In the first of a two-part series examining the future of Australian climate policy, Inside Story explains why the international policy consensus, on which Australia has based its carbon pricing scheme, has broken down …

For climate change policy, last year ended with two contradictory scenes: one, the successful passage through parliament of Australia’s carbon price laws; the other, the dispiriting conclusion to the international climate change talks in Durban.

Critics of Australian climate action would see the contradiction in the mere fact of Australia acting, given the paralysis in the international talks. But this perspective is narrow and ultimately self-defeating, since it assumes that Australia’s efforts should be predicated on success in UN negotiations.

Rather, the contradiction is a more subtle one. It lies in the fact that Australia has embedded in its laws a climate policy based overwhelmingly on a model of international climate action that has been revealed, yet again, to be staggeringly unrealistic — and unhelpful.

The international climate talks have been all about treaties, targets and trading — about agreeing to an international treaty to reduce greenhouse emissions to a globally safe level by allocating all major emitters an individual target to be met by a specified date and, moreover, by allowing countries to trade their emissions entitlements among themselves so that reductions occur where they cost the least.

The Copenhagen conference in late 2009 was meant to ”seal the deal” on a treaty of this magnitude, but failed to do anything of the sort because of widespread disagreements among countries on nearly every issue on the agenda — the thorniest being how to allocate the emissions reduction burden between rich countries (who benefited most from past emissions) and their rapidly industrialising counterparts (responsible for most of the future growth in emissions).

Whether or not a new agreement should take the form of an extension of the Kyoto Protocol or an entirely new treaty was another major sticking point in Copenhagen. (The Protocol, the first commitment period of which expires at the end of 2012, contains binding targets for developed countries only. Not surprisingly, they want to scrap it while poorer countries want to retain it.)

At the Cancun conference a year later, countries made progress by largely ignoring these two deeply contentious issues, agreeing instead on frameworks to raise money for climate action in poor countries, including helping them to adapt to unavoidable climate impacts.

In Durban, parties re-engaged with the more difficult issues regarding emissions reductions and the future of Kyoto — with disastrous results. The European Union sought to cajole developing countries into agreeing to its “roadmap” for a new treaty, under which a treaty would be agreed by 2015 and impose binding targets for developed and most developing countries from 2020. The quid pro quo for developing countries proposed by the Europeans was an extension of the Kyoto Protocol from 2013 to “bridge the gap” to 2020. For most of the conference, India played “bad cop” for the big developing countries, trading barbs with the European Union in the sidelines of the conference and refusing to accept any roadmap that envisaged developing countries signing up to binding targets.

In a classic end-of-conference rabbit-from-hat exercise, negotiators managed to agree on language for the roadmap that allowed all sides to save face and herald progress in the talks. The text of the roadmap commits the parties to a new process for the negotiation by 2015 of “a protocol, another legal instrument or an agreed outcome with legal force”, with the associated emissions reduction obligations to come into effect from 2020. The Europeans had wanted the text to refer to “a legally binding” treaty, but this formulation was deemed unacceptably strong to developing countries because of the reference to the word “binding”. The disagreement threatened to derail the talks, which by that stage had already gone into overtime. A last-minute “huddle” on the floor of the conference hall between the Europeans, India and other key countries resulted in the compromise language.

World leaders were quick to pronounce the success of the negotiations on the back of this compromise. The head of the UN’s climate secretariat heralded the outcome as “a historic agreement that has met all major issues”. The EU’s Climate Commissioner, Connie Hedegaard, claimed that the outcome vindicated the Europeans’ negotiating strategy. Australia’s climate change minister Greg Combet said the outcome was a “massively historic step” that “means we are negotiating a legally binding agreement that would bind all developing and developed countries”.

But the text of the Durban outcome does not commit developing countries to binding targets and anyone who genuinely thinks it does understands neither the meaning of the words agreed to nor the circumstances in which they were agreed. One could drive a truck through the compromise language.

*Read the full story at Inside Story.