the Kyoto Protocol

As was to be expected given Australia’s ratification of the Kyoto Protocol and the UN Meeting in Bali at the moment, there has been a lot of discussion about what Kyoto actually means to Australia.

I think to answer that question, it is necessary to consider what Kyoto actually is: the first attempt to globally acknowledge the problem of climate change and do something about it. Given that environmental issues have never had much weight across the political or business spectrum, any first attempt to get global acknowledgement of climate change as a problem was always going to struggle.

To be honest I think Kyoto has been successful… at least 50 percent successful anyway! Through Kyoto (and a little help, ironically, from the climate!), both politics and business are now seriously looking at the issue. That always had to be the starting point of any such protocol, and the fact that countries haven’t actually reduced emissions only highlights how, despite the UN conventions of the early 90s, neither politics nor business has taken the issue seriously. Effectively what happened was that we aimed for the stars, missed, but have fortunately landed on the moon.

So now that we are on the moon, what does it look like? Unfortunately for some (the species that will become extinct, for example) it’s probably worse than we thought. Perhaps fortuitously, the scare campaign didn’t turn out, and because we are now all seeing and experiencing the effects of climate change, politics and business are now responding to a real problem rather than a fluffy, ‘nice to have, but…’.

This is a good thing because despite the best intentions of some, inevitably we are a society that responds to real problems, and dare I say it, a crisis. Interestingly if the climate hadn’t changed as dramatically has it has over the past five years, climate change could have been written off as another scare campaign by left wing hippies and tree huggers, and action would still be a long way off.

So what does Kyoto mean to Australia? As reported in the Australian Financial Review this weekend, it provides ‘business certainty’. Finally the economy has the signals that we will take action. For business, certainty is huge. There were many ways that the new Australian Government could have provided the certainty, and for perhaps symbolic reasons, Kyoto was it.

So where to now? As everyone is saying, Kyoto needs some major revisions if it is going to be successful during it next phase. That’s fine. As every good entrepreneur knows, success is a product of past experience, and importantly, failure. So while Kyoto was not a failure because we now have politics and business seriously looking at the issue, it didn’t deliver on its intended emissions reductions, and that means it needs an overhaul.

Does that mean we need a completely new framework? I don’t think so, but what we do need is some serious exploration of where it fell down: a good starting point? The WIIFM: What’s In It For Me? As climate change develops, as our experience of it increases, the WIIFM will be easier to sell, and for Australia, action on climate change is probably needed to help us manage not only on-going water issues, but more importantly to decouple our future wealth and prosperity from our future emissions growth. To do this, we need to think about powering our economy with something other than coal.

And that’s where the new Government should start. While they have signaled their intentions by signing Kyoto, one of their key drivers – the emissions trading scheme – still needs major work. Now that business has certainty that something will be done about climate change, it needs – as quickly as possible – the new rules it will have to operate within.

In some ways it is like when cricket moved from test matches to one day games; Kerry Packer signaled the intention to modernise cricket, but payers had to learn new rules and learn how they would play the game under those new rules. The same goes for business: they need to learn the new rules and work out how they will change their businesses to ensure – like any game of sport – that they are a winner, not a loser!