by Peter Castellas, Chief Executive Officer of the Carbon Market Institute.
Today the Minister for Energy & Environment, Hon Josh Frydenberg, released the much anticipated final report of Australia’s review of climate policies. There are encouraging signals in the review, including committing Australia to involvement in international carbon markets, developing a long-term emissions reduction goal, beyond 2030 and adjusting the domestic policy suite to better align with international commitments.
To be constructive, I think the Government has left open the door further engagement with business for input into these revised policy settings and some continued important detailed refinements will need to be done early next year. We will digest and consider the review over the holiday period and at CMI we aim to work with the Government of the day to ensure our members views are heard deep “inside the tent” to hopefully have a positive influence on how these policies evolve.
So after an intense but deeply professionally satisfying year having the privilege of leading CMI, I have finished up a bit early and taken my family up to far north Queensland. Bathing in the unique majesty of where two world heritage sites meet, the Great Barrier Reef and the Daintree Rainforest, I can take a step back can indulge in some prognostications of what 2018 might hold.
Overall, I am very optimistic that the momentum in corporate climate change action will build, the power of community values will override short-term political opportunism, and we will see some positive shifts in the national discourse and long-term commitments next year. Here are my personal predictions for 2018 (not those of CMI or our members).
- A federal election will be held mid-year: The Federal Government will gear a campaign around an election budget and seek a mandate to implement its program and go to the polls mid-year. On climate policy, the polls will indicate that the electorate is sick of the historical polarised antics and will want to see a more mature approach. Misinformation and point scoring from either major party on climate won’t cut it and progressive business associations, the informed public and the non-Murdoch owned media will start to call them out. The Coalition will build on the review from today and release the design of the National Energy Guarantee and this will form the Coalition’s main pitch to meet climate goals. Labor will reconfirm its ambitious renewable energy goals and use the existing framework of the Safeguard Mechanism and tweak it to demonstrate how a market-based mechanism can cap emissions.
- More Australian businesses will coalesce around a high common denominator approach: It will become increasingly clear that leading businesses across all major sectors have moved ahead of domestic policy settings and will start to publicly seek clarity on the long-term climate policy trajectory. Stronger, bolder messages and positions communicated by an increasing number of businesses will be driven by; the disclosure requirements of the TCFD; investor interest; sector competitiveness; international developments; the need to manage climate risk; and genuine commitments to link climate action with shareholder value.
- The Australian States will start to really drive economic activity across the country: Building on the legislated net-zero commitments, we will start to see the state premiers move to centrestage and own their climate change agenda. Climate and energy policy will be big factors in elections in South Australia (March) and Victoria (November) , and an empowered Queensland Government will implement big ticket initiatives such as its flagship $500m Land Restoration Fund. Internationally Governor Brown’s Climate Action Summit in September 2018 will galvanise the world’s attention and action on climate.
- The Paris rule book will be written: The diplomatic triumph of the Paris Agreement from two years ago will culminate in 2018 at COP24 with the development of the rule book for implementation. This will require Australia to revisit our Paris commitments sooner than expected, and to articulate the policies that will demonstrate how we raise ambition. Of particular relevance to Australia over the next decade will be how we optimise our position under the market mechanisms of Article 6, and link our markets for emissions reduction.
- Women in climate change will start to form as a power base: The engagement of women in driving the climate change agenda will become evident through the leadership we are seeing already from the many networking initiatives that are creating a positive, powerful network across the country.
- Climate change professionals’ stocks will rise: Professionals who are able to translate the language of climate change and sustainability into finance, policy, market and technology, will find increasingly that they are in demand. We will see the beginning of a major recruitment drive for people that can help companies and governments manage strategies, policies, risks and opportunities in the low carbon transition.
- The Australian public will rally for the reef: The Australian public will start to realise that the threat to the survival of our globally significant natural asset, the Great Barrier Reef (GBR), is something that requires a stronger national voice. The Adani mine will not go ahead and the attention of NGOs, philanthropists and the general public will put the threat to the GBR on the front pages. Nature’s intrinsic value will come to the fore.
- New carbon clubs will continue to emerge on a bilateral, regional and sectoral basis, boosting global carbon markets: Developments in carbon market linkages across national and state borders will grow in significance in 2018, especially as the Chinese ETS comes online. Australia will want to be part of the formal and informal bilateral connections being made in the Indo- Pacific. The governing body of the aviation market-based-measure (ICAO) will recommend a set of rules for eligible carbon credits in 2018. This will provide a boost to international carbon markets by generating demand for as much as 3 billion tonnes of CO2e over 2021-2035 period, from airlines required to offset emissions above 2020 levels from flights between participating nations.
It will be exciting for us at CMI to bring all these themes and developments together at our national Summit on 1-2 May at the MCG (Summit Earlybird Registrations now available here). In the meantime, rest up and enjoy the holiday period. Its going to be a fun, adventurous ride in 2018.