Kyoto Protocol: A sea-change or just hot air?

01 May 2005Archived News Climate Change Matters

The long-awaited Kyoto protocol has finally entered into force as a legal document on Wednesday 16th February. Virtually all developed nations, with the exception of USA, Australia, Lichtenstein and Monaco are now obliged to curb greenhouse gas emissions to an average 5% below 1990 levels by 2012.

 

 

Australia originally negotiated a target increase of 8% over 1990 levels, but has elected not to ratify the treaty and so is not bound to meet this. Despite this, the Federal government has committed to meeting the target and remains one of few countries in a position to do so, thanks largely to the once-off benefit of halting land clearing activities in Queensland.

A land-mark document or a costly environmental irrelevancy?

The primary aim of the Kyoto Protocol has always been symbolic. The international community has identified the need for very deep cuts in greenhouse emissions to avoid dangerous climate change. Australia's Chief Scientist has called for cuts of 50% in world emissions by 2050. The Kyoto Protocol is a "call to arms" for the international community to begin the enormously challenging task of "de-carbonising" the economy.

What does this mean for Australian business, if anything?

In a day-to-day sense, very little: no new laws or regulations have come into force in Australia and business will continue as usual. But for forward-thinking companies, 16th February was a significant day in history. It is the first day of an internationally recognised carbon-constrained world. This day formalises and reinforces the trend in government policies and market drivers that have been emerging over the past decade. The two most significant trends are binding emission limitations and the consequent financial valuation of carbon emissions.

Companies seeking to succeed in the new "carbon-valued" business environment need to understand and manage their risks and find ways to take advantage of emerging market opportunities.

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