China-Australia Dialogue on Clean Energy and Environment
Wednesday 9 April 2008

Roundtable discussion with the Prime Minister of Australia, The Hon Kevin Rudd MP, Mr Xie Zhenhua, Vice Chairman, National Development and Reform Commission, People’s Republic of China, Australian Minister for Climate Change and Water, The Hon Senator Penny Wong and Mr Shi Yubo, Vice Chairman, Chinese State Electricity Regulatory Commission.

The Australian Prime Minister, Minister for Climate Change and Water, Senator The Hon Penny Wong, Mr Xie Zhenhua, Vice Chairman, National Development and Reform Commission and Mr Shi Yubo, Vice Chairman, Chinese State Electricity Regulatory Commission, participated along with 80 Australian and Chinese government, business, research and NGO leaders, in a Dialogue on Clean Energy and Environment.

The Session opened at 4pm with on the record remarks by the chair of the session, Mr Steve Howard, Secretary, The Global Foundation, followed by Prime Minister Rudd. The balance of the session was conducted on Chatham House lines and the full report will follow.

Verbatim remarks: Mr Steve Howard
‘Prime Minister, distinguished guests,

Today, The Global Foundation and the China Institute for International Studies (CIIS) have presented a dialogue on China-Australia Clean Energy and Environment. The Global Foundation is a non-political, not-for-profit, citizens’ organization with more than 200 members, which promotes Australia’s national and global progress. The CIIS is one of China’s most respected think tanks on international relations, at the forefront of China’s regional and global participation.

The Global Foundation and the CIIS have a long tradition in working together over the past decade, partnering for dialogues in China, Australia, the United States and Asia, on many diverse themes of long-term importance to both of our societies. The Governments of Australia and China have supported these dialogues, a ‘second track’ means of developing closer co-operation between our two nations.

We all appreciate that the challenges facing our planet today and into the future are immense and cannot be solved by governments alone. We believe that the private sector, including business, academia and citizens, can partner with, or in some cases, provide leadership to, governments in addressing common challenges. In Australia, the Global Foundation has a program called Australia Unlimited, which enables citizens to contribute to the policies of our governments on an ongoing basis. The outcomes of today’s dialogue will form part of the Australia Unlimited program.

With regard to our strong and vibrant bilateral relationship, we want China and Australia to enjoy sustainable growth in our respective economies, which are increasingly linked together. Of course, we all want to see increased prosperity for our peoples. However, this growth must be sustainable and we want to be responsible stakeholders in helping to deliver a world for our children and their children which enjoys future sustainable growth.

With this in mind, the China-Australia Clean Energy and Environment Dialogue has brought together leading thinkers from all sectors of society, particularly from the business community, to determine what China and Australia have in common, as we look to the formation of projects and policies to address immediate environmental challenges, such as water & air pollution and the wider global challenge of climate change due to global warming.

The key outcomes to convey to you from our dialogue today:
• We have to find new national and global pathways to ensure sustainable growth into the future, balancing energy security and development with environmental needs;
• While there are many exciting developments in new energy fields, fossil fuels – oil, gas and coal – will be powering our economies for the 40 or more years; and cleaner coal must be a key focus;
• Action is needed now on many fronts, with many technologies, for the longer-term, we also need immediate efforts to increase energy efficiency;
• China and Australia have much in common and much to learn from each other in responding to the challenges of clean energy and the environment; and that this could become quite a special relationship, both bilaterally but also multilaterally;
• Fundamental to success will be the effective partnership between the government and private sectors;

At a practical level, we learnt today of a number of existing collaborative partnerships and opportunities for further co-operation; for example:
• there is a very effective joint environment program in China, supported by the Australian Government and a number of Chinese government agencies, addressing environmental remediation activity in water and air pollution; this program could be expanded but could also serve as a model for other forms of co-operation;
• Also that existing programs of co-operation for clean energy technologies should be expanded quickly and substantially:
o in particular, ‘clean coal’, that is carbon capture and storage - CCS - should be a priority, given the dependence now and into the long-term future by both countries for the supply and use of coal;
• there are good cooperative ventures in both countries for various carbon capture technologies;
• there is an outstanding Australian trial program to store CO2 – ‘geo-sequestration’ – in which China could become a partner and further trials could be conducted in China as well as in Australia; can we ramp up the total effort on clean coal and as a joint bilateral priority?
o We also believe there can be stronger co-operation for the further development of nuclear energy, where Australia is a major supplier of uranium and China’s nuclear energy program is expanding rapidly;
o Also, there can be even more focus on renewable energy sources, including solar and wind power, now at the early stages of cross-investment and development.
• As a consequence of today’s positive discussions, the Global Foundation plans to host a follow-up meeting in Australia later this year, to focus on further cooperation between China and Australia in clean energy technologies and we are pleased that the Government of Victoria has offered to assist us in hosting the meeting. We will be pleased to invite all present here today to participate in this Australian meeting and we hope that the Australian Government will be able to lend its support to the initiative.

At a policy level, it was agreed that:
• That the development of national government policies in both Australia and China to address climate change caused by global warming is at an early but critical stage and that we could encourage stronger exchange and co-operation in the development of policy responses, in and between our respective nations, ensuring that the private sector is fully engaged in the design of possible outcomes at the earliest possible opportunity;
• That there is a willingness of the Chinese and Australian private sectors to work together in the international development of climate change policy and that in this regard, The Global Foundation and the CIIS have agreed to partner to arrange a dialogue with policy-makers from the United States of America at Georgetown University in Washington in September; and it would be helpful to these second track discussions to have the support and participation of the Governments of Australia and the People’s Republic of China.

Prime Minister, we invite you to address us.’

Verbatim remarks: Prime Minister of Australia, The Hon Kevin Rudd MP
‘Thanks very much Steve.

First of all to acknowledge Penny Wong, the Australian Minister for Climate Change and also Mr Xie Zhenhua the Vice Chairman of the NDRC and other Chinese colleagues and friends. I thank The Global Foundation, (and for) our representatives from China and those who have come from Australia for participating in what is an important forum on probably the greatest economic and environmental challenge that we will face for the century and that is climate change.

There is a stark statistic which we should all think about and that is as we sit around this table with these two flags in front of us: this one represents the world’s largest coal exporter and this one represents the world’s largest coal consumer. If between us we cannot fix this problem I don’t think the rest of the world will think very well of us. This is a core challenge for both of our countries and I believe with the abundance of intellectual talent, scientific innovation, commercial enthusiasm and the depth and breadth of our carbon energy sectors, that we have it within our hands to produce a solution for the planet. What is missing is our common resolve to do that and to push ahead and I hope that during the period that I’m in Beijing we move towards reaching that common resolve between us because I believe we have a global responsibility.

The first point I would make is simply that, I’ve just arrived in Beijing today from London and whether I’ve been speaking with the British Prime Minister as I have been for a lot of the weekend, the South African President, the Prime Minister of Norway and prior to that the President of the European Commission in Brussels and prior to that the President of the United States, this subject that we are debating here now represents about a third at least of the global discourse, the global discussion and that is because it is a core environmental and economic challenge for the future and unless all of the economies in the world, developed and developing, agree on our path forward domestically and internationally, then there is a grave risk it will undermine our long-term capacity for development; and across those countries, including the United States, there is now an acceptance that the science is clear, that climate change is happening and therefore we must act to reduce global greenhouse gas emissions.

In the United States all three candidates for the Presidency of the United States, two Democrat, one Republican-endorsed candidate, are committed now to significant action on targets for their respective policy platforms should they become the next President of the United States. The United States will be moving on climate change one way or the other and there is already, of course, a resolve to do so in Europe and in the case of Australia, with the change of government and the ratification of Kyoto, we are moving in that direction as well.

The second point I would make is all this becomes possible in terms of real action on climate change if the global community agrees on a global target. We need to move in that direction because we are driven by the science and if the science tells us that we need to stabilise greenhouse gas emissions at a certain level by a certain time to avoid irreversible and unsustainable climate change by way of temperature increases, then that has to inform what global carbon target we agree as a community of nations and of peoples and therefore for Australia that means that we’ll be moving towards a binding target for ourselves. We have commissioned domestic work on this, we’re engaged in international discussions through the Minister and the IFCCC and the Bali Road Map leading to Copenhagen, but this is the beginning of the important part of this enterprise.

The third point I’d make is that in Australia itself we have made a decision to move towards a cap and trade system which we intend to have operational by the year 2010. There is a lot of work underway on it at the moment at the technical level, in terms of economic modelling, in terms of system design and work specifically on the target. We’ll resolve those matters over the coming period of time, but the objective is to have in 2010 a functioning cap and trade system.

The other thing we in Australia are committed to is an increase to the mandatory renewable energy target. Some ask what is the compatibility between on the one hand having a cap and trade system which is based on the operation of a market to find a carbon price and then as a consequence allow the technologies to deploy which is the most efficient, which is the least, which is the most effective, which is the least and for investment to follow as a consequence.

The reason that we believe we need to have an increased mandatory renewable energy target to 20% by 2020 is so that we will then have sufficient critical mass in our renewable energy sector that it will be able to perform effectively within carbon markets as they develop. We have already a robust solar industry, a robust wind industry; we have great potential when it comes to geothermal, but we believe we need to develop these further and that’s why the renewable energy target is significant and I am aware that China itself has a significant renewable energy target.

The further point I would make is many people around the world, particularly from the business community - and I know there are many hard-nosed business people in this gathering today, and that’s good, they should be here - businesses have got to make a profit, they’ve got to look to the future, make sure there’s a market and make very difficult commercial decisions. That’s why we want to work closely with business. Some argue that if you act on climate change therefore that will be a problem for business. My view is this: the cost of not acting on climate change is much greater than the cost of acting on climate change; that’s the first point. The second is that if you look at the new market which will emerge it will present a whole new generation of business opportunities, a very dynamic market itself around the carbon market. It should not be seen by our business partners as simply being a cost. It should be seen instead as being a great new business opportunity and when you have a carbon price operating, then that market really takes off.

Tom Friedman from the New York Times is a good friend, Lexus and the Olive Tree, The World is Flat and any other book that you care to want to read. This is currently Tom’s passion, which is, to explain to people around the world that this is the great next economic transformation because if we get the rules of the market right it will, in fact, enable businesses to be created which are now not possible and if you’ve got the technology, which our two countries have in rich abundance, solar, wind and other renewables, as well as the technologies we are working on together right now, carbon capture and storage and the critical importance of the future of coal where I began my remark about our flags at the beginning of this discussion, there is a rich opportunity for these technologies and their business applications to constitute a whole new revolution in economic activity and I think that is where we need to have our minds firmly fixed.

The last thing I would say before saying a word or two to our Chinese guests in particular is Penny Wong, our Minister, will be leading our negotiations through the Bali Road Map all the way to Copenhagen at the end of the next year. That’s only 18 months away. That will be a critical meeting and what we would like to do as Australia is work very closely with our friends in China on our march towards that end point. There must be responsibilities taken up by the developed world including Australia. There must also be an acceptance on the part of developing countries of appropriate actions which are necessary to complement the binding targets which we in the developed world will need to accept because unless we have in the future all of us moving in one direction towards effectively saving the planet, the United States, the great countries of China, India and others, then we will not be fulfilling our responsibilities to the next generation of our peoples.

With your indulgence, Mr Chairman, I might just say a few words to our Chinese friends.’

[Translation of the Prime Minister’s remarks delivered in Chinese]
‘Mr Xie, Ambassador Ma, Mr Shi,

Thank you all for attending our dialogue today. This is a very important dialogue. The issue of global climate change from a world perspective is very unique, economically, environmentally, and ethically, as we think about the next generation. Therefore, I believe this dialogue plays a very crucial role. China and Australia, from a coal perspective, play significant roles in the world. In this our importance may be unparalleled. Therefore, I believe, with respect to coal technologies, we must ensure sound cooperation in this area. In addition, from a business point of view, there are many Chinese businesses attending our dialogue. A warm welcome to you all, a warm welcome. We are very honoured that these businesses have found the time to attend our dialogue. This dialogue has two aims: one is on a policy level, that is how our two countries coordinate our actions internationally; and the other is the business side, that is to research the most appropriate and most promising investment projects. I believe this dialogue has presented us with a very good – a wonderful opportunity to realise these two aims.

To conclude, I thank our Chinese friends for attending. Cooperation is cooperation. Cooperation may be just a theory, or we can make cooperation a reality. The challenge we are facing at this dialogue is to make the concept of cooperation a reality, for new climate change cooperation. Thank you all and again, a special welcome to you.’