2002 Cabinet Papers: ‘Why we never ratified Kyoto was beyond me’, Peter Costello reflects

Peter Costello laments rejection of 1997 Kyoto Protocol as cabinet documents from 2002 reveal Treasury argued for incentives to invest in cleaner energy.

Then-Prime Minister John Howard (left) and Treasurer Peter Costello attend the Liberal Party’s 49th Federal Council Meeting at the Hyatt Hotel in Canberra on April 13, 2002. Picture: File

Peter Costello believes the Howard government should have ratified the 1997 Kyoto Protocol as cabinet documents from 2002 reveal Treasury argued for incentives to invest in cleaner energy and advised shielding industries from emissions reduction policies would cost Australia more in the long run.

“Why we never ratified Kyoto was beyond me,” the former Treasurer told The Australian. “What was wrong with ratifying Kyoto? We negotiated it and we were happy with the outcome, we were abiding by it, I think we should have ratified it. There would have been no harm in ratifying it in my view and of course the subsequent deals went far further than Kyoto.”

In response to a July 2002 submission by Environment Minister David Kemp and Foreign Minister Alexander Downer, released on January 1 by the National Archives of Australia, cabinet resolved not to ratify Kyoto because Australian industry would be disadvantaged and there was “no clear pathway” for emissions reductions by developing countries.

CABINET PAPERS 2002

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‘Why we never ratified Kyoto was beyond me’: Costello

Peter Costello laments rejection of 1997 Kyoto Protocol as cabinet documents from 2002 reveal Treasury argued for incentives to invest in cleaner energy.

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Christmas Island detention centre’s fast-tracking revealed

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Timor Sea Treaty negotiations to be kept under wraps

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Push to restrain growth of disability pension

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Although Australia’s Kyoto commitment required only limiting emissions by 108 per cent over 1990 levels between 2008 and 2012, cabinet agreed that the “risks for Australia in burdening its emission-intensive trade-exposed industries with costs not faced by competitors” was not in its interests.

Peter Costello and John Howard attend a Federal Cabinet meeting in Canberra on February 11, 2002. Picture: File

Yet cabinet noted the cost of Australia meeting the 108 per cent target “could be low” and would depend on “policies and measures chosen” to reach it. Cabinet also noted that with no change to policies, Australia’s emissions would be “about” 111 per cent above 1990 levels. Australia, in fact, met and exceeded this first Kyoto target.

The July 2002 submission followed the 2001 Report of the Intergovernmental Panel on Climate Change which found that global warming was accelerating and some impacts might not be reversible, and the US decision not to participate further in the Kyoto Protocol process. It urged Australia to work towards “a global response” and at home pursue “a strong and competitive lower emissions economy.”

While Treasury supported the recommendations, and did not consider Kyoto to be “an effective global instrument” for dealing with climate change. It further argued that any economic costs were related to the extent of emissions reductions required, the measures chosen and trade effects which were all “largely independent of ratification”.

Treasury supported a clearer strategy for climate change, urged industry to shoulder “some responsibility” for reducing emissions and argued that investment in “cleaner technologies” should guide policymaking rather than “direct subsidies”. Further, it argued that “shielding sectors or regions” from emissions reduction policies would “raise the overall economic costs to Australia” longer term.

John Howard and Peter Costello are seen in Question Time on November 13, 2002. Picture: AAP/File

A CSIRO briefing to the Sustainable Environment Committee of cabinet in June 2002 advised that global temperatures were at levels “not sustainable” and even with action to reduce emissions, Australia would still face “considerable impacts” such as extreme weather events, reduced Murray Darling water flows and increased coral bleaching.

John Howard told The Australian that he remained “agnostic” on climate change but supported investment in new energy technology – his government introduced the Mandatory Renewable Energy Target in 2001 – and stood by the decision at the time not to ratify Kyoto.

“The protocols of Kyoto imposed stiffer penalties on a country like Australia,” the former Prime Minister said. “You could easily lose your opportunity of a major investment in, say, an aluminium smelter, because the protocols that applied to the investment in Australia were different from those who would apply to an investment in Indonesia or China.”

In April 2001, Mr Howard wrote to George W. Bush encouraging “an effective global framework to address climate change” that would include emissions reduction commitments from “all major emitters” and a policy framework that did not preclude “unrestricted market-based mechanisms” such as “emissions trading”.

Mr Costello told The Australian that he supported and recommended an emissions trading scheme to address climate change but international co-operation was critical.

“You could introduce a trading scheme here, but would it be recognised in other trading markets?” he said. “If I said I planted a forest in Africa and claimed a credit, would it be verified, would it be real, would it be accepted? I think the reason why we never really went down the path of the trading scheme was that it wouldn’t have been internationally enforceable.”