched its first Creative Fellowship withacclaimed photographer Michael Hall. All images in the report and this presentation (except the one ofimpacts of bushfires in Tasmania) are part of a photo essay documenting climate change, its impactsand solutions, in China. Michael shot this work in late 2012.For more information, visit IN PARTNERSHIP WITH  22
  23. 23. Videos Ben Waters, Director of ecomagination for GE Australia and New Zealand, discusses the implications of the emerging low-carbon economy for business. Lord Nicholas Stern, John Connor, CEO of Chair of the Grantham The Climate Institute, Research Institute on Climate discusses the broader Change and the Environment implications of the at the London School of findings for Australia and Economics, shares his why The Climate thoughts on the 2013 Low- Institute has undertaken Carbon Competitiveness the research. Index.For more information, visit IN PARTNERSHIP WITH  23
  24. 24. More information Visit global-climate-leadership-review-2013.html Or connect with us on Facebook or Twitter for the latest news on global climate action… IN PARTNERSHIP WITH This project was conducted with support from GE. The help of the British High Commission and Vivid Economics is also acknowledged.  24