Media Release
13 November 1998
Carbon sequestration rights legislation encourages emitters to continue
emitting
Friends of the Earth today claimed the New South Wales Government was
leading Australia in propping up the continued increase in greenhouse gas
emissions from electricity generation and automobile transport.
"Contrary to the NSW Government's claim it was leading the world in
emissions trading by creating a carbon sequestration right from the growth
of trees, what the government has really done is provide an avenue for
industrial emitters of greenhouse gas to continue to contribute to global
warming", Mr Dietrich Willing, national spokesperson for Friends of the
Earth said.
The world needs a reduction in these gases, not a maintenance of the status
quo nor an increase. Senator Hill is quoted as saying in Buenos Aires that
Australia is on target for meeting its eight percent containment target.
"How can he say that when the Australian Government will not commit to an
interim target before 2012, nor commit to industry sector targets", said Mr
Willing.
The prospects for meeting our Kyoto Protocol targets are bleak. "Figures to
be released in the next few days will show that NSW electricity retailers
have not met their interim targets", Mr Willing forecast.
"The carbon sequestration rights legislation would not stand up to the
scrutiny of international opinion", Mr Willing predicted. "The government
was not even prepared to link its carbon sequestration right to the Kyoto
Protocol. It has refused to recognise that allowing credits to be gained
from trees planted on land that has been cleared less than 20 years
previously is wrong because it gives credit for sequestration where carbon
dioxide continues to be emitted from the deforestation that happened
earlier".
"It allows trades of current emissions for future sequestration. The
insurance industry in Buenos Aires has said trading should only involve
credits that have already taken place. Otherwise traders are dealing in
promises", Mr Willing said. [see report following]
"The fact that the NSW Government does not support penalising electricity
retailers if they don't meet their interim greenhouse gas targets (they
refuse to support The Greens Party amendment to the Electricity Supply Act)
shows they are not serious about reducing greenhouse gas emissions from New
South Wales. All their effort in electricity industry reform has gone into
reducing electricity costs for large users of electricity", Mr Willing
continued.
"This legislation will help prop up the timber industry on the coast and
tablelands of NSW, but it won't reduce the pressure on logged native
forests, nor will it help in reducing dryland salinity and riverbank
erosion west of the Divide, because rainfall in inland NSW is inadequate
for tree growth to produce commercially viable carbon sequestration
credits".
"Both the ALP and the Liberal parties should direct their energies into
creating new structures that encourage the reduction in greenhouse
emissions. The ALP has done little in its four years of government, and the
Liberal Party has been silent. Friends of the Earth, Green Groups and the
Community want to see reductions and will make their decisions at the State
elections accordingly", Mr Willing concluded.
For Media Inquiries, please phone 02-9332 3833
The legislation can be viewed at
http://web.one.net.au/~dietrich/greenhouse/greenhouse.html
Second reading speeches in the upper house can be downloaded from
http://www.parliament.nsw.gov.au/lc/hansards/lchans98/cp111198.pdf
A Risky Business
By Kirsty Hamilton, Greenpeace
Leading insurance companies have welcomed the Kyoto Protocol as an
"important step" in implementing a truly precautionary approach to climate
change. They have also taken a favorable interest in its flexibility
mechanisms, but as Ivo Knoepfel of Swiss Re points out, "considerable
further clarification" of the flexibility mechanisms is necessary before it
can be determined what sort of active participation by the private sector
insurance industry is possible.
These and other conclusions were in a report on "The Kyoto Protocol and
Beyond: Implications for the Insurance Industry", which was presented in a
UNEP Insurance Industry Initiative seminar chaired by Klaus Toepfer
yesterday afternoon.
The main issues of concern to the insurance industry in the flexibility
mechanisms debate are: the issuance of emissions credits, baseline
emissions verification (for JI and emissions trading projects), rules
governing the banking of credits, "hot air" and limits to trading. The
issue of non-compliance of countries in meeting their Kyoto emissions
limitation commitments is "a major concern [requiring] further attention by
negotiators."
These companies also want an ex-post approach to counting carbon reductions
for credit (i.e. they are credited only once they have been achieved).
In the current climate, emissions trading is the instrument least likely to
get insured: the long timescales involved in international verification
procedures, and the scale of the related political risk "would seem to
render this an inappropriate area for commercial insurance at present." Ivo
Knoepfel described how the insurance industry traditionally operates on the
basis of seller liability, creating difficulty with involvement in
emissions trading, as the seller is ultimately the government, and very few
insurance companies are prepared to insure governments.
As negotiators go about the business of elaborating the flexibility
mechanisms, the points raised by the insurance industry provide a reality
check as to how markets work.
As the manager of as much as one third of investments in global stock
markets -- a total capitalisation of more than $15 trillion -- the industry
is also looking at the investment opportunities and challenges arising from
what it calls the 'decarbonisation path' inherent in the Kyoto Protocol.
This will "lead to structural changes in the economy, favoring carbon light
sectors and burdening carbon intensive ones."
As a backdrop to the report, the insurance industry points to the fact that
losses have risen by more than a factor of six in the 1990s compared to the
previous decade. In 1998 insured losses of more than $30 billion are
anticipated.
The UNEP report also stresses the importance of policies and measures as
the 'principal way' of achieving emissions reductions.
The full report will be available from UNEP at the end of this year or
early 1999.
