Introduction

(Acknowledgements)

I would like to thank the Asia Society for hosting this breakfast, and for their contribution to the discussion on climate change.

This week, in this city, the world has taken a small step forward.

The risk we face knows no precedent and it will know no rival.

For the majority of us - the Earth's current generations - nothing in our lifetimes will surpass this challenge.

Yesterday we saw new signs that we might just be up to this task. But there is a long way to go, and we don't have much time.

This December, we have our greatest opportunity to act.

Small steps won't be enough. We need to be going flat out - at full throttle - all the way to Copenhagen.

As President Obama said yesterday:

No nation, however large or small, wealthy or poor, can escape the impact of climate change.

And while no nation can solve this problem on its own, equally there can be no global solution without individual nations stepping up to the plate.

All nations must keep moving forward, because what each country does at home matters.

Australian action on climate change

Australia is determined to play its full and fair part on climate change.

In May, the Australian Government announced a new, ambitious target to reduce our emissions by 25 per cent by 2020, if together we can reach an ambitious global agreement capable of stabilising greenhouse gas concentrations at 450ppm CO2-e or lower.

Just as importantly as having ambitious targets, we have a serious and credible plan to deliver them.

Principally, we are legislating for our Carbon Pollution Reduction Scheme, a cap and trade emissions trading scheme that covers around 70 per cent of the Australian emissions.

We have already passed laws to increase our renewable energy by four times over the next decade, so that by 2020, 20 per cent of our energy will come from renewable sources.

To put it another way, the equivalent of all current household electricity will come from clean, renewable energy within just ten years.

We have embarked on the biggest investment in energy efficiency in the nation's history.

We are supporting the creation of green jobs.

We are investing billions directly in new, low carbon energy technology, ranging from solar and wind and wave to geothermal and, of course, clean coal.

And we have established a Global Carbon Capture and Storage Institute, a „one-stop shop' for expertise to help realise the goal of 20 large-scale carbon capture and storage projects in operation by 2020.

Australia’s contribution to global action

That support for global clean technology development is an important part of our global effort. But this is by no means the sum total of our efforts toward an international solution.

National schedules and common but differentiated responsibilities

Late last year, Australia started a conversation on how we actually form an agreement where individual countries sign up to deliver action on climate change.

Australia's approach is premised on our strong belief that in Copenhagen this year, we must reach an effective international political agreement to tackle climate change. We need all countries, whether developed or developing, playing their full and fair part.

To get to this point will be extremely hard. We are a long way off still. We are trying to bring the world together in a way it simply has never come together before.

Australia is proposing an approach of national schedules to help find common ground between developed and developing countries.

Our approach builds on lessons learned from the Kyoto Protocol, where countries had to commit to strict economy wide targets.

Taking on an economy wide target can be daunting. It sets a high bar for developing countries, meaning they have not taken on commitments - yet we need developing countries to be part of the solution.

National schedules are designed to encourage greater participation by developing countries to allow any new global agreement to include binding commitments from both developed and developing countries.

The Kyoto Protocol focused solely on commitments from developed countries – with no commitments from developing countries.

Under the proposal, annexed to the overarching agreement on issues like the environmental objective, could be schedules to specify the mitigation undertakings for each Party to the agreement.

The mitigation undertakings in the annexed schedules can be cast in a variety of forms, ranging from Kyoto-style economy wide targets, to more specific undertakings on energy – for example, renewable energy targets or energy intensity measures - technology or efficiency standards, sectoral targets, or targets to reduce deforestation.

We recognize that the nature of developing country actions will differ. Our concept of schedules proceeds from a recognition that the type of actions developing nations will take will necessarily involve a wide variety of actions - for example, the action that President Hu spoke of yesterday – such as reducing emissions intensity and increasing forest cover.

Undertakings could be chosen by the country depending on its circumstances.

The legally binding nature of schedules delivers environmental, political and market certainty. It builds confidence to put forward ambitious mitigation efforts - knowing that others will reciprocate – also underpins private sector investment.

And the private sector is critical. We know the scale of the financing task is beyond the capacity of public sources alone and that governments have to provide the framework that will allow the private sector to invest with confidence. Inscribing actions into schedules can help do this.

More generally, schedules offer a durable vehicle to serve the international community for the long term, because they can adapt to changing country circumstances without the need to go back to the drawing board and design a new agreement every five or ten years.

Schedules deliver flexibility, because actions can be tailored to each country's circumstances.

For many prospective participants in a global climate change agreement, this flexibility could be the difference on whether they start crossing the bridge to a low carbon future.

This is an idea – a starting point, rather than a finished product - that will be the subject of debate and discussion.

While we are at an early stage of discussion, there is potential for this idea to help encourage progress.

We've been heartened by the discussion this idea has generated.

During the last round of UN negotiations in August, Australia hosted a seminar to showcase and discuss the six leading proposals.

The enthusiasm and optimism for this discussion from governments and non-government organisations alike has encouraged Australia to continue along this path.

Last week at the Major Economies Forum in Washington, I gave a presentation on Australia's proposal.

At the next round of negotiations, starting in Bangkok next weekend, Australia will host another seminar to further draw out those areas of common ground.

This work reflects Australia's commitment to a new period of active and creative middle power diplomacy, and our tradition of vigorous efforts to forge multilateral solutions, such as our role in the formation of the United Nations and important treaties.

REDD

As I said, there are a number of activities that could potentially be included in a schedule. One such activity is efforts to reduce emissions from deforestation and forest degradation – usually known by its acronym, REDD.

Efforts in this area can also help developing countries to grow their economies while tackling climate change.

Indeed, one of the keys to reducing emissions in developing countries is to ensure there is reward for avoiding deforestation. To put it another way, instead of an economic imperative to remove forests, we need an economic incentive to preserve them.

The broader economic value should also motivate us to avoid deforestation.

Australian modeling shows that the inclusion of forest-related activities in a future global agreement has the potential to reduce global mitigation costs by around 20-25 per cent.

The environmental motivation, of course, is beyond doubt.

Emissions from deforestation and forest degradation represent around 20 per cent of global emissions – more even than from transport – meaning that our stabilization goal of 450 parts per million is next to impossible without REDD.

This of course says nothing of other environmental benefits, like protecting biodiversity.

The last time I was in New York, I released Australia's proposal on how emissions reductions from the forest sector in developing countries can be included in a future international climate change agreement.

Our proposed forest carbon market mechanism will include reductions in emissions from deforestation and forest degradation as well as enhancing the removal of emissions from afforestation and reforestation. Importantly, our proposal has been developed with a long term vision of enabling broader land sector coverage in the future.

Australia's proposal is a market based approach that puts an economic value on activities that reduce emissions from the forest sector in developing countries. National governments would be issued with forest carbon credits for emissions reductions below an internationally agreed national forest emissions level, which takes existing emissions reduction activities into account.

An important element of REDD will be ensuring there is capacity for local communities to share in the benefits of protecting forest carbon.

In addition to our multilateral work through the World Bank, the Clinton Foundation and the UN, our $200 million International Forest Carbon Initiative supports emissions reductions through bilateral REDD partnerships in developing countries.

This bilateral work is focused in our region, in Indonesia and Papua New Guinea.

One of the most important issues in REDD – particularly in the context of a carbon market – is assurance that the emissions reductions that are claimed are in fact genuine.

This will require significant capacity building on forest carbon measurement in developing countries – which is where a considerable part of Australia's contribution on REDD is focused.

And building on our cooperation on REDD, Australia is working with Indonesia and Papua New Guinea while they develop the necessary policy, technical and financial pre-requisites for participation in future international forest carbon markets. We are helping these countries in our region to build their own capacity in carbon measurement, accounting and reporting systems that will be designed by locally, for local benefit.

These accounting systems are a critical part of any national system aimed at reducing emissions. They will provide the market with the information required to ensure credibility of any emissions credits generated from the forest sector. And it shows the international community that developing countries can develop the robust and credible systems that are required to generate tradable credits.

Through the Kalimantan Forests and Climate Partnership, Australia and Indonesia are working together on the first, large-scale REDD demonstration activity of its kind in Indonesia. Our two countries have also agreed to extend our cooperation by developing a second practical REDD activity.

Finance

Another central element of bringing developed and developing countries together in an international agreement will be financing.

Indeed, it is clear that without a robust package on financing, we won't get the deal we need.

As I referred to earlier, the magnitude of the financing effort means contributions will need to come from the broadest range of sources possible – domestic and international, public and private.

Navigating this terrain will require difficult discussions, about how much money needs to be raised, where it will come from, and how to manage it. I should note that the work done by Mexico on these questions has been very helpful.

But we are a long way from sealing a deal, and we cannot expect to deal properly with the complexities of designing a public and private financial architecture at the last minute in Copenhagen.

Decisions about national contributions, about systems for raising finance, private and public – about where billions of dollars will come from and where they will go - these can't be made on the fly.

And we cannot simply leave climate negotiators to hammer out a deal in the white heat of the final sessions of Copenhagen.

Ultimately, it will be settled through the UNFCCC, but we need serious input from leaders and finance ministers before we get to that point.

Where to from here

Across a range of issues – financing, mitigation, adaptation, among others - we must do everything we can to reach an effective political agreement at Copenhagen.

But we are a long way from where we need to be.

As Danish Prime Minister Rasmussen said yesterday at the conclusion of the UN Secretary-General's Climate Change Summit:

In the coming days and weeks we need progress at unprecedented pace.

As I said, the world took a small step at yesterday's summit.

The leadership of Japanese Prime Minister Hatoyama on climate change will provide a welcome boost to negotiations.

Australia applauds the new Japanese Government's commitment to an emissions reduction target of 25 per cent below 1990 levels by 2020.

Prime Minister Hatoyama also outlined his resolve to implement this target through measures including the introduction of a domestic emissions trading mechanism.

And – quite significantly in my view - we heard a very positive statement from President Hu Jintao of China which demonstrated China's willingness to contribute to finding a solution to climate change.

His comments highlighted the need for developed and developing countries to work together. He also spoke of the need for developing countries to “avoid the old path of “polluting first and cleaning up later””.

China, as the largest emitter of greenhouse gases, will be critical to efforts to reduce emissions, so their statement, and their commitments, including to a reduction in CO₂ emissions per unit of GDP, are welcome.

Australia has emphasised that negotiators will need fresh mandates and political leadership as we approach Copenhagen, now less than 80 days away.

Japan's decision to increase its target offer, as Australia also did earlier this year, is a good example of such a fresh mandate.

We need more examples of this kind of political will to get us on the path for success at Copenhagen.

Conclusion

And politicians from across the political spectrum, across the globe, need to remember that we can't expect all nations to take the same action.

And politicians from across the spectrum, across the globe must understand that we can't all hang back and wait for others to move first.

Followers do not have the answer. All of us must share the lead.

The world's problems have never before been solved by procrastination.

The world's problems have never before been solved by delay.

Nor will they now.

The only way for us to succeed is to match the scale of our challenge with the scale of our ambition.