Speech

Adelaide, 2 June 2006

Speech To the Energy Supply Association of Australia

International action to address climate change

Thank you Grant King (Chairman, Energy Supply Association of Australia and MD and CEO of Origin Energy).

Introduction

Thank you for the opportunity to talk to you today about international efforts to address climate change.

This is a most serious issue and a major challenge for the international community.

And it's an area where, quite frankly, there are no easy answers.

But as I think about climate change, it always occurs to me that we need to push on many fronts at once.

We need to work domestically to reduce emissions.

And we need to build international cooperation on reducing emissions and also on adapting to climate change.

Most importantly, we need to continue to pursue new technologies and new approaches to reduce carbon emissions here and globally.

That's why I am a strong supporter of the Prime Minister's call two weeks ago for a full debate on the use of nuclear energy in Australia.

International Framework

It is now fifteen years since the world gathered at Rio and forged the UN Framework Convention on Climate Change.

The international community agreed on the need to stabilise greenhouse gases at a level that would prevent dangerous interference with the climate system.

That much, we could all agree on. And Australia would like this worthy goal implemented.

Then, ten years ago the Kyoto Protocol was negotiated, to operationalise the UN Framework Convention...

... by setting targets and timetables for developed countries to limit greenhouse gas emissions.

Kyoto's great achievement was that 40 developed countries all pledged to curb emissions.

However, Kyoto's great flaw was that it exempted the 149 countries of the developing world from making a similar effort.

Moreover, it locked in a sharp distinction between developed and developing countries that in 2006 does not reflect the reality of global emissions - and will do so even less by 2012.

Now, we are often criticised for not signing onto the Kyoto Protocol...

... but the fact of the matter is that Australia is on track to meet the target our Kyoto target - unlike, by the way, many other developed countries.

The latest greenhouse accounts show that Australia has reduced per capita emissions by 13% since 1990 and emissions per dollar of GDP by 35%.

We are indeed taking seriously the need for Australia to contribute to greenhouse mitigation.

Yet large emitters such as Brazil, Mexico, India, Indonesia, Korea and China, have made no such commitment.

The net result is that global greenhouse gas emissions are projected to grow by 40 per cent by 2012.

Without Kyoto global emissions would have grown by 41 per cent.

This is just not good enough.

Next International Steps

The question then is: What comes after Kyoto, which was clearly just a first step (and some would say a misstep)?

The international community is now looking for a more effective and more inclusive collective action.

So, for the next two years, we expect to see a dialogue - conducted under the auspices of the UN Framework Convention on Climate Change - to consider new ways to take long-term international action.

I think this is the start of a broader international effort to find a better way to encourage all major emitters to take action.

The Government fully supports this UN dialogue.

And internationally, Australia is recognised for its leading role.

I was pleased when, on 14 May, the rest of the developed world selected an Australian to co-chair the UN dialogue alongside the developing world's choice of South Africa.

We remain the permanent leader what is called "the Umbrella Group" - whose members include Japan, Russia, Canada, Norway, New Zealand and the United States.

The Umbrella Group is one of the three critical groupings in the UN Framework Convention, alongside the EU and the G-77 developing countries.

Both of these leadership roles are testimony to Australia's standing in UN climate change circles.

So what hopes do we have for the new UN dialogue on future action?

Above all it must promote more inclusive global action in the fight against climate change.

The top one dozen countries are responsible for over three-quarters of global greenhouse gas emissions.

So, the dialogue must generate recognition that all top emitting countries must act to curb emissions.

This means China, India, the EU, Japan and the United States to name a few.

And, even if Australia is a smaller emitter compared with others, we will continue to act to curb our own emissions.

The magnitude of the collective effort needed to mitigate climate change is huge.

Energy use is the primary human source of greenhouse gases.

And global demand for energy is increasing rapidly as we strive to improve the well-being of people around the world.

No one would want to stop what has been an incredible reduction in poverty levels in the last few decades.

But on present trends, the International Energy Agency (IEA) expects energy demand to grow by over 50 per cent between now and 2030.

That is thousands of extra power stations and millions of extra cars.

The bulk of this growth in demand will be in the faster growing developing countries such as China and India.

We also need to recognise that the energy sector alone is not responsible for all greenhouse gas emissions.

The way we use the land is also a significant source of greenhouse gases.

We should acknowledge that a ton of carbon dioxide in the atmosphere has the same effect wherever it came from.

And likewise, a ton avoided has the same impact whether it is from:

• reduced energy use;
• carbon capture and storage;
• renewable energy; or
• from trapping carbon dioxide in vegetation - in other words, growing trees.

In particular, managing our forests better, offers great promise.

The world's forests contain more carbon than in our entire atmosphere.

The total forest cover of the developed world has now stabilised and in some countries is increasing.

This is a tremendous achievement.

However, deforestation in developing countries is still responsible for nearly a quarter of global greenhouse emissions.

We are asking the UN to also consider views on reducing emissions from deforestation in developing countries.

Unfortunately, no matter what action is taken we will also need to take steps to adapt to some of the unavoidable impacts of climate change.

So another major priority for Australia is forging increased cooperation on adaptation.

Technologies

Renewable energy, energy efficiency and nuclear energy will all help dampen the prospect of an equally sharp rise in global greenhouse gas emissions.

Equally essential is new technologies. The key here will be the development, diffusion and uptake of new low-and zero carbon technologies for fossil fuels.

Cleaner technologies can reduce the environmental impact while delivering increased economic growth.

This was the view taken at the inaugural meeting of the Asia-Pacific Partnership on Clean Development and Climate or AP6.

Ministers recognised at AP6 that fossil fuels underpin our economies, and will be an enduring reality for our lifetimes and beyond.

We agreed it was therefore critical that we work together to develop, demonstrate and implement cleaner and lower emissions technologies...

...because these technologies allow for the continued economic use of fossil fuels while addressing emissions.

Nuclear Energy

Of course it was easier to find agreement among the six AP6 countries than it will be in a room of 189 countries.

And if we think getting agreement in the United Nations is difficult, try cutting through the myths that surround nuclear energy.

The Prime Minister has called for a full debate on nuclear energy and time has clearly come to start that debate.

A good starting point would be to recognise that our uranium exports already make an enormous contribution to reducing carbon emissions.

Those who oppose uranium mining would do well to note that the amount of electricity produced from Australian uranium in a year saves an amount of CO2 roughly equivalent to Australia's total CO2 emissions in a year.

And as the holder of the world's largest uranium reserves we have a responsibility to supply clean energy to other countries.

Over 30 countries around the world have nuclear power programs, supplying one sixth of the world's electricity.

In our region Japan has 55 nuclear reactors providing 30 per cent of its electricity, plus 3 under construction and a further 12 planned.

China has plans for 40 reactors by 2020.

Like Europe, countries in our region are realising nuclear power is an essential part of the energy mix.

And safety is a manageable issue.

People think of nuclear power and think of Chernobyl and Three Mile Island.

These accidents must be seen in perspective.

There is no totally safe way of producing electricity.

The Chernobyl reactor would never have been licensed in the West.

A similar accident is physically impossible with a modern reactor.

With Three Mile Island, the reactor containment system worked as planned, and there were no casualties.

Compare this with the coal industry.

While Australia has an exceptional safety record, world wide there have been well over 20,000 deaths since 1970.

Of course, as an exporter or uranium, we have a responsibility to ensure that effective safeguards are in place.

We do this already, and the Government will do so in the future with China.

Then there is the myth that renewables are the only way of the future and should replace nuclear energy.

Yet it has been estimated that to meet South Australia's requirements would require wind turbines occupying some 1200 square kilometres.

Using solar power you would need 34 square kilometres of solar cells, which would cost at least 13 billion dollars just to buy the cells, let alone install them.

Of course, while wind and solar have their place in the energy mix...

... they don't produce 24 hours a day, so they can't be relied on for a significant part of base load power.

Given fast-rising energy demand, all these technologies have their place, and they need to be evaluated in a cool-headed economic and technical sense.

We must be prepared to take a dispassionate look at what nuclear power could bring to Australia's energy mix, and the downsides, if any.

The conventional view is that nuclear power is too expensive for Australia - but a recent report to ANSTO indicates otherwise.

Economic and technical aspects need to be assessed with current information.

And the assessment of the nuclear option should take account of advantages such as avoidance of CO2 emissions.

It should include the potential for complementary processes such as desalination.

This could make nuclear very attractive in areas facing both power and water shortages.

For example, it may be possible to build a nuclear plant in South Australia, supplying 1,000 megawatts an hour of electricity and 75 gigalitres a year of water, at a cost in the order of 2.5 to 3 billion dollars.

This amount of water is almost half Adelaide's current requirements, or nearly three quarters of the water South Australia currently draws from the Murray.

Such a project would have two enormous environmental advantages - large-scale electricity supply with no CO2 emissions, and keeping much needed water in the Murray.

I believe this is an idea we cannot afford to dismiss, and certainly not on ideological grounds - it deserves serious study.

The nuclear debate will take some time to work through.

But we're talking about long term issues here, so it's time to get the issues out in the open.

The Role of Government and the Private Sector

Ladies and Gentlemen,

Governments can do a lot.

The Government has already earmarked some two billion dollars towards the fight against climate change...

... with a heavy emphasis on developing and proving new technologies.

But Governments cannot do it alone.

It is business that will drive the investment decisions that will determine our path towards low-carbon economies.

Lending institutions, including the international financial institutions, will determine the degree of support business receives for implementing low-carbon technologies.

And it is consumers that will support low-carbon choices for the future.

I'm pleased that the Australian private sector is increasingly taking up the challenge.

For example, the Government welcomes the recent coal industry decision to provide up to three hundred million dollars over five years...

... for low emission technologies for coal-fired power stations.

We are also very heartened by the enthusiastic support and participation by Australian industry in AP6.

We're getting strong industry involvement across the range of issues...

... in energy production...

... in buildings and appliances efficiency...

... and in industrial processes.

We were very pleased to have Mark Chatfield from CS Energy and Ian Nethercote from Loy Yang Power at the first meeting of the AP6 Power Generation Task Force in Berkeley California last April.

I just don't think this international work will be relevant to the real world without private sector participation.

So I would encourage ESAA members to continue their participation.

Carbon Trading

A quick point on carbon trading before I conclude...

We've heard recently calls for a CO2 cap-and-trade system to be introduced in Australia as one of a number of tools to manage emissions and provide certainty of investment.

And I do understand the need for a greater degree of certainty about the future and a signal to the market for important investment decisions.

However, the Federal Government's position is we do not see the need to impose an economy-wide system...

... particularly at this time, when we are already on track to meet our emissions target.

A trading system is a complex and expensive apparatus to set up and implement.

In the absence of similar action by our major trade competitors, a trading scheme could undercut our competitiveness.

But we have said that we would revisit that issue if a global framework on addressing climate change is in prospect.

Conclusion

In closing I would like to return to my key points.

First, climate action should not be a matter of clean versus prosperity - but for us to be clean and prosperous.

Second, the global nature of climate change requires a commitment by all countries to effective solutions.

Third, to be environmentally effective and economically efficient, all major emitters, including developing countries, must take action to curb emissions.

Finally, and most importantly, we need to be clever about how we achieve these ends.

We need to make use of new technologies.

And I think we also need to look hard at the option of nuclear energy.

Thank you

ENDS