I'm delighted to be here today at the opening session of the third Asia Pacific Carbon Markets Roundtable.
Introduction
Thank you Dr Banerjee for that introduction, and I'd also like to extend my appreciation to Mr Guy Beatson, Deputy Secretary of New Zealand's Ministry of Environment, for the strong support and leadership that New Zealand has provided to the Asia Pacific Carbon Markets Roundtable since its inception in May 2011.
New Zealand is of course a pioneer in this work having introduced an emission trading system in 2008.
I'm delighted to be here today at the opening session of the third Asia Pacific Carbon Markets Roundtable.
Some of you are familiar faces. I had the pleasure of attending a reception on Wednesday evening with participants of the World Bank Partnership for Market Readiness (PMR).
Australia is honoured to host both the PMR and the Asia Pacific Carbon Market Roundtable in Sydney this week. These are two important and complementary initiatives.
The PMR provides a forum for countries to share information and experience in the development and design of market-based approaches, providing practical technical expert support to implementing countries under the Partnership.
Australia is proud to support this excellent World Bank initiative, and announced this week an additional $2.5 million in support to the PMR, bringing the total Australian contribution to $12.5 million.
Carbon pricing - the global norm
When I think of where carbon markets should be in ten to fifteen years, I envision a fully integrated and liquid regional and global market where we can trust that units are environmentally credible and fungible.
This roundtable is the type of activity that will take us closer to this goal. It provides a forum for key regional partners who have, or are looking to introduce, market-based approaches to drive emissions reductions and support low carbon, green growth. Through the exchanging of views and sharing of information, this Roundtable can play a key role in the development of robust, credible, effective and integrated carbon markets in our region and beyond.
Developments in our region over the past year have given a major boost to markets, an acknowledgement of the growing role that markets are playing in the global effort to reduce greenhouse gas emissions.
In Australia, the fixed price phase of our emissions trading scheme commenced on 1 July this year.
As many of you will be aware, in August this year Australia and the European Union jointly announced that we have agreed a pathway to link our respective emissions trading systems, commencing with a partial, one-way link in 2015, and full two-way linking in 2018.
The discussions are progressing well. In Australia, we learnt a lot from those who went before us in establishing domestic emissions trading systems. Equally, I am sure, there will be a strong practical demonstration effect for those looking to integrate carbon markets in the future by the establishment of an intercontinental link between Australia and the EU.
There have been many other significant developments in carbon markets this year.
In California, where an economy-wide cap-and-trade program will launch from 1 January next year, preparations are underway for the first round of auctions in November. I know Mary Nichols had wanted to be with us this week but this has not been possible.
I was in California recently as part of a visit to the United States for climate change talks. The Californian Government agreed to work together with our Government towards the development of regional and global carbon markets, exchange comparative experiences on climate policy, and explore options for linking carbon markets over the longer term.
We did this because it is in our shared interest to continue developing integrated carbon markets - the lowest cost and fairest way of cutting carbon pollution.
I also congratulate Korea, whose National Assembly in May this year passed legislation with near unanimous support to establish a national emissions trading scheme from 1 January 2015.
Earlier this week while representing Australia at the UNFCCC Pre-Conference of the Parties and inaugural meeting of the Global Green Growth Institute, I met with President Lee and Environment Minister Yoo. I know that the Korean Government is now very busy preparing the Presidential Implementing decree for the Korean ETS, to be released in November.
In China, we've seen impressive progress in establishing pilot emissions trading schemes in seven cities and provinces. China's Market Readiness Proposal, released this week, is a comprehensive plan of work towards establishing a national framework for emissions trading.
I look forward to hearing more on these and other developments in the region in the session after morning tea.
This morning, I want to take the opportunity to talk to you about why this policy area that you are considering is important to Australia.
First, Australia's economic prosperity is deeply enmeshed in the continued prosperity of the Asia-Pacific region. Seven out of our eight largest trading partners are represented here at this roundtable, because seven out of our eight largest trading partners are in the Asia Pacific region.
It is in Australia's interest that your economies remain strong into the future.
It is consequently important for Australia to work with partners in our region in responding to the challenge of climate change.
Climate change poses a clear threat to the economic prosperity that our region has enjoyed in recent decades.
The science tells us that the Asia Pacific region is one of the most vulnerable to the impacts of climate change.
According to the National Centre for Atmospheric Research, the cost of adapting to climate change is likely to be higher in our region than in others including Europe and Central Asia, the Middle East and North Africa.
Indeed the cost of adapting to a 2 degree temperature rise could be as much as $15 billion for South Asia alone.
The adverse impacts of climate change on our region will include sea level rise, more intense tropical storms and increased wind speeds which could inundate low lying port cities, threaten coastal areas, exacerbate flooding and increase the salinity of rivers and bays. All of this will affect our economies and business.
We need to work together, as a region, to protect our societies, our economies, and our natural environment, to build resilience to the unavoidable impacts of climate change, and avoid moving past the two degree guardrail so as to minimise the most dangerous impacts of climate change.
The Asia-Pacific must be an integral part of the solution if the global effort to combat climate change is to succeed.
The countries of our region face a common challenge of transitioning our economies to a low-carbon future.
The Asian region alone currently accounts for around 40 per cent of global emissions, up from 31 per cent in 2001. If you consider the broader Asia Pacific, from which this Roundtable draws its membership, then the scale of the challenge is even greater.
This Roundtable provides a unique forum in which to explore how we as a region can further develop carbon markets to drive greater global ambition, to drive investment in clean technology and innovation, and to lower the collective costs in responding to the challenge of climate change.
Each of the participants here represents a country, a state or a group of states, in the case of the Regional Greenhouse Gas Initiative, that has implemented, or is planning to introduce market-based mechanisms as a response to the challenge of climate change.
We know that the economies that will be competitive in the 21st century will be those that innovate, that move to clean energy, those that reduce the emissions intensity of their economy.
That is why in November last year, Australia's Parliament passed legislation to establish an emissions trading scheme, with the fixed phase period beginning on 1 July this year.
It was not an easy political path for Australia; indeed it took a number of attempts to succeed. But it is an important, historic reform for the Australian economy.
Australia's emissions trading scheme will deliver at least a 5 per cent reduction in our emissions by 2020 and 80 per cent reduction by 2050.
One of false, but unfortunately common criticisms made of the Clean Energy Future package here in Australia is that we are acting alone in introducing a price on carbon. This roundtable, and the Partnership for Market Readiness meeting earlier this week, demonstrate just how unfounded that criticism is.
From 2013 at least 33 countries, 11 sub-national jurisdictions in the US and Canada, and seven cities and provinces in China, covering around one-third of China's GDP, and one-fifth of its population, will participate in emissions trading schemes. Many more countries, including Korea, will be implementing emissions trading in the near future.
There is now clear recognition that carbon markets are an integral part of the global effort to address climate change.
Markets help identify low cost abatement opportunities. By sending a clear price signal, they further incentivise private sector investment in and development and deployment of clean technology.
Integrated carbon markets will deliver a number of benefits. They will expand the scope and diversity of low-cost abatement opportunities - enhancing cost-effective emissions reduction in participating economies.
Deeper, more liquid carbon markets will also operate more efficiently and effectively - provided there is strong confidence in the governance and environmental credibility underpinning market mechanisms.
As international carbon markets develop price volatility should decrease, because supply and demand for permits will be less dependent on a single country or region's short term economic outlook. Linked markets decrease transaction costs for businesses with liability under various schemes, and reduce the risk of competitiveness impacts on business and of potential consequent "carbon leakage".
The sorts of issues that this Roundtable will explore, such as criteria for environmental credibility, will no doubt be integral to developing a common understanding that will help move the vision of regional carbon markets closer to reality.
It is a pleasure to be here and convey personally the best wishes of the Australian Government for your work over the next two days.
