06/10/2020

(AU) EU's Carbon Clock Starts Ticking For Australian Companies

AFR - Hans van Leeuwen

London | Australian companies have been urged to start preparing now for the European Union’s carbon border tax in 2023, or else risk getting caught up in a potential fracturing of the world trade system.

Consulting firms are gearing up to offer carbon audits to their clients, while think tank experts warn that the border tax could end up splintering the world into high-carbon and low-carbon blocs.

“I had a call from a client in Asia three weeks ago asking about this," says Mark Lewis, London-based chief sustainability strategist at BNP Paribas Asset Management. "That’s the first time I’ve seen an Asian investor starting to think through the implications of what an EU carbon border tax could mean.

The European Union is looking for a road out of coal dependency. Bloomberg 

“The impact is quite profound. It will vary from country to country, but whoever is exporting goods into Europe, which within Europe are covered by its Emissions Trading Scheme, ought to be thinking now about the possibility of having to pay a carbon tax.”

And the experts warn it isn’t just companies exporting directly to Europe: it trickles down to anyone in a supply chain that ends up in Europe – which could mean Australian raw materials going due north into Asia-produced exports to the EU.

The EU, a market of about 450 million people, has mooted a “carbon border adjustment mechanism” (CBAM) for some years. But as former prime minister Malcolm Turnbull and former Bank of England governor Mark Carney warned last week, it's now getting serious.

With a net-zero emissions target for 2050 that will soon be legally binding, and an Emissions Trading Scheme (ETS) that will therefore have to ratchet up both the number of sectors it covers and the cost of using carbon, the border tax is almost inevitable.

The tax is levied on imported goods based on the carbon content that goes into producing them, levelling the playing field with European producers who have to buy carbon permits on the ETS. That stops “carbon leakage” – customers switching to cheaper, more carbon-intensive alternatives outside the EU.

Tim Figures, associate director of EU & Global Trade and Investment at Boston Consulting Group in London, says Australian companies should get started now on working out how much carbon is embedded in their products.

“That’s quite a complex calculation, because you’ve got to think not just about how much steel or metal or whatever is in it, but also how much electricity you used to transform it, what emissions came from generating that electricity; and if it’s in Australia, what emissions did the ship that took it halfway around the world to Rotterdam give out?”

The EU is still weighing up four different designs for the CBAM, so an audit alone wouldn’t immediately make a company compliance-ready. But Figures says it's not just about paying the tax, it's about finding ways to remain competitive.

“The more you know about what’s in your product, the more you can start thinking about how you can address it – do I have a more efficient industrial process, do I change the design of my product, do I use different raw materials in it that are less carbon-intensive, do I find another way of transporting it?”

If that all sounds fiendishly complicated, it’s because it is, says Sam Lowe, senior research fellow at the Centre for European Reform in London.

He’s argued that Brussels should probably “take on board much of the financial and administrative burden, particularly for small and medium-sized companies”. That might mean creating and funding a few carbon certification bodies out of the CBAM revenue.

Political momentum

The counter-argument to Figures’ sense of urgency is that the EU is a notoriously slow-moving legislator, and political and business concerns about the CBAM may keep it on the backburner well beyond 2023.

But that ignores the fact that the EU might not be able to reach its binding net-zero without the CBAM.

“The most important reason to impose a carbon border adjustment mechanism is to secure the buy-in of local industry [in Europe] for deeper decarbonisation policies,” Nikos Tsafos of the Centre for Strategic and International Studies wrote recently.

“It is hard for any country to agree on aggressive targets … Regardless of how much carbon leakage exists in practice, powerful people see it as a problem. Offering a solution to that problem might help garner support or, at least, lessen opposition.”

Even Germany, a longstanding sceptic, has come around to in-principle backing of the scheme. The CBAM has now moved into a public consultation, which will run until November.

A firm proposal, which has to overcome political difficulties and try to be compliant with World Trade Organisation (WTO) rules, is due in mid-2021. European Commission President Ursula von der Leyen recommitted to it in her inaugural ‘State of the European Union’ address last month.

Fork in the road

If the EU goes it alone on a CBAM it will become a “low carbon island”, says Tsafos: “Only the most low-carbon producers will be able to export to Europe. High-carbon trade continues, bypassing Europe, and European suppliers have to raise output to meet demand.”

This has been one of Europe's worries, which was why the continent was very quick to latch onto the significance of Chinese President Xi Jinping’s announcement last week that he’s setting a 2060 net-zero target.
The world splinters into two trade blocs: a high-carbon one and a low-carbon one.
— Nikos Tsafos, Centre for Strategic and International Studies
That suggests Beijing might come to the party on carbon pricing, and EU leaders including German Chancellor Angela Merkel have repeatedly stressed that whatever their geopolitical differences with China, the Europeans want to work hand in glove on climate change.

If China and Japan came on board with cap-and-trade systems like the EU ETS and a CBAM of their own, the future of world trade starts to look quite different, Tsafos says.

“The world splinters into two trade blocs: a high-carbon one and a low-carbon one. High barriers between the two shut out emerging-country exporters from accessing markets in advanced economies.”

The question then would be: on which side of the divide are Australian producers?

Coal is set to gradually fade from the picture in the European Union. Bloomberg

The answer is partly up to the companies themselves, who can prepare for compliance. But it's also partly up to the Morrison government, which could introduce a carbon pricing regime equivalent to the ETS – thus exempting the economy from the CBAM.

The government's other option is to resist, joining a potential group of countries that brand the CBAM as a trade barrier and fight back through the WTO.

A recent European Parliament study acknowledged that many countries “understand the logic and purpose of the EU CBAM mechanism as a climate instrument, [but] they are concerned that its design and implementation will transform it into a protectionist trade instrument” – and one that hurts lower-income countries.

On the face of it, the WTO could find that a carbon tax was discriminatory – breaching the rule that any country with which the EU doesn’t have a free-trade agreement (FTA) needs to be treated the same. The WTO could also class the CBAM as an illegitimate subsidy to European industry.

Lowe suggests that if the CBAM’s cost is the same as a European producer faces under the ETS, it has a decent chance of surviving a WTO challenge. This also suggests the EU might opt for a model that requires foreign companies to buy EU carbon permits, rather than levying a tax.

The trouble is, as Figures points out, this means Brussels has to start phasing out all its free allocations of permits to European industry – and that’s going to hurt, politically and economically.

Another way to soften the blow offshore might be to phase the tax, starting with just a few heavy-emission sectors.

If the EU instead goes all-out, Lowe worries that “third countries [could] retaliate unilaterally against EU exporters”, dragging decarbonisation into the centre of global trade tensions.

Yet another EU gambit will likely be to embed some kind of commitment to carbon pricing into the EU’s FTAs – including the one under discussion with Australia – so that the CBAM bypasses many countries. It’s understood that Brussels raised the CBAM once again in last month’s round of Australia-EU FTA talks.

Some observers doubt the EU has the stomach for any of this. But others say the EU’s Green Deal, its binding net-zero target and its need for the CBAM revenue to fund its big COVID-19 recovery plan, all point to an inexorability.

“I wouldn’t want to underestimate either the political or the technical difficulties of implementing a carbon border tax; but I would say that I’ve been surprised by the forthrightness with which the commission is pushing ahead with the idea of studying it, publishing it and potentially proposing it,” says BNP Paribas’s Lewis.

“It’s clearly going to be a very, very controversial thing if they do propose it, but I think it’s inevitable.”

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(CA) What A Dutch Supreme Court Decision On Climate Change And Human Rights Means For Canada

The Conversation - 

Climate activists gather outside the Supreme Court of the Netherlands on Dec. 20, 2019, ahead of a ruling in a landmark case in which the government was ordered to slash greenhouse gas emissions by 25 per cent by 2020. (AP Photo/Mike Corder) 

Author
 is a PhD Student and Assistant Professor (part-time), Schulich School of Law, Dalhousie University
Late last year, the Dutch Supreme Court issued a decision that could have implications for countries around the world.

The case, The Netherlands vs. Urgenda, established that a country’s inadequate action on climate change can violate human rights.

For the first time, a court imposed a legally binding target and deadline for a government to reduce greenhouse gas (GHG) emissions, by at least 25 per cent from 1990 levels by the end of 2020.

Urgenda was a major victory for climate justice activists, who have launched human rights lawsuits attempting to require governments to take more substantial and timely action against climate change. This landmark decision could prove influential in Canada, where similar cases will be decided.

Urgenda and Canadian climate litigation

There are now at least four pending Canadian climate cases invoking human rights, including La Rose et al vs. Canada, in which the federal government’s effort to have the lawsuit stopped before it goes to trial was argued last week.

Past Canadian climate cases based on other grounds have failed. But Urgenda may be particularly relevant to current litigation because it is based on human rights and some of the federal government’s arguments in La Rose reflect the Netherlands’ unsuccessful arguments.

For example, Canada acknowledges the threat of climate change, but maintains that a court cannot order it to take action because climate change policies are for elected politicians — not judges — to decide. The government also argues that climate change is a global problem that Canada alone cannot solve.

Some of the young people who are part of the lawsuit filed against the federal government, seen at a press conference in Vancouver, B.C., in October 2019. THE CANADIAN PRESS/Darryl Dyck

The pending Canadian cases will require our courts to decide similar issues as Urgenda, including:
  1. Does the right to life under the Canadian Charter of Rights and Freedoms require the government to take specific action on climate change?
  2. Is it appropriate for courts to review climate change policies?
  3. Does the concept of an individual but shared global responsibility overcome the “de minimis contribution” defence?
Other issues have been raised in these cases that are not addressed here, including equality rights for young people and Indigenous Peoples.

Why could Urgenda be relevant?

In Urgenda, the court concluded climate change poses a “real and immediate” threat to the right to life, which the Netherlands has a legal obligation to address under the European Convention on Human Rights (ECHR).

While this convention is not binding in Canada, Section 7 of the charter protects the right to life. Canada is also bound by international treaties recognizing the right to life.

Supporters congratulate Urgenda’s legal team after the court upheld a 2015 landmark ruling ordering the government to cut the country’s greenhouse gas emissions by at least 25 per cent by 2020, in The Hague, Netherlands, Oct. 9, 2018. On Dec. 20, 2019, the Dutch Supreme Court upheld the previous rulings. (AP Photo/Peter Dejong)

The interplay between international and domestic law is complicated, but the Supreme Court of Canada has established that charter rights should provide at least as much protection as corresponding rights under binding human rights treaties.

It has also held that other sources of international human rights law — including cases interpreting the ECHR — may be considered in charter litigation. Finally, Canadian courts often canvass relevant foreign decisions.

These principles open the door for our courts to consider Urgenda relevant. And, if our judges think the approach to similar issues in Urgenda is persuasive, they could follow it.

Climate change and the right to life in Canada

That being said, Canadian plaintiffs still face significant obstacles due to how the the right to life under the charter has been interpreted.

For example, the courts would need to adopt a broader understanding of a “real or imminent” threat, and to recognize that the government must take action to protect the right to life. As the law currently stands, the government is not required to take action to address indirect threats.

But, this could change. The SCC left the door open to a broader approach in an anti-poverty case:
One day S. 7 may be interpreted to include positive obligations…. It would be a mistake to regard S. 7 as frozen, or its content as having been exhaustively defined.
In addition, the UN Human Rights Committee has more recently concluded (in a different context) that the right to life under the International Covenant on Civil and Political Rights — a binding international treaty — can impose positive obligations on Canada.

These decisions may leave room for climate plaintiffs to argue that our courts’ approach to the right to life is too restrictive and is falling below international standards.

Can courts review climate change policies?

In La Rose, Canada argues that the plaintiffs are asking the court to “step outside its judicial function” and become involved in “crafting a policy response to global climate change.”

This argument failed in Urgenda. In the Dutch Supreme Court’s view, an order to reduce GHG emissions was within its authority because it is the court’s role to review the reasonableness of laws and policies and the legislature remained free to determine what laws and policies to implement to meet the Netherlands’ obligations.

Canadian courts also often review the reasonableness of laws and policies. So, if climate change is considered a threat to charter rights that Canada must address, Canadian courts could follow the same approach as Urgenda.

While the government’s obligation to meet an emissions target would be new, elected officials would still decide relevant laws and policies.

The ‘too small to matter’ defence

In the Dutch Supreme Court’s view, the shared global responsibility for climate change necessarily entails an individual responsibility on each country to do its fair share. And the court concluded that the Netherlands was not doing its part.

Critically, the Netherlands emits a disproportionately large share of global GHGs, had adopted a less stringent GHG policy than comparable countries and did not show that meeting a higher emissions target would pose an undue burden.

If Canadian courts accept the premise of individual responsibility, they would similarly assess whether Canada is doing its fair share, and the statistics could be on the side of the plaintiffs.

Canada emits more GHG per capita and in total than the Netherlands. Its emissions target under the Paris Agreement is lower than the Netherlands for 2030 (a 30 per cent reduction from 2005 levels compared to 40 per cent — and Canada is not on track to meet it). And it has been argued that Canada ought to be able to “reduce its GHG [emissions] without major economic repercussions.”

Our courts may also find it compelling that, even though Canada’s emissions amount to 1.6 per cent of global emissions, “Canada is still among the top ten global emitters … on an absolute basis, and in the top three on a per capita basis.”

A matter of when and not if?

In 2018, the UN Secretary-General lamented that, “scientists have been telling us for decades [about the risk of climate change]. Over and over again. Far too many leaders have refused to listen.”

As Urgenda shows, human rights cases could force leaders to listen — and act. If Canada continues to not do its fair share and if Urgenda marks the beginning of domestic and international decisions requiring countries to take specific action against climate change, it may only be a matter of time until Canadian climate justice plaintiffs prevail.

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Sir David Attenborough’s Latest Doc Is His Witness Statement To The World

Refinery29 - Alicia Lansom

Photo Courtesy of Netflix.

Admired by Gen Z and their grandparents alike, Sir David Attenborough is one of the few public figures who has true intergenerational appeal.

His lifelong career as a broadcaster and his commitment to the preservation of the natural world has solidified him as a royalty-like figure among the younger generation, and he regularly appears on British Hinge profiles as a "dream dinner guest".

This kindred connection with young people is likely why the 94-year-old naturalist has pivoted away from terrestrial television for his latest documentary film, A Life On Our Planet, which premiered on Netflix on 4th October.

Described as his "witness statement" to the world, the new feature documentary, made in collaboration with WWF, stands as both a testament to the destruction of climate change and a practical guide to stopping it in its tracks.

While it may seem like a big feat to encompass the two topics in only 82 minutes, the documentary manages to tread the line between harrowing and hopeful, detailing our problems as a global society and our collective power to right our wrongs.

Set against the backdrop of Sir David’s six-decade-long career, the documentary puts the speed of the planet’s decline within the context of one person’s life and experiences, making for a truly affecting and thought-provoking watch.

Infographics display the world’s population, remaining wilderness and carbon levels against the years of his professional milestones, and the quickly mounting damage is alarmingly clear to see.

Beginning with his experiences fossil-hunting as a young boy and moving through his memories of shooting renowned series like Life On Earth and Blue Planet, the broadcaster shares personal accounts of visiting some of the world’s remotest areas and communities.

While there are certainly heart-warming moments to be found in the old footage (my personal favourite is a clip of him shouting "Boo!" at a sloth who is asleep in a tree), the film is far from a sugar-coated journey down memory lane.

Scientific data is woven in seamlessly as the scene changes to shots of the current landscapes and we hear about the individual abuses each environment has faced in the years since his visits, from mass deforestation in the Amazon to rising sea temperatures in the Arctic.

Splicing together the footage with a present-day interview, it's clear from Sir David’s candour that this is his most personal film to date.

Sitting quietly in a blacked out studio, his statements are disarmingly profound as he discusses humanity's absolute failure to protect our fragile ecosystem.

You can hear his grief and disappointment at witnessing firsthand the decline of the natural world and it's this vulnerability that makes the film so incredibly moving as you watch Sir David dedicate his final years to fighting to protect the planet.

A Life On Our Planet may sound like an entirely bleak account of humankind’s destructive tendencies but the film’s screen time, split 50/50 between evidencing and action planning, comes together to create an uplifting and pragmatic latter half.

Detailing practical steps towards sustainable living and the positive effects of restoring Earth’s biodiversity, you'll be left feeling genuinely hopeful for the planet’s future rather than distressed and disenfranchised.

While tips about reducing food waste, switching to renewable energy and moving towards a plant-based diet might not feel revolutionary, hearing it broken down into bitesize pieces – and in Sir David's familiar soothing voice – makes the task at hand feel genuinely doable, which is rare for a large-scale documentary.

In the film’s final scenes we see the veteran presenter on location in Ukraine, walking through the bombed out buildings near the Chernobyl nuclear power plant.

Against footage of the shrubbery and vines that have overgrown the derelict houses, Sir David talks about nature’s adaptability and determination to thrive in even the most difficult of environments. 

And in one of his final sentences, he hammers home the fragile existence of humankind: "The living world will endure, we humans cannot presume the same." I think I speak for us all when I say that I hope Sir David Attenborough continues to create documentaries for many years to come but if A Life On Our Planet is his last film, it tells us everything we need to know.

We just have to listen.

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