Confab tests climate for change as China steps on gas [January 18, 2006]

FOR all the predictable cynicism it fuelled, last week's Asia-Pacific Partnership on Clean Development and Climate could prove a signal moment in the international fight against carbon dioxide emissions.

While even capitalism's weekly bible, The Economist, was reduced to describing AP6 as just "more hot air", the conference actually offered important insights into the changing attitude of government and industry to climate change, its causes and potential solutions.

That the member governments turned so obviously to business to find answers to the conundrum of maintaining economic growth while containing climate change is crucial. The call for industry to lead the technological charge reflects an emerging awareness within governments, and even some non-government organisations, that if industry cannot produce solutions to global warming, then just who will?

Just as significant though was the the roll-up of executives from the region's major energy users and providers. The corporate debate over the veracity of climate change, and the theories on its causes, is essentially over. Industry is largely convinced and even those who remain sceptical recognise that inaction ultimately undermines their interests.

Business leaders who attended AP6 understand that the community expects action on carbon dioxide emissions and to fail on that challenge threatens, to a lesser or greater degree, their long-term future. That said, the starting point for any real-world discussion on climate change has to be that the Kyoto Protocol will fail to achieve its ultimate aim. Nary a signatory is on track to meet emission targets and the US has, like Australia, infamously refused to sign.

Kyoto has a symbolic importance. It indicated the depth of the global community's concern about the link between carbon dioxide emissions and climate change and the determination of governments to find answers. But few of the governments knew how to reach their Kyoto targets. And many who did were simply not prepared to accept the electoral cost of doing so.

The world has changed profoundly since Kyoto was agreed in 1997. And the changes have only underlined the flaws in the protocol.

As we all now understand, the emergence of aspirational China and India has changed the balance of the global economy as well as Australia's fortunes.

But, as emerging economies, neither China nor India is bound by Kyoto emission targets.

So if you accept greenhouse theory, then the rise of China is plain scary. Because the fuel of China's economic revolution is, and will be for the foreseeable future, coal.

To put that into some sort of context, China's power demand is forecast to grow 25gigawatts a year for the next decade. And that is the equivalent of building one big power station every week for 10 years. China has built nearly 150 coal-fired power stations over the past two years and plans to build another 544.

By 2020, China will have easily moved ahead of the US as the world's biggest carbon dioxide producer. By 2030, China will be producing an extra 3 billion tonnes of the gas annually. That increase alone is 10 times Australia's total carbon dioxide emissions.

China then is the single biggest issue for climate change policy in our region. And industrial innovation, supported by international diplomacy, is the only way to meet that challenge.