President-Elect Joe Biden has been elected on one of the most ambitious climate platforms in US history[i]. However, with a divided Congress and many competing priorities, his ability to implement the necessary transformational climate reforms will be limited. For Australia, the issue is whether Biden’s win will translate into meaningful climate action at home.
In short, the answer is yes, but how and why is the question.
Australia and the Paris Agreement
A Biden Presidency will take the US from the only country ever to have left the Paris Agreement to its biggest champion. This will cause pressure to markedly increase from the US as well as emboldened allies in the UK, Europe and Asia for Australia to ramp up its ambition under the scheme. However, this pressure alone may not be enough for us to overcome our domestic aversion to climate action.
Kyoto credits, domestic climate action and the Paris Agreement
What is more difficult to avoid is the emerging view that there is ‘no legal basis for Australia’s use of Kyoto [carryover] credits’ as succinctly argued by the Australia Institute. Had Trump won re-election, Australia might have had reason to believe it could push through with its tactic to rely on its supposed ‘over commitment’ in the Kyoto Protocol to meet its 2030 Paris target.
With an ambitious US administration led by Biden however, the odds of Australia being allowed to use the credits is dramatically reduced – as is corporate Australia’s acceptance of their use[ii]. Should Australia not use carryover credits, modeling completed for Ndevr Environmental’s Tracking Two Degrees report indicates that Australia will need to increase its cumulative emissions abatement ambition from 217 MtCO2-e to 628 MtCO2-e by 2030 to meet its current targets. Such ambition will spur dramatically increased climate action at home either through the Climate Solutions Fund or Safeguard Mechanism – actions likely to markedly increase the price of Australian Carbon Credit Units.
Other emerging mechanisms too are likely to highlight Australia’s underperformance on climate. Most concerning of these for Australian exporters is the emergence of carbon tariffs like those proposed by the European Union. The EU scheme is formally scheduled for consideration by the European Commission in 2021 as part of the European Green Deal package, enjoys broad support and has a good chance of becoming law. It is intended to ‘help motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring a level-playing field…’ and will apply a tariff proportional to the carbon intensity of goods imported to the EU. The full scope of this scheme is yet to be seen but it is likely to be especially impactful for carbon intensive exporters like Australia.
Rather than fight such plans, the Biden Administration plans to take the same approach by applying a carbon tariff to goods imported to the US and take it a step further by using trade agreements to ‘get [U.S.] allies, partners and others to raise their ambitions’[iii]. Counterintuitively, this kind of action is more likelywithout Democratic control of the Senate because Biden, severely limited in his ability to legislate change domestically, would be forced to rely more on his executive authority which, among other things, permits him to execute foreign trade deals in the way President Trump was able to do with China.
Domestic climate action
Combined, changes resulting from Biden’s win are likely to dramatically increase the risk of inaction for Australian businesses with or without concerted action from our government. Carbon neutrality is an increasingly popular way to address this risk, with an 80% increase in carbon neutrality certifications just in the last year. Ndevr Environmental has supported many of the over 181 carbon neutral certifications across 107 businesses and as of October 2019, contributed to 14 MtCO2-e offset since 2010 – equivalent to taking all of Sydney’s cars off the road for one year.
At Ndevr Environmental, our mission is to help business transition to a sustainable future by contributing to climate action for the earth and its people. We are carbon, energy and sustainability specialists – get in touch with us to find out how you can formulate and implement a strategy for your business to prepare for a transition to a low-carbon economy.
Thomas is a Principal consultant with Ndevr Environmental and an experienced strategy and carbon pricing specialist. Thomas excels in supporting clients to manage the transition to a low carbon economy.