ABC The Drum Unleashed

by Tom Switzer

Now the trumpet summons us again - to take action on climate change. BHP Billiton chief executive Marius Kloppers has garnered banner headlines and much praise for his call for the Gillard Government to impose a carbon tax before any global agreement. "We do believe that such a global initiative will eventually come and, when it does, Australia will need to have acted ahead of it to maintain its competitiveness," Kloppers told the Australian British Chamber of Commerce in Sydney yesterday. The problem, though, is that there is neither a domestic nor a global consensus on how to reduce greenhouse gas emissions. None whatsoever. Start with Australia. Tony Abbott's decision to oppose Kevin Rudd's Carbon Pollution Reduction Scheme forced Labor ministers into doing what they wanted to avoid: explain to the electorate how a costly and complicated cap-and-tax scheme affects ordinary people. By winning the argument that an emissions trading scheme would amount to economic pain for no environmental gain, Abbott pressured Labor into shelving its legislative centrepiece. The upshot is that the new Labor minority government would lack democratic legitimacy if it put a price on carbon this term - whether it's an ETS or a carbon tax. It would be akin to John Howard implementing WorkChoices without having campaigned on the issue in 2004. During the recent election campaign, Julia Gillard hardly even mentioned the subject. In a 5,500 word speech to launch the Labor campaign, for example, the Prime Minister dedicated 12 words to climate change. And notwithstanding the proposed citizens' assembly which has been subsequently dropped, she did not propose any real climate policy agenda. Hardly a top-order legislative priority. When asked whether Labor would support a carbon price in the next term, Treasurer Wayne Swan told The 7.30 Report: "We have made our position very clear. We have ruled it out. We have to go back to the community and work out a way in which we can put a cap on carbon pollution." Given those Labor focus group polling which encouraged party leaders and Sussex Street hard heads to shelve the unpopular ETS following the Copenhagen debacle, a community consensus seems a long way off. The Climate Institute polling that suggests Australians are panting for a carbon price is flawed. Indeed, it stretches credulity to expect that the many Australians mortgaged to the hilt are keen to pay twice as much for their electricity - especially when the rest of the world is refusing to decarbonise their economies. Which brings us to Kloppers' second argument: a global climate deal is inevitable, so it makes sense for Australia to price carbon as soon as possible. But the costly reality of the climate agenda has led to a change of heart among the political classes abroad. In North America, plans to implement cap and trade are either stalled in legislative limbo (Canada) or dead (US Congress). In the European Union, the ETS has been a victim of fraudulent traders and done little to curb emissions. The governments of China and India insist they won't join the West in what they see as an economic suicide pact. Which explains why Beijing's leaders, in Kevin Rudd's colourful language, "rat xxxxed" the Copenhagen talks last December. Moreover, the prospects for a legally binding treaty to replace the Kyoto protocol which expires in 2012 are virtually zero. Mexico City is bound to be another Copenhagen. In this environment, domestic plans to price carbon unilaterally would inflict collateral damage on the Australian economy: higher energy prices, lower growth and lost jobs to nations that won't conform to any post-Kyoto deal. Like many people in the business world, Kloppers places undue faith in the power of globalisation and international institutions. He insists a "global initiative will eventually come." But a cursory look at the international scene suggests he might be waiting a very long time. One of the consequences of living in an increasingly multi-polar world is that more states have effective veto power over collective action. Recall the collapse of the Doha round of trade talks two years ago. For the first time since World War II, an effort to liberalise global trade failed. Why? Not because the talks lacked support, but because Indian and Chinese politicians were afraid of antagonising their local interest groups, such as farmers. It's only one example of a new age of what The New York Times columnist David Brooks terms "globosclerosis" - an inability to solve problem after problem. What may make sense for a developed country in Europe does not work for a developing one in Asia eager to expand its economy and lift its people out of poverty. The point here is an old one about nation states having everlasting interests rather than eternal ideals. It's the language variously ascribed to Metternich, Palmerston or Kissinger, and the argument is a simple one: national interest beats global aspirations any time. Which is why Kloppers, like many climate activists, is naïve to think a genuinely global climate agreement is inevitable.