10/12/2019

(AU) About 100 Countries At UN Climate Talks Challenge Australia's Use Of Carryover Credits

The Guardian - 

COP25 delegates from developing countries try to ban the emissions accounting measure in a clause described as an ‘anti-Australia option’
Extinction Rebellion protesters at the COP25 UN climate talks in Madrid where Australia’s use of carryover credits has been challenged by about 100 countries. Photograph: Pablo Blázquez Domínguez/Getty Images
Australia’s plan to use an accounting loophole to meet its international emissions targets has been formally challenged at UN climate talks, with about 100 countries wanting the practice banned under the Paris agreement.
Delegates from developing countries led by Belize and Costa Rica have introduced a ban on using carryover credits from the Kyoto protocol into the text of the rulebook for the Paris climate agreement, which is being debated at a meeting in Madrid.
It is a crucial debate for the Morrison government as it relies on using the accounting measure to meet its commitment under the Paris deal. The emissions reduction minister, Angus Taylor, arrived in Madrid on Sunday to make Australia’s case at the second week of the talks.
Emissions projections released as Taylor left Australia suggested the Morrison government was on track to meet its 2030 target (at least a 26% emissions cut below 2005 levels), but only if it used carryover credits. Without them it expected emissions to achieve just a 16% cut. Government advisers found Australia’s fair share under a meaningful global deal would be at least 45%.
Carryover accounting rules allow countries to claim credit for exceeding previous targets against future targets. They were allowed under the soon-to-be-obsolete Kyoto protocol to encourage countries to be as ambitious as possible. They were not mentioned in the original text of the Paris agreement.
The introduction of a ban on what are described as “Kyoto units” into the negotiating was the clearest sign that countries that had expressed opposition to their use were determined to follow through. Some observers at the talks described the clause as an “anti-Australia” option.
Bill Hare, the chief executive of Climate Analytics in Berlin and a long-time adviser to developing countries at climate talks, said using carryover credits was opposed by three major negotiating blocs – the alliance of small island states, the least developed countries group and the independent alliance of Latin America and the Caribbean – as well as Canada, Switzerland and Norway.
“There [are about] 100 countries supporting this [challenge],” Hare said from Madrid.
The government has said it earned the right to use the credits through previous efforts. Opponents say it could claim access to the credits only because Australia set unambitious targets under the Kyoto protocol, including allowing emissions to increase by up to 8% between 1990 and 2012.
They say using the credits was at odds with the Paris agreement, which committed countries to escalating action that reflected their “highest possible ambition”.
Officials told Senate estimates earlier this year that as far as they were aware Australia was the only country planning to use carryover credits. Several developed countries had explicitly ruled out using them.
Hare said the European Union, South Africa and Papua New Guinea, representing a group known as the coalition of rainforest nations, had not embraced an outright ban in Madrid but supported a time limit on their use.
Some major countries including China, India and Brazil have sided with Australia in opposing the ban, at least in part because as written it would also outlaw using Kyoto protocol-era offsets generated in their countries that can be sold to developed nations in lieu of reducing their own pollution.
Richie Merzian, a former Australian climate negotiator and now climate energy director with the Australia Institute, said it was possible the wording of the text would be altered to ban just carryover credits but not carbon offsets. He said China, India and Brazil were far more influential with developing countries than Australia and had a specific interest that could be catered for without allowing carryover credits.
“Australia has a single issue that could be targeted and that’s always risky,” Merzian said. “It means the minister has to start the week on the defensive.”
Australian officials have indicated the government’s position is that using the credits is non-negotiable. As decisions at UN climate talks are by consensus, Australia could stand alone to block a ban, although it would be expected to face significant pressure if isolated.
Faced with objections from the British high Commission at a meeting with business groups last month, Australian officials said there would need to be a diplomatic solution to the standoff.
Official data shows Australia’s emissions have not come down and several analysts have found it was not on track to meet its Paris target.
But the government released two sets of data over the past 10 days to support the argument that Taylor will make at the conference: that the country has “a track record of which all Australians can be proud”.
The first new report used newly adjusted emissions data to suggest national pollution was flat, and had dipped slightly over the past two years, rather than increasing year-on-year as official greenhouse accounts had previously shown. The second updated projections of how much pollution would be released to 2030 and found, contrary to other evidence, the country was expected to meet its Paris target by using the accounting loophole.
The department projections suggested Australia would exceed its 2020 target (a 5% cut compared with 2000) by 411m tonnes of carbon dioxide. This is 44m tonnes more than a year ago.
As analysts have pointed out, 44m tonnes is about 8% of Australia’s annual pollution. It is equivalent to the annual emissions of Switzerland, or 10 times the emissions of Lesotho.
On Saturday Taylor said the improvement in the projections was primarily a result of the government’s $3.5bn climate solutions package and emissions cuts in the electricity sector. “Our commitment is achievable, balanced and responsible, and is part of coordinated global action to deliver a healthy environment for future generations while keeping our economy strong,” Taylor said.
The projections are based on a range of assumptions, including that renewable energy will provide 50% of Australia’s electricity by 2030. When this amount of clean energy was proposed by Labor before the election, the government suggested it would be reckless and damage the economy.

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What Kenneth Hayne Says About Climate Change - Transcript

AFR - Kenneth Hayne

Learned helplessness and short-termism suit those who still see climate change as a matter of belief or ideology, but the obligations directors have for the good of their companies are very clear.
A director acting in the best interests of the company must take account of, and the board must report publicly on, relevant climate-related risks and issues. David Rowe
Kenneth Hayne
The Hon Kenneth Hayne AC QC was a Justice of the High Court of Australia from 1997 to 2015.
Prior to this, he was appointed as a Justice of the Supreme Court of Victoria in 1992, later serving on the Victorian Court of Appeal until his appointment to the High Court.
In 2002 he was appointed a Companion in the General Division of the Order of Australia for service to the judiciary, to the law and the community in both legal and general education.
On his retirement from the High Court he was appointed as a professorial fellow at the Melbourne Law School, University of Melbourne.
On 14 December 2017, Kenneth Hayne was appointed Royal Commissioner into Misconduct in the Banking, Superannuation and Financial Services Industry.
This is an edited transcript of remarks Kenneth Hayne, QC, made at the Centre for Policy Development’s Business Roundtable on Climate and Sustainability on November 21:

 Previous speakers have emphasised the need for system-wide response. Systemic response is essential. But for the moment, I want to stand the issue on its head and look at it from the individual entity’s point of view.
Three things are clear. First, I think the relevant law is clear. Directors must act in the best interests of the company.
'Best interests' is not one-dimensional – it is not determined only by share price movement or 'total shareholder return' over a period.
'Best interests' does not present a binary choice between the interests of shareholders and the interests of others (whether customers, employees or society more generally).The longer the period of reference, the more the interests of all affected by a company’s actions will converge in pursuit of the long-term financial advantage of the enterprise. Second, international opinion is also clear.
International opinion is now firmly behind the need for all entities with public debt or equity to respond to climate change issues in their governance, their strategy, their risk management and their metrics and targets and, importantly, to record their responses to the issues in their financial reports.
The work of the Bank of England and the Financial Stability Board’s Task Force on Climate-related Financial Disclosures both forms and reflects that opinion.
Third, the position of Australian regulators is clear. ASIC, APRA and the Reserve Bank have all recently made plain the significance each of those bodies attaches to climate-related issues.

Learned helplessness
The inevitable consequence of the three points I have made about the law, international opinion and domestic regulators is that, in Australia, a director acting in the best interests of the company must take account of, and the board must report publicly on, climate-related risks and issues relevant to the entity.
As the 2019 Task Force on Climate-related Financial Disclosures status report shows, the speed at which changes are needed to limit the rise in the global average temperature obliges more companies to consider the potential impact of climate change and disclose their material findings than are now doing so.
The entities and their boards must ask at least two questions:
• What is the potential financial impact of climate-related issues?
• What is now, and what will be, our strategic response?
All this being so, what is the issue?
Political debates (do) not distract from what is clear: directors have a duty to respond to climate-related risks.
Directors have their duties; there are clear statements of what those duties require; regulators have said plainly that they expect the duties to be performed.
What is there left to debate?
I wonder whether there may be two related points to consider – learned helplessness and entrenched short-termism.
The issue, of course, is global. What we are now considering is individual response by entities and by their directors (separately and collectively).
A response often seen in Australian political discourse is that: 'The issue is large; Australia is comparatively small; nothing we do will affect the outcome if the big emitters do not act'.
That is, the response is 'We can do nothing that will help'. By making that response, we are persuading ourselves that we are helpless.
Boards will reinforce that sense of helplessness if they put climate risk into a bucket marked 'non-financial risks'.
Both learned helplessness and short-termism yield a result that fits comfortably with those who still see climate change as a matter of belief or ideology. David Rowe
And boards might think that they can do that if they see the risk as not being immediately realised in the next financial period.
But as recent events in the financial services industry should have shown, the notion of 'non-financial' risks can be very misleading.
The distinction between financial and non-financial risk to the entity is anything but clear.
Conduct and regulatory risk were seen by some financial services entities as
non-financial risks less important than other risks to the financial performance of the entity.
But the realisation of conduct and regulatory risks has had large and continuing effects on, not only the reputation of the entities, but also their profitability.

Short-termism
Helplessness is then coupled with short-termism. At the national level short-termism is expressed as: 'Doing something now will have adverse effects on employment in some part or parts of the country. That would be bad for the national economy. Therefore, we will do nothing.'
Both learned helplessness and short-termism yield a result that fits comfortably with those who still see climate change as a matter of belief or ideology.
Framing the most recent debates provoked by the bushfire emergencies as part of the 'culture wars' reinforces the notion that climate science is a matter of belief, not scientific observation and extrapolation.
No less importantly, because the debate remains framed as a debate about belief, learned helplessness and short-termism can be translated into the nativist-populist terms that now have such currency in many political systems.
But neither helplessness (whether that is learned or real) nor short-termism provides any answer to the director’s duty to act in the best interests of the company.
Indeed, each points plainly towards the need for boards:
• to recognise both the nature and extent of climate-related risks and the speed with which change will have to be made;
• to develop strategic plans in response; and
• to report to shareholders and the wider market about what they have done, are doing and will do in response.
I say that any sense of helplessness points to those results because the choice for a board is between responding or having a response thrust upon the company.
And boards simply cannot confine their attention to the short-term. As I have said, entities which did not look beyond short-term profit have recently suffered very large financial and non-financial losses.
Learned helplessness and short-termism may explain how our political debates are being framed.
If they do, we must be careful that the framing of the political debates does not distract from what is clear: that directors have a duty to respond to climate-related risks and that the continuing work of the  Task Force on Climate-related Financial Disclosures shows directors what they should do.

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(AU) Hayne Rebukes Directors On Climate Risk Failure

AFR - James Fernyhough

The former High Court judge says directors cannot hide behind "learned helplessness" as an excuse not to act, and lashed the "short-termism" of national debate. 
Justice Kenneth Hayne says a sense of helplessness and short-termism is no excuse for inaction on climate risk. AFR
Former High Court judge and royal commissioner Kenneth Hayne has warned directors they have a legal duty to act on climate change risk, include it in corporate strategies and report on it to shareholders, raising the real prospect that boards failing to act could end up in court.
In a private address to business leaders, regulators and government officials hosted by think tank, the Centre for Policy Development, Mr Hayne also took a swipe at the Morrison government, which has come under criticism for its unambitious emissions reduction policies.
He said both "learned helplessness" and "short-termism" yielded "a result that fits comfortably with those who still see climate change as a matter of belief or ideology".
"Framing the most recent debates provoked by the bushfire emergencies as part of the 'culture wars' reinforces the notion that climate science is a matter of belief, not scientific observation and extrapolation," he said.
"No less importantly, because the debate remains framed as a debate about belief, learned helplessness and short-termism can be translated into the nativist-populist terms that now have such currency in many political systems."Mr Hayne said in the remarks released exclusively to The Australian Financial Review, that international expert consensus was now clear that climate change risk was a matter of fact and boards could not hide behind excuses for inaction. "International opinion is now firmly behind the need for all entities with public debt or equity to respond to climate change issues in their governance, their strategy, their risk management and their metrics and targets and, importantly, to record their responses to the issues in their financial reports," Mr Hayne said.
He said the financial regulators – the Australian Securities and Investments Commission, the Australian Prudential Regulation Authority and the Reserve Bank of Australia – were all clear that climate change posed real and measurable financial risks.
"The inevitable consequence [of this consensus] is that, in Australia, a director acting in the best interests of the company must take account of, and the board must report publicly on, climate-related risks and issues relevant to the entity," he said.
He said more companies would need "to consider the potential impact of climate change and disclose their material findings than are now doing so", and dismissed the argument that the magnitude of the problem left directors helpless to act, referring to that position as "learned helplessness".
Mr Hayne's remarks come three years after barristers Noel Hutley, SC, and Sebastian Hartford Davis published a landmark opinion, which argued boards that failed to consider climate change risks could be found liable for breaching their duty of care and diligence.
Mr Hayne's opinion will add new force to the view that boards have clear legal obligations on climate risk.
As commissioner of the 2018 financial services royal commission, his recommendations on the treatment of non-financial risks, particularly cultural risks, have already sparked a radical rethink of directors' responsibility for areas previously considered outside their remit.
Alluding to the findings of the royal commission, Mr Hayne told the CPD roundtable: "As recent events in the financial services industry should have shown, the notion of 'non-financial' risks can be very misleading."
He said companies might take the view that the size and global nature of global warming – which is predominantly caused by the burning of fossil fuels, and the resulting emission of carbon dioxide into the atmosphere – left them helpless to act. But he said this excuse would not stand up under the law.
"A response often seen in Australian political discourse is that 'The issue is large; Australia is comparatively small; nothing we do will affect the outcome if the big emitters do not act.' That is, the response is, 'We can do nothing that will help.'
"By making that response, we are persuading ourselves that we are helpless," Mr Hayne said.
"Helplessness is then coupled with short-termism. At the national level, short-termism is expressed as: 'Doing something now will have adverse effects on employment in some part or parts of the country. That would be bad for the national economy. Therefore, we will do nothing.'"
He said directors must not be distracted by the "framing of the political debates", urging them instead to look at standards set out by the international business-led Task Force on Climate-related Financial Disclosures, which has been endorsed by Australian regulators.
Mr Hayne's remarks were made at a closed roundtable discussion hosted by the Centre for Policy Development late last month in Sydney. Also present were RBA deputy governor Guy Debelle, Bank of England executive director Sarah Breeden, APRA executive board member Geoff Summerhayes, and ASIC commissioner John Price.
Representatives from big business, including ANZ, Macquarie, QBE, AustralianSuper, Coles and UBS, were also present.
Government representatives who attended were from the Department of Environment and Energy, the Department of Prime Minister and Cabinet, and Treasury. Greg Combet, the Labor environment minister who oversaw the Gillard government's short-lived carbon tax, was also present in his capacity as chairman of industry super-owned fund management colossus IFM Investors.
The roundtable concluded: "First, the climate crisis is upon us, and decision-makers across the Australian economy have a clear and increasing obligation to address the risks and opportunities it presents. It is clear climate change is a ratcheting risk, a trend change that is highly interactive, systemic and irreversible, and one which will impact every aspect of Australian society.
"History is no guide to its future impacts, meaning that forward-looking scenario analysis is needed to manage the physical and transition risks it will generate. Australia’s economy and financial system is particularly exposed given the significant physical risks the country faces and its profile as a commodity exporter. Australian business is at increasing risk of retaliatory action from other countries because of a perceived view that Australia is not pulling its weight when it comes to reducing emissions."
The conclusions from the roundtable were prepared by the CPD and are not meant to represent individual policy positions of the participants.

Madrid meeting
The release of Mr Hayne's remarks coincide with the second week of the United Nations COP25 meeting in Madrid, at which government ministers from around the world, including Energy Minister Angus Taylor, will discuss details of the Paris climate agreement including potential carbon trading rules, and the use of Kyoto carryover credits.
The government confirmed on the weekend that it intends to use Kyoto carryover credits – that is, credits from its over-achievement of emissions goals under the Kyoto protocol – to meet its Paris goals. In real terms, that means Australia's emissions by 2030 will be 16 per cent below 2005 levels, not the 26 to 28 per cent below set out in the Paris agreement.
The Paris agreement does not mention the use of Kyoto carryover credits, and many nations are pushing for the practice to be formally banned.

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