No legal or moral basis for Australia’s Kyoto accounting fudge, new analysis shows

New analysis of Australia’s international climate commitments has argued there is no legal, or moral, justification for the use of surplus Kyoto-era emissions credits to meet Australia’s 2030 emissions reduction targets.

A new report, authored by research group ClimateAnalytics and published by the Australia Institute, has argued that the premise of Australia’s Kyoto surplus is built on a mix of convenient emissions accounting arrangements and a disregard for previous commitments made by successive Australian governments.

ClimateAnalytics’ analysis breaks down the convenient accounting that has worked in Australia’s favour, including the inclusion of Australia’s land-use emissions in baseline calculations, soft targets adopted under international treaties, and the use of averaging across compliance periods.

“Any claim of overachievement under the Kyoto Protocol does not represent any real emission reductions but is technical only, resulting from anomalies under Kyoto accounting rules and deliberate accounting choices Australia made. The same is true of Australia’s 2020 Cancun pledge,” the ClimateAnalytics report says.

According to ClimateAnalytics, Australia has effectively set up very convenient arrangements under international climate change arrangements going back to the 1990s, that have allowed Australia to be seen to be generously meeting its targets while having to do comparatively little to decarbonise its economy.

These arrangements have carried forward to the present, culminating in a claimed 411 million tonne surplus of emissions permits, almost a year’s worth of Australia’s greenhouse emissions, that the Morrison is now trying to use to meet future emissions reduction targets.

“It is a serious concern that the Australian Government continues to employ dodgy accounting in order to evade action and actually reduce its emissions,” report co-author and head of Climate Analytics Dr Bill Hare said.

“There is nothing to be proud of claiming credits for action that never happened under the Kyoto Protocol so that Australia can bludge off the efforts of others, nor, as the report shows, undermining the Paris Agreement by demanding legal recognition for emission units that do not belong to it.”

The Australian government intends to use this overachievement as a credit towards meeting its 2030 emissions reduction target, which would result in Australia reducing its emissions by just 16 per cent, according to projections prepared by the federal environment department, with the surplus Kyoto units bridging the gap to the 26 to 28 per cent target.

“Australia’s proposed use of Kyoto Protocol units, or “overachievement”, would substantially cut the 2030 emission reduction required of Australia,” the report says.

“While the quantitative impact of Australia’s “proposed carryover” can certainly be calculated, any overachievement of Kyoto Protocol targets by Australia in preceding years is irrelevant to achievement of its 2030 Paris Agreement target,”

“There are a number of reasons why it is not legitimate or defensible- factually, legally or from an equity perspective- for Australia to use Kyoto Protocol “overachievement” toward its Paris Agreement NDC.”

Additionally, ClimateAnalytics highlights that no current mechanism exists that would practically allow for the units created under the Kyoto Protocol to be transferred into the Paris Agreement. No agreement between countries stands to facilitate the “carryover”, and Australia is simply working on the assumption that such an arrangement can be established in the future.

However, the government is facing stiff opposition to this plan, as countries move to prohibit the carryover of the surplus units during UN climate talks currently underway in Madrid.

It is not clear what decision may emerge from the COP25 talks, with negotiations set to continue for the rest of the week, and New Zealand and South Africa having been brought in as mediators to the Kyoto carryover issue.

If countries decide to prohibit the carryover of the Kyoto units, the Morrison government may be facing a bill of as much as $18 billion to purchase additional emissions reductions to account for the difference.

In a forward to the report, The Australia Institute climate and energy director Richie Merzian said there was no moral basis to carryover the surplus Kyoto units.

“Government intends to ‘carryover’ emissions credits from the Kyoto Protocol era to count towards emissions reductions under the Paris Agreement. This is problematic for many reasons,” Merzian said.

“Australia’s carryover credits from the first and second Kyoto Protocol commitment periods derive not from genuine efforts to reduce fossil fuel use and curb emissions, but from the use of accounting loopholes.”

“The creative accounting efforts by Australia encourage others to engage in similar creativity. This undermines the goals, principles, fabric and machinery of the Paris Agreement itself,” Merzian adds.

The analysis from ClimateAnalytics points to the fact that when the then Gillard Labor government indicated Australia’s 2020 emissions reduction pledge, it stated Australia was committed to an unconditional 5 per cent reduction target, along with reduction targets of 15% or 25%, dependent on certain conditions being met.

These tiered targets were incorporated into an international agreement under the UN climate talks, known as the “Doha Amendment”, which extended the operation of the Kyoto Protocol to 2020. The “Doha Amendment” was formally ratified by the Turnbull government in 2016.

Almost certainly, the conditions for Australia adopting the 15% reduction target, which required international agreement on a comprehensive climate treaty, where met by the establishment of the Paris Agreement in 2015.

According to ClimateAnalytics, the adoption of a target to reduce emissions by 15 per cent by 2020 would almost entirely exhaust any Kyoto carryover.

This raises the question of whether Australia has walked away from its pledge to adopt a 15 per cent emissions reduction target by 2020.

Australian Greens climate and energy spokesperson Adam Bandt argued as much in a letter to Scott Morrison and Angus Taylor seen by RenewEconomy.

“There is no longer any basis for Australia to refuse to lift its 2020 targets by up to 15%. This would not only be the right thing to do, it could resolve the dispute at Madrid about the legality and propriety of using ‘carryover credits’, as a higher 2020 target would mean most or all of these credits would not be generated,” Bandt’s letter said.

“Indeed, there is arguably no legal basis for the creation of most or all of the credits in the first place.”

In 2014, the Climate Change Authority recommended that Australia’s 2020 emissions reduction target be lifted to 15 per cent, with the Kyoto surplus used towards boosting that target to 19 per cent, rather than being used to reduce it.

Rather than moving to adopt the more ambitious 15 per cent target, then environment minister Greg Hunt, instead announced in 2015 that Australia had met its 5 per cent emissions reduction target five years ahead of time.

There has been no indication of any appetite amongst Coalition ministers to boost Australia’s 2020 emissions reduction targets beyond the unconditional 5 per cent target.