COPENHAGEN CALLING: Is this the end?

Hope of a robust and binding agreement at the Copenhagen climate talks were unofficially abandoned last Wednesday, when the Danish hosts opened up a hot dog stand in a corner of the main atrium, bringing a hugely popular alternative to the organic stodge that had sat unapologetically on biodegradable plates for the previous 10 days of the conference.

The overwhelming response told you something about the state of play in the negotiations. Everyone agreed that climate change is bad and that global temperature rise must be capped at 2c at the very most.

It's just that no one could agree on how it should be done, and how responsibility should be shared – when or where. The world is preparing itself for a new economic menu, but it's not quite ready for a mandate.

Prime Minister Kevin Rudd summed up the proceedings quite nicely on two occasions in the tumultuous last 48 hours of this at times colourful, entertaining, exasperating but most important conference. The first came in his speech to the plenary session on Wednesday morning, when he described this conference as a triumph of process over substance and of inaction over action.

The second came in his post-conference assessment that failure to agree on anything would have been a disaster. The Copenhagen Accord, represents progress of sorts and at least offers the possibility that the process towards an ambitious and legally binding agreement, which every leader stood up and said was necessary, can continue.

But here's the problem: The inability of diplomats and ministers to advance on two years of stumbled negotiations and produce a very basic text meant the conference did not start in earnest until the early afternoon of the very last day, when Barack Obama and Wen Jiabao – the leaders of the two largest emitters in the world, and of one declining and one ascending superpower - finally sat face to face.

How Obama must have bristled when Wen Jiabao reportedly sent a junior protocol officer in his place for a later meeting. But for all the noise generated by US and Chinese proxies, by grumbling OPEC producers and small and impoverished states that fear for their very future, it will be these two that hold the key in future negotiations, whether they resume in Bonn in May or in Mexico at the end of next year.

And little will change until someone can figure out how to coax the US to push for greater emission reduction targets, even as it tries to force its own climate bill through a hostile Senate, and how to get China to agree to international monitoring and verification of its proposed measures, which at the moment stand as a pledge to reduce emissions as a percentage of GDP by up to 45 per cent. The unstated fear is that one slip of a pen on quarterly GDP data and, hey presto, the target is met.


What next for the ETS?

The next crucial step in this tortuous process comes at the end of January, when nations are supposed to table their emission reduction pledges. And it is around this time that the Rudd government proposes to reintroduce its bill for an emissions trading scheme.

The lack of traction in the Copenhagen Accord means that domestic political debate seems destined to be framed around the issue of whether Australia should introduce an ETS while the state of international negotiations remains in such a state of flux (See Rudd's the big loser, December 21).

Australia needs an ETS because, without one, investment in many crucial sectors, particularly energy infrastructure, is paralysed. And as John Connor, the head of the Climate Institute said on the weekend, it would be dumb and reckless for Australia to ignore the low carbon, more efficient economic drivers that are being built by its competitors and trading partners, even if it is for energy security and cost effective reasons, as much as the climate.

Global clean energy investments outstripped fossil fuel investment for the first time last year and US, China and many other nations made it absolutely clear in numerous speeches and presentations in Copenhagen that they would continue to drive such investments. Planting trees might be a good idea, but it doesn't make for economic transformation on the scale that is required.

There is much talk about the threat of carbon leakage. A recent report by the World Bank, as well as the presentations inside the Bella Centre last Thursday by the International Institute of Sustainable Development, suggests these fears are overstated.

The biggest threat to Australian business if it cannot make substantive progress towards low carbon economy may come in the form of carbon tariffs. This is the stated intent of the Waxman-Markey Bill being considered by the US Senate, and is being openly discussed in Europe.

Australian businesses bidding for international contracts are already saying they are missing out on contracts because they cannot detail their own path to carbon reductions – and this in a voluntary market.

Absent Australians

And where were the Australian CEOs? Notable by their absence, they were. It might be a bit much to expect that they should queue in the cold for entry alongside the vegan followers of Vietnamese grand master Ching Hai, or be asked to survive on a diet of organic dark chocolate pumpkin seed snacks, but they may have been better for the experience of Copenhagen.

In and around the theatrics of Bella Centre was quite possibly the biggest expo ever on the science, the ethics, the technology and the mechanisms that would lead the world to a low carbon economy. Dozens of CEOs from leading global companies attended, talking of the possibilities rather than the threats. All called for robust action on the domestic and international level.

Posters proclaiming "We must act now” that lined the metro stations came not from environmental groups but leading corporates. For them, this was not so much a political statement as a business plan.

There were three delegations from Australian clean-tech business groups, but Australia's established industry sent only a group of lobbyists whose principal brief was to push for the weakest and least ambitious accord possible.

The result is what they might have wished for. But if they're celebrating it's only with an eye to next year's profits, and possibly the year after. It's a short-sighted approach, and leaves these industries poorly prepared for what lies ahead because Copenhagen is not the end of the process, it's a new start.