43. Is Australia crucial to international climate policy and action?

I have been thinking quite a lot about the role Australia plays in global climate policy and action. I just read an article entitled "Does Australia hold the keys to solving climate change?" in Climate Spectator. Perhaps the title is a little bold, but the points raised are very valid. Opponents of climate change action often point out that Australia’s direct emissions are only 1.5 per cent of the global total, and claim that it does not matter what we do. But there are several key areas where Australia’s actions could affect global outcomes.

Australia’s action (or inaction) influences other countries, like China
While it’s true that Australia’s direct emissions are only 1.5 per cent of the global total, it’s worth bearing in mind that we are not only one of the highest per capital emitters in the world, but also the 15th largest emitter in total. This means that of the 196 odd nations of the world, barely a dozen are larger than Australia. Therefore, if Australia isn’t moving, most other nations in the world can feel justified in a similar degree of inactivity. In particular, as our most important trading partner, China watches about what Australia does. 

Australia can influence global renewable energy markets
As the 14th largest electricity consumer in the world, Australia has the potential to be a major player in developing renewable technologies. Renewables and fossil fuel technologies are now close enough in cost that investing heavily in renewables to bring them down the cost curve could have dramatic influence over the investment decisions of other nations. By bringing forward the point of cost competitiveness of renewable energy we could drive huge emissions reductions, particularly in developing economies that are likely to be reluctant to take on carbon pricing in the near term.

It remains Australia’s choice to expand fossil fuel exports (or not)
Of course, we also need to acknowledge that it remains our choice to expand our fossil fuel exports (or not), and with Australia on the path to becoming the largest fossil fuel exporter in the world, our potential influence in this space is immense. By supplying vast amounts of fossil fuels into international markets over the next two decades we have the potential to reduce global fossil fuel prices, increasing the likelihood that other nations (particularly developing nations) invest in coal and gas-fired generation. Alternatively, we could choose to slow or prevent expansion of fossil fuel mining through a range of possible mechanisms (such as meaningful mining taxes). 

Finally, Australia’s vast renewable resources give us a huge advantage in establishing ourselves as a home of energy intensive industries. In the past we have attracted them with the promise of low cost, low risk energy. By leading the global transformation we are excellently placed to continue in that tradition. As stated by David Cameron, the Prime Minister of the United Kingdom, “it is the countries that prioritise green energy that will secure the biggest share of jobs and growth in a global low-carbon sector set to be worth $4 trillion by 2015.”