Today the Government released its Green Paper on a Carbon Pollution Reduction Scheme, in which it outlined the plans and structure for an Emissions Trading Scheme here in Australia. OTR have prepared this special edition of OTR covering the political highlights of today’s announcement. Have your say on the impact of the ETS on you, click here to vote on our online poll.

The Scheme
Overall there were no big surprises from today’s announcement; a cap and trade scheme with protections for certain industry sectors and consumers. There are a number of question marks however – the cap in the first five years of the scheme won’t be set until 2010 and the medium term target for emissions reduction by 2020 will not be known until later this year.

The revenue raising aspect of the Carbon Pollution Reduction Scheme is also unknown, but there are a few potential bites of the cherry – revenue from the Permit Auction and potentially additional GST revenue from the transactions on the secondary trading market.

So, the scheme will work like this:
• A cap on the total amount of carbon pollution allowed in the economy by covered sectors – 75% of emissions from about 1000 organisations;
• The Government will issue permits up to the annual cap each year;
• Industries will need to acquire a 'permit' for every tonne of greenhouse gas they emit in a year that is then surrended at the end of the year;
• The quantity of carbon pollution produced by each firm will be monitored;
• At the end of each year, each liable firm will need to surrender a permit to cover every tonne of carbon pollution they produced; and
• Firms compete in the market (either via an auction or through a secondary trading market) to purchase the number of permits they need.

The Pitch
They say music soothes the savage beast and the dulcet tones of Climate Change Minister Penny Wong at the National Press Club address were certainly reassuring. No lectern slamming rhetoric about the dangers of climate change or exhorting the Australian people to action, rather the Minister addressed the nation in the kind of tones one uses when dealing with frightened animals. No scaring the horses here.

The story on the Government’s response to climate change is Penny Wong’s to tell. Rudd himself has been distinctly hands off from this Government-defining policy, a signal of his confidence in the capable Wong. While Rudd himself has been quiet - the climate change story is very much an extension on the main themes used to sell Kevin07 in last year’s election:
• Economically responsible;
• Protecting families and low income earners (interestingly, pensioners and carers are now mentioned separately); and
• Preparing Australia for the future.

Labor is painting itself as the party of the future, the party prepared to make the hard decisions and tackle the big challenges in the national interest. The Australian economy must be transformed from high pollution to low pollution. Wong’s speech also emphasised pollution over emissions. Emissions don’t sound have the really nasty sounding ring that pollution does, which explains why to help communicate and sell its message the Government has moved away from ‘emissions trading scheme’ to ‘carbon pollution reduction scheme’.

While explaining there is no painless, cost free or simple way to tackle climate change, Wong also moved to reassure various sectors that the Government is listening and will continue consultation on the scheme design. She also outlined that the increased costs to petrol prices will be offset by a ‘cent for cent’ excise offset and that low income earners, families, pensioners and carers will be compensated for cost of living increases flowing from the scheme through various measures in the tax and welfare payments systems.

The Opposition
The Opposition left their response until late in the day, possibly due to only being briefed on the scheme for half an hour at 11:30am this morning. When he did finally speak, Opposition Leader Brendan Nelson slammed the proposed scheme saying that the costs will fall unfairly on the shoulders of middle Australia.

Nelson cautiously welcomed the decision to cut the fuel excise over the first three years of the scheme but said that voters couldn’t trust Kevin Rudd not to abolish the excise cut after 2013. The Opposition Leader once again questioned the start date for the scheme – saying that 2010 was too early and would put the Australian economy in a difficult position and threaten jobs in the coal industry.

However, the signs of a confused Coalition response are already starting to appear with Nelson now saying 2011 would be the earliest possible start date – despite previously flagging 2012 as the marker. Malcolm Turnbull and Shadow Environment Minister Greg Hunt will undoubtedly clarify the position shortly…

The US Position
With the current focus on climate change it is worth having a look across the Pacific at the views of the candidates in the US Presidential race, one of whom will have control of the ‘world’s biggest polluter’ after the election.

Climate change policy will be reformed in the US whatever the outcome of the election, with both candidates agreeing that climate change is real.

The policy approaches to climate change have a number of similarities, but there are key differences in the approach to emissions reduction targets and the use of nuclear energy.

Obama has stated that his market-based cap-and-trade system would aim to reduce carbon emissions to 80% below 1990 levels by 2050, whereas McCain is promising a 60% cut from 1990 levels by 2050.

McCain has said that if he is elected he will build 45 new reactors by the year 2030, with the ultimate goal of 100 new plants. In contrast, Obama is on the record as stating that he is “not a nuclear energy proponent”.

To read more on the two different policy platforms:
Obama - http://www.barackobama.com/issues/energy/
McCain - http://www.johnmccain.com/Informing/Issues/da151a1c-733a-4dc1-9cd3-f9ca5caba1de.htm

The Reactions:
The Environmental Groups:

“The government has missed a real opportunity to fund things that are a real solution, like public transport and vehicle efficiency. So we would have liked to see the money go towards more long-term lasting solutions rather than a short-term cut in excise."
- Australian Conservation Foundation (ACF) climate change program manager Tony Mohr told Sky News this morning, reacting to reports this morning that the Government will lower the excise on petrol.

"Australia's overall poor result is embarrassing, and highlights the government has some tough decisions ahead of it if it wants to raise Australia's overall climate change performance,"
- from World Wildlife Fund (WWF) Australia chief executive Greg Bourne.

The WWF and insurer Allianz also released a well-timed report by consultancy Ecofys showing Australia has the largest per-capita emissions in the world - mainly due to our reliance on coal.

The Business Groups:

"For companies that are exposed to international competition where the prices set for their product are in world markets, and we're adding a big impost in the Australian market to introduce climate change abatement policies ... those activities will just go offshore and we'll destroy investment industries in Australia." -Australian Industry Group CEO, Heather Ridout commenting on the impact an Emissions Trading Scheme will have on big business, who she argues should be compensated to remain competitive.

“Farmers have maintained that we are willing to play our part in meeting Australia’s, and the world’s, climate change challenge. Today’s Green Paper provides the opportunity for Government and farmers to work together to ensure this can be achieved in an equitable, measured and sustainable basis.”
-National Farmers Federation President David Crombie seeing today’s Green Paper as a prudent way forward.

“The Government has shown it wishes to take a lead position on emissions trading by pursuing the inclusion of carbon embedded in wood products through the development of international rules. The forest industry is looking into the future, towards an inevitable international carbon trading scheme. In the international carbon market it will be vital that Australia has the maximum amount of carbon stocks available for trade and that means fully recognising all aspects of forestry.”
- National Association of Forest Industries CEO Allan Hansard, pleased to be named as the only carbon positive industry.

“The green paper provides the basis for ongoing discussions with the government, but the devil remains in the detail in terms of whether the options put forward will achieve the twin objectives of sustaining growth while meaningfully reducing emissions.”
- Business Council of Australia President, Greig Gailey.

The Unions:

"I don't know that we will see huge losses of jobs. On the contrary, you are going to make aluminium somewhere, you are going to make steel somewhere. Whatever the industry, we know that there is a real chance that if we can be ahead of the market internationally, if we can retro-fit and restructure our plant, look at the redesign of work, then we may very well expand some of those industries, not see them decline."
-Australian Council of Trade Unions President, Sharon Burrows


“The Rudd Government appears to have accepted the reality that the Australian economy is based on coal. The Prime Minister has joined a long line of eminent thinkers...who all believe that low emission technology must shape our energy future. A decision to invest $5 billion, will allow Australia to continue its coal exports, not just of export quality black coal but the technology that will make it an appropriate power source into the future. We are on the eve of historic announcement that will shape a new future for Australia. These are nation-building moments. Clean energy will mean better jobs, economic growth and profits."
-CFMEU Mining and Energy Union National President, Tony Maher.


The Consumer Groups:

"We're always very concerned about the additional cost to motorists. This, I think, achieves the goal of making sure motorists are in (the emissions scheme) but also their costs are reduced because fuel is such an intricate part of the economy."
- The NRMA likes the proposal to compensate motorists by cutting fuel excise as a step in bringing in an emissions trading scheme. President Alan Evans supports what he describes as a balance between cutting greenhouse gases and protecting motorists.

“While everyone will have to bear the costs of responding to global warming some groups, including those who rent and can’t make the necessary investments to improve efficiency, will need help.”
-CHOICE Director of policy & campaigns, Gordon Renouf.
CHOICE released an Energy and Equity report with ACOSS and ACF back in April and take the view initiatives are necessary to protect those on low incomes, disadvantaged communities and the rental sector. They also argue any costs passed on by business to consumers must be transparent to ensure there is no price gouging.

by Alicia Burgman Portfolio Leader Agriculture and FMCG

Climate change is the biggest scapegoat out there at the moment. It seems almost everything that’s going wrong at the moment can be linked to and designated to be a result of climate change. One sector that has been waiting patiently for the penny to drop is the agriculture sector, in particular those growing food for domestic and international markets. Climate change also formed the basis of the Prime Minister’s speech at yesterday’s ABARE Outlook conference in Canberra. Country areas have long been the stronghold of The Nationals, but last year’s election highlighted the changing nature of rural voters with one third of the 45 seats in the country now held by the ALP (See P&Ps analysis in the Rudd Book for more).

While there will always be arguments about the environmental footprint of certain sectors, it’s difficult to dispute the fact that Australian farmers don’t have a long history working with the weather. From searing drought to flooding rains, they’ve seen it all and unlike most of us who can still get up and go to work regardless of the weather, the changing patterns are directly impacting the viability of an entire industry.

This is not to say changing weather patterns are a new phenomenon for farmers. Their livelihoods depend on their ability to accurately forecast weather patterns and plan accordingly. While this has been challenging recently, farmers are used to changing their plans depending on what the weather is doing. This sector is opportunistic in nature and has to be to ensure its survival.

Farmers’ understanding of these patterns should be drawn upon by decision makers to inform policy. There’s a wealth of information farmers can provide in terms of really pinpointing differences in the climate patterns in recent times. It was great to read recently that it’s these older farmers who are really convinced there’s something out of the ordinary going on here, which is a change from what you normally hear and see.

While there’s still a lot of air left in the climate change debate, it’s a debate we need to have. While the commercial impacts of changing production to become ‘climate friendly’ are real and likely to be large, this is an debate which requires vision. And if we don’t start looking for solutions to the problems we have created, the outlook for future generations is certainly bleak

According to the latest Sky News Australia internet poll, 51% of Australians are not willing to make further lifestyle changes to help redress climate change. This survey result is quite interesting against the backdrop of the release today of Professor Ross Garnaut’s interim report on the economic costs of climate change.

Last year the State and Territory Governments (supported by Federal ALP – then in Opposition) commissioned Professor Garnaut to undertake an independent study into the way climate change and climate change policy will impact on the Australian economy. Garnaut is charged with proposing potential medium to long-term policies to ameliorate the effects of climate change.

Following today’s release of its interim findings, Garnaut will submit a first draft of his report by 30 June and his final report is due to be released on 30 September.

Garnaut’s interim report provides onlookers with insights into what the final report will actually contain, with Garnaut commenting today that “Contrary to the conventional wisdom which has dominated Australian debate over the past decade, comprehensive global efforts to reduce emissions will play to Australia’s strengths”.

He also stated that economically speaking, “the challenge is to end the linkage between economic growth and emissions of greenhouse gases”.

Garnaut is attempting to address the question of how Australia can meet its strong environmental goals in a way that is the most cost-efficient. Garnaut has stated that one of the greatest challenges is to remove the link between economic growth and greenhouse gas emissions.

Public submissions on the Garnaut’s Interim Review are due by 11 April 2008.

Parker & Partners would be happy to provide you with a more detailed account of the Garnaut findings, its political and policy ramifications and how the review may impact on your company at your request. Please contact the Director of P&P’s Sustainability practice – Peter Shmigel at peter@p-p.com.au for more information.


Biography:

Ross Garnaut has been a Professor of Economics in the Research School of Pacific and Asian Studies at the Australian National University since 1989. He is currently Chairman of a number of international companies and research organisations, including the International Food Policy Research Institute, and a board member of several others. From 1985-88, Professor Garnaut was the Australian Ambassador to China.

By Peter Shmigel, Director Sustainability

There is a powerful new brand in town called “carbon neutral”. If your organisation is thinking of associating itself with this brand, it’s worth thinking about what “carbon neutrality” represents – and even more importantly - what it may not represent.

When you do that, you might find that in some cases the “carbon neutral cart” has been placed before the horse that is hard work toward genuine environmental improvement. Smart companies in this space will be the ones with “horsepower” and not just hype.

Let’s start at the beginning. The notion of “carbon neutrality” holds that through its activities an organisation has no net effect on carbon levels. Whatever “baddies” it emits into the atmosphere, it cancels out, negates or “neutralises” through the creation of “goodies”.

The “goody” that currently gets the most press is the purchase of “carbon offsets”, which is essentially investing an organisation’s money through a third party ( a “carbon offset provider”) in beneficial projects, such as the development of renewable energy technology or reforestation.

In my own view, this approach is well intended, but it certainly can’t be the only way a company tries to do the right thing. Indeed, it’s not surprising that there’s increasing community and stakeholder skepticism about “carbon neutrality”. The satirical and activist-run website www.cheatneutral.com foretells what’s to come about corporate “carbon neutrality” when it’s not matched with more substantive approaches. As Cheatneutral says:

“When you cheat on your partner you add to the heartbreak, pain and jealousy in the atmosphere. Cheatneutral offsets your cheating by funding someone else to be faithful and NOT cheat. This neutralises the pain and unhappy emotion and leaves you with a clear conscience.”

It’s plausible that an organisation could still call itself “carbon neutral” even if it was intentionally increasing its energy use and its greenhouse gas emissions - as long as it was willing to buy enough “offsets”. Do such practices actually substantially decrease the rate of global warming and make the world significantly more sustainable? I’d be very interested to see some serious modelling that can make the case.

Another concern is the accuracy of the very term itself. “Carbon neutrality” implies that an organisation has very systematically calculated all its greenhouse gas emissions (its “footprint”), very accurately recalculated those emissions into carbon equivalents (“conversion factors”), and very carefully matched / picked valid projects into which to put its money (“offsets”). Assumptions usually need to be made and they need to be of the most conservative variety.

Achieving “carbon neutrality” is simply not as easy as using some on-line calculator and then handing a cheque to some green entrepreneur for some anonymous projects. Indeed, the carbon offset market is a new and emerging one. Like most new and emerging markets, it has its share of snake oil specialists, trying to make a quick buck before the inevitable regulations are introduced. The better players in the sector are pushing for high standards of self-regulation and the ACCC is also having a look.

Even the spin doctors are cautious. The UK’s Chartered Institute for Public Relations has issued a draft “Best Practice Guidelines for Environmental Sustainability Communications” that (rightly) state the following:

“Many consumers believe that being carbon neutral denotes good environmental practice, where as this could actually mean that a company has bought themselves a good reputation - drawing a green halo over their brand. Quoting being ‘carbon neutral’ needs to be used carefully, particularly with regards to carbon off-setting as part of the process.”

Given these issues, Parker & Partners’ counsel to clients who want to legitimately participate and position in this space is based on what we’re starting to call the carbon management hierarchy of priorities: reduce, renew, & replace.

• Reduce. Most organisations can make significant strides in lowering their energy usage / greenhouse gas emissions – often with a financial payback. Indeed, from an international and national policy standpoint, the benefits of energy efficiency are too often overlooked – probably because fewer people will make money from it.
• Renew. Choose to get your juice from certified GreenPower sources and directly support the renewable energy sector – rather than through middlemen that inevitably add to the transactional costs of the sector.
• Replace. Once you’ve applied the above two strategies, and lowered your impact on the natural environment, consider “offsets” as a way to achieve neutrality for your remainder emissions and to generally support a transition to a lower carbon future.

For good measure, I’ll add another R – for Research. Namely, if you are going to use “offsets” as one component of a total package, be sure to research several key elements. Asking hard questions of providers will ensure the legitimacy of what you’re buying and optimise your organisation’s involvement. Here’s some sample questions:

o What procedures does the provider use to measure the “footprint” of your greenhouse gas emission generating activity?
o What does the provider count within the “scope” of your footprint? Is it site, process, or event specific or does it involve the supply chain?
o Is the provider accredited / certified / verified – both in terms of how they “footprint” and the projects that your offsets will support?
o What types of projects does the provider put your money toward? Renewable energy – what type and where? Reforestation – what type and where? Carbon sequestration – what type and where?
o Are the projects ‘additional’, eg, or, would they have happened regardless of the offset investment?
o Are the projects they support somehow relevant to your own activities and/or stakeholders?

As outlined above, an organisation actually needs to work quite diligently to legitimately claim the “carbon neutral” title. As regulators, stakeholders and the public get up to speed and exert greater scrutiny of companies’ environmental claims, the more plausible descriptor could often be “low or lower carbon” .

And, that is the heart of the matter: credibility. Credibility in what an organisation does and what an organisation claims. When it comes to corporate environmental performance and positioning, that’s the ultimate test that companies need to apply to themselves: is what we’re doing truly substantive improvement and is what we’re saying 100% true? The smart companies know that positively answering those questions goes well beyond calling oneself “carbon neutral”.

By Peter Shmigel, Director Sustainability

If there's one thing that Peter Garrett's threat to ban plastic bags proves, it's that he's still good at show biz. While style and symbolism are undeniably important in politics, let's hope our new Enviro Minister will be equally adept at the policy substance in months to come. Indeed, it would be great to see him next try his hand at some other, more substantive bans.

So, why all the excitement? Well, plastic bags are a classic negative icon if you're trying to get column inches in the enviro debate. They're everywhere and part of everyday life. They're ugly when littered. They remind us about our consumptive, wasteful ways. They certainly can kill critters. And, very importantly, they're easy for journos to understand as a story. Why do you think you see rival environmental spokespeople – such as Jon Dee of Planet Ark and Ian Kiernan of Clean Up Australia -- falling over each other to 'own' the issue?

While the plastic shopping bag definitely has an environmental impact and while that impact should be minimised wherever possible, it’s comparative impact is low. The bottom line is that the plastic bag is a very light weight article that is small in area. That each bag is so cheap largely reflects how little resource goes into producing it - even accounting for what we geeks call "the non-monetisation of its environmental externalities".

The reality is that the plastic bag simply doesn’t do nearly the kind of damage that other things we use in daily life do. Plus, focussing policy on banning the bag detracts from any number of serious reforms, including other potential bans.

Let’s note that in policy terms a ban of any sort is what's called a 'blunt instrument'. Namely, it’s likely to create significant collateral costs for some group in society. So, if you are to use a ban, do it judiciously where the benefits of action are greatest. Here’s a few suggestion – solely from the waste minimisation arena – where bans would deliver much greater benefits that those associated with banning the bag:

• Ban organic material from landfill. Most of what goes to and decomposes in our landfills (and creates 3% of Australia’s greenhouse gases) is stuff like garden waste and food scraps. Nearly all of this material can be recovered for beneficial and job-creating uses like composting on residential and agricultural scales and renewable energy production.

• Ban computers, TVs and other ‘electronica’ from landfill. The various digital bits and pieces are the fastest growing segment of Australia’s waste stream. Some of this material is quite toxic, including heavy metals such as lead from batteries. Again, a considerable proportion of these goods – such as their plastic, gold and copper content – can be recovered as part of new sustainable industries. Indeed, probably less than 2% of all computers are currently being recycled.

• Ban biohazardous material from landfill. With our society’s ageing demographic, there’s an increasing amount of medical waste around and more of it is inappropriately ending up in landfill where it can create significant human health issues.

• Ban introduction of packaging materials which can’t generally be recycled in existing Australian systems

And, there are many other bans beyond waste that are equally applicable, such as banning cars that don’t meet an annual pollution emission and fuel efficiency test.

Each of the above steps – though thoroughly unsexy – would address a market failure, deliver a superior environmental outcome than banning bags, and stimulate new "sustainability industries". They're also easier to police - who's going to be keeping an eye on millions of shops in thousands of High Streets?

Moreover, if your aim is to get supermarkets per se to show greater environmental responsibility, encourage them toward better environmental labelling of consumer products. Why not give the consumer more information and choices about the environmental footprint of what's in their shopping trollies not just what they use to get stuff home in?

Banning plastic bags – while populist and there’s nothing wrong with that – seems a bit redundant. Namely, there’s been a steady decline in bag use for the last five years as a result of community and consumer education – all of it paid for by the supermarkets rather than the taxpayer. Many people are steadily moving to the reuseable bag alternative – a ban just sends the signal that their efforts haven’t been good enough. Moreover, the policy alternative - the plastic bag levy – applies to those who don’t do the right thing while not punishing those that do.

Indeed, if as government you’re getting a decent environmental trend and somebody else is paying for it, why not focus public policy priorities where that isn’t happening? While I strongly support the principle of consumer-based environmental responsibility, let’s hope the next time the Minister suggests a ban it will be on something big and bad rather than just what’s easily understood and visible.

While Labor’s environmental promises coming into Government are on the public record, the appointment of Senator Penny Wong and Peter Garrett to respective environmental portfolios has some further implications and opportunities.

Based on her background as an attorney and her former Shadow Ministerial responsibilities for corporate governance and responsibility, it is fair to say that Senator Wong has expertise in corporate governance and a strong understanding of how companies work. Through her background, she will know that disclosure and measurement drive outcomes. For example, Senator Wong has publicly supported the Parliamentary Joint Committee on Corporations and Financial Services’ recent report titled, Corporate Responsibility: Managing risk and creating value, which put forward measures for business on environmental and social risks.

As the Committee was influenced by the former Government’s numbers, Senator Wong also advocated a series of measures beyond those officially recommended:

· Establish a Corporate Responsibility Unit in a business-oriented government agency to develop and deliver corporate responsibility policy;
· An immediate audit of government regulations that help or hinder sustainable business activities;
· A National Sustainability Council responsible for policy ideas and national targets on sustainability issues;
· Ensure that government leads by example by implementing mandatory obligations for government agencies on sustainability reporting and performance; and
· A flexible, mandatory minimum of reporting on non-financial risks and strategies to mitigate them by listed and large proprietary companies.

Senator Wong’s legal and Parliamentary experience may well have some logical consequences in policy development – beyond what’s already been pledged in the election campaign. In my view, this includes some of the following possibilities:

· Increased emphasis on public reporting of companies’ environmental performance, potentially including via annual accounts/statements
· Potential changes to National Pollutant Inventory rules
· Potential rationalisation / consolidation of energy, greenhouse and water reporting regimes across Australia
· Possibly a new Intergovernmental Agreement on Environment and National Environment Protection Measure framework – and a re-assessment of how environmental matters are managed across Commonwealth / State / local governments
· Possible extensions to provisions for Board director / senior executive liability for environmental harm by companies
· Capacity building measures for business to address climate change risks

The bottom line is that Senator Wong is uniquely placed to drive environmental reform from where it matters most - the executive suite and Boardroom – via not only environmental policy/regulation but corporations law. This will mean she will need to get the cooperation of the Minister for Finance, Lindsay Tanner MP, who is on the record as a strong and articulate advocate of climate change reform.

It would initially appear that Peter Garrett’s influence will be of a different variety. The substantive components of the broader environmental portfolio are climate change and water, which Wong will take hold of. This leaves elements such as Commonwealth national parks, forestry policy, biodiversity policy, whaling, Antarctica, hazardous waste, cultural heritage and others to Garrett. While it has no direct Constitutional control of many environmental matters, the Commonwealth under Garrett may play a stronger national facilitative role on various issues, such as urban sustainability and waste management/resource recovery. For example, there are several NEPMs currently under development – including for product stewardship – that Garrett may seek to positively influence (read: speed up) by utilising Labor’s historic ascendancy in every State and Territory in this regard.

At the same time, new Departmental arrangements are of note. It would appear that Minister for Climate Change and Water Penny Wong has the new Department of Climate Change (the old Greenhouse Office) and the water policy part of the new Department of Water, Heritage and the Arts. However, her control of the new Department of Climate Change (DCC) may be shared, as it remains part of the Prime Minister and Cabinet portfolio, which potentially reflects the centrality of the issues at hand, and the nomination of the Treasurer to answer relevant questions in the Lower House.

Minister for the Environment, Heritage and the Arts Peter Garrett has the remainder of the new Department of the Environment, Water, Heritage and the Arts (DEWHA). This new agency is a result of a merger of the old DEWR and the Arts section from the old DCITA. It should be noted that consumer / householder environmental change programs will be in the new DEWHA and under Garrett.

Interestingly, the energy and water efficiency program pledged by Labor (eg, $240 million Clean Business Australia program) looks to be housed in the new Department of Resources, Energy and Tourism (DRET) under Minister for Resources, Energy and Tourism Martin Ferguson.

By guest contributor Peter Shmigel, Director of P&P's Sustainability portfolio

Will Kevin Rudd and Penny Wong return to our shores with Australia committed to new greenhouse gas reduction targets or just with their hair braided and cases of Bali belly? The UN Framework Convention on Climate Change Conference in Bali, Indonesia is down to the short strokes and it is the new Rudd Labor Government’s first big challenge. How will Labor achieve the right balance between environmental considerations and the reality of Australia’s resource-based economy?

What’s mainly on the table at Bali is the so-called Draft Decision. If adopted, it is a major step toward a future international decision on binding greenhouse gas emission rules after the overall UN Convention and its Kyoto Protocol expire in 2012. The Decision – while not de jure binding at this point – would strongly push signatories along toward a new set of post-2012 obligations and timeframes primarily including:

· Net emission reductions between 25% and 40% by developed countries including Australia by 2020 – as opposed to the 8% increase off 1990 base that we’re currently committed to, and;
· Slow-down in overall emissions by developing countries by 2020 – including many of Australia’s major trading partners.

The stars are aligned for progress in four ways: a) strongest possible scientific consensus on the extent and implications of the problem through the International Panel on Climate Change; b) strong economic evidence that inaction is costlier than action through the UK’s Stern Report; c) rising community expectations off the back of Al Gore’s Inconvenient Truth, and; d)unprecedented calls from business leaders for policy certainty, including targets and carbon pricing.

So, the bold OTR prediction: by week’s end, Australia will commit in principle to Bali’s 2020 target reduction of between 25 to 40% subject to the cost/benefits currently being identified on behalf of the Commonwealth, States and Territories by Professor Ross Garnaut. Labor will get the symbolism right while leaving itself some wriggle room on the substance (which is completely kosher under the likely Bali Decision). Call it a measured risk.

Indeed, games theoreticians say that you just don’t play for today, you play for tomorrow and tomorrow’s tomorrow. Building on the precision and acumen of his leadership takeover and election victory, Kevin Rudd is very likely to further prove his gamesmanship at Bali.

Kevin Rudd is a Prime Minister in a hurry and climate change is his first big target. He said on election night that he wanted to roll up his sleeves and get to work. Having the paperwork to start the process of ratifying the Kyoto Protocol ready for the Governor-General to sign with him at his swearing-in ceremony was a good signal he meant it.

In an interview yesterday with Cynthia Banham at the SMH, Rudd said he wants to remould Australian foreign policy, make our nation a global leader on climate change and "bridge the gap" on emissions between developed and developing nations. Rudd will also seek to use climate change as a way of improving Australia's relationship with developing nations such as Indonesia and will head to Bali next week to commence this challenging task.

The Executive Secretary of the UN Framework Convention on Climate Change, Yvo de Boer, today acknowledged just how big a challenge this will be, saying that developing nations (quite understandably) will give the eradication of poverty a much higher priority than cutting emissions.

He has appointed Senator Penny Wong as Minister for Climate Change and his principal negotiator in global talks - but by placing the Department of Climate Change within the portfolio of PM&C - Rudd has signalled that he will be very heavily involved in emissions policy.

Peter Garrett, despite being appointed Environment Minister, was sidelined further from the climate change debate when it was revealed that Treasurer Wayne Swan will take questions on Kyoto and climate change in the House during Question Time.

By Peter Shmigel

From the amount of media that climate change is receiving, you’d surely think that environment will be a big vote decider in this Federal election. You might want to think again.

For a voter to move from one Party to the other on any given issue, there have to be clear points of difference between the two. One Party has to differentiate from the other in policy, positioning and competency terms.

The fact is that when it comes to climate change both Parties practice “shades of gradualism”. When their overall strategic directions on climate change are laid side-by-side, there is strong commonality between the Coalition and Labor:

· Both ultimately want to protect Australia’s resource-based economy and recognise our growing reliance on Chinese and Indian economic needs;

· Both understand Australia’s comparatively minor net greenhouse gas contribution and the fact that international action is fundamental to any real progress;

· Both see current energy sources as providing the majority contribution to our domestic energy mix into the future;

· Both (whether they admit it or not or set targets or not) treat renewable energy technologies as ultimately boutique;

· Both favour a reasonably market-friendly mechanism – emissions trading – as a key means for stimulating greenhouse gas reduction;

· Both Parties have pretty much shut up about climate change adaptation or how we should manage future impacts here in Australia – too scary to tell farmers and tourism operators they’re on the brink;

· Both only fiddle around the edges when it comes to demand management – again too scary to tell Joe and Jane Bloggs they don’t really need that flat screen in the bathroom;

· Both understand the general community’s desire for more action by somebody – and it’s equal unwillingness to in its own right pay more, buy less, give up the car etc, and;

· Both know from their research that the general community’s still a bit confused about climate change and not yet fully articulating what it wants done.

There are in fairness some differences between Lib and Lab, but on closer analysis they are largely symbolic rather than substantive. Labor has committed to a greenhouse gas reduction target of 60% by 2050 with economic analysis to come; the Coalition wants the economic analysis before committing to a target - probably pretty close to 60/2050 anyway. Labor wants us to commit to Kyoto – full well knowing we’ve already met our reduction target and that Kyoto is more a word (like “Sorry”) than a workable agreement nowadays. The Coalition has committed to compensating Australia’s Grey Army for climate change related utility costs – full well knowing it’s really convenient cover for a big cash handout in the election period. Labor has a rock star as spokesperson; Liberals an investment banker.

The fact is that the two major Parties are not actively seeking competitive advantage over each other in the climate change space. If they were, the policy contrast would be much greater. Rather, each is doing just enough to strategically neutralise the other guy and tactically use the issue to lock in some core constituencies – against the backdrop of economic realism and (some would say appropriate) deference to business interests. For their part, Labor back-roomers will be laughing all the way to the ballot box for not having had to do anything to win over the hapless and goofy Greens’ preferences. For their part, Liberal apparatchiks can take some heart from their best ever ‘ratings’ by various green NGOs.

The bottom line is largely stale mate in national voting terms – just some continuation of the normal historical pattern of Labor being seen as somewhat better on environment. In a tight race (which this may well not be), that won’t make a difference in swing terms, but it could matter a bit in a few key seats with stronger “green sophisticate” constituencies such as Wentworth, Macquarie, Richmond, and Adelaide.

We've all heard of a green thumb, but a green bum? This week, Australian supermarket chain Woolworths has been forced to pull its 'select' brand of toilet paper and tissue products from their shelves due to allegations their packaging makes misleading environmental claims.

A logo on these products stated they were sourced from sustainable forest fibre, from an environmentally responsible company. However, a report by Indonesia's Centre for International Forestry Research last year found that the foreign supplier, Asia Paper and Pulp (APP) relies on the clearing of natural forests in Sumatra for 60 to 70 per cent of its wood supply.

In the past, the term green brought to mind images of protests and "tree hugging hippies". Now, with climate change and sustainability top of mind, environmentally friendly products are no longer designed for a niche market. More and more, the public is becoming environmentally conscious in their purchasing decisions, although some might argue that there is still a wide gap between sentiment and action. All the same, Australian companies have been forced to take a stronger approach to green products and marketing.

Woolworths has always boasted a strong corporate social responsibility (CSR) strategy, particularly in relation to the environment, and released a comprehensive CSR report in 2005. However, with the current focus on climate change and the environment, investigation of issues such as labelling claims is becoming more stringent.

Woolworths has approached this issue vigilantly to ensure it doesn't significantly impact the company's reputation and ultimately their sales. Clearly adhering to a standard issues and crisis management plan, Woolworths Chief Executive Michael Luscombe has been on hand for media interviews, admitting fault where due and outlining Woolworths' solutions.

Mr Luscombe also personally phoned to update the ACCC on their actions and asked environmental group WWF to act as an auditor in checking APP’s claims. Further to this, all products were voluntarily taken off the shelves by the company until further notice.