Climate change’s usual terms of reference involve rising ocean levels and rising temperatures, not rising debt. But the world’s biggest economic evaluation of climate change, The Stern Review, due to be released tonight, says that climate change represents “the greatest and widest-ranging market failure ever seen.”

The report by Sir Nicholas Stern puts the global cost of global warming at $A9 trillion. In a nutshell, contrary to our PM’s previous statements, to NOT do anything drastic about climate change looks set to significantly damage our economy.

Internal documents from the Business Council of Australia — leaked to Crikey — offer an interesting snapshot of just how action on climate change has been stalled and derailed for over a decade now in the name of the economy.

Clive Hamilton made reference to this internal division in his Greenhouse Mafia speech, but it’s interesting to read these very candid comments from corporations in 2002 on why Kyoto was never going to cut it.

Back in 2002, some members of the BCA decided that it was about time that the Association, made up of the chief executives of Australia’s top 100 companies, reverse its position on Kyoto and urge the government to ratify it. A document was circulated which ran graphs like the example below which highlights the disparity between different industries’ carbon emissions and their total value to the economy:

Click for a larger image

The BCA looked set to show some real leadership on the issue of climate change. But then some disgruntled members spoke up. They condemned the internal memo and then laid out their reasons why the BCA should not support Kyoto. Dissenting members included Alcoa, ExxonMobil and Rio Tinto.

Wayne Osborn, Managing Director of Alcoa World Alumina Australia wrote:

Alcoa notes the variety of studies which continue to show that accession to the Kyoto protocol will adversely impact the Australian economy as a result of costs imposed on energy intensive export industries…

Chairman of Exxon, Robert G Olson, wrote:

Australia is a large producer of energy intensive goods and services and has relatively high per capita emissions of greenhouse gasses compared to most Kyoto signatories. Australia will be a net loser under the Kyoto protocol, as has been illustrated by ABARE analysis. Any perceived benefits of ratification are either illusionary or would be directed to sectional interests and will not be to the benefit of the broader Australian economy.

Brian Horwood, of Rio Tinto, wrote:

Credible Australian studies indicate that accession to the Kyoto protocol may result in measures damaging to the Australian economy through the costs imposed on our energy intensive export industries and through the loss of potential investment to non-Kyoto countries.

Greg Bourne of BP, now with the World Wildlife Fund, stood out for his support of Kyoto, but Rod Pearse, CEO and Managing Director of Boral Limited made his feelings pretty clear:

In our view, there is a very strong risk that a public reversal of the BCA’s stand on Kyoto will alienate the Government given the position announced by the Prime Minister and reiterated by senior ministers, and which the BCA has previously publicly advocated. We feel this will impact on the credibility and effectiveness of the BCA.

Eventually, the Business Council of Australia, strangled by internal division on the issue, came out with this neutral position.

As history will show, neutral statements don’t prove to be very effective. Three years on, Stern’s statement is about as far from neutral as you can get.

Since then, the BCA hasn’t revisited the highly contentious Kyoto issue. But now, under new chief Michael Chaney, the group is stating that “climate change is an indisputable reality and Australia must cut its greenhouse gas emissions.” As The Age reports, “Mr Chaney’s rhetoric would have been unthinkable from his predecessor, Western Mining boss Hugh Morgan, a prominent global warming sceptic.”

The BCA documents offer a lesson in obfuscation, but for a real example of how to muddy a debate, have a look back on the Kyoto vote and our government’s stellar stalling efforts.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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