Australia deal is a disaster for UK climate policy

Posted on December 17, 2021
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The UK has just signed a trade deal with Australia, a country with one of the world’s worst records on tackling climate change. As the first of the UK’s truly independent trade deals, coming just weeks after the COP26 climate conference and as the UK retains the presidency for a further year, this sends a terrible signal.

Australia is well-known for its shocking lack of action on climate change. The Sustainable Development report 2021 gave it last place out of 193 UN member countries on this target. The country only recently signed up to a net zero target and has made slow progress towards the adoption of renewable energy and electric vehicles. It has lost 20% of its tree cover since 2000, a level of deforestation that puts it on a par with Brazil, Borneo and the Democratic Republic of Congo. Australia is home to some of the world’s largest energy and mining companies, which even a former Prime Minister has admitted hold huge sway over the Government, to the detriment of positive action on climate.

No surprise then that Australia batted away the UK’s feeble attempt to insert into the deal language on specific commitments to things like net zero. The gold standard for trade deals would be to formally ensure that they are subordinate to climate agreements, for example via a climate waiver - which recently got backing from the UN’s trade arm, so that action on climate change cannot be challenged as being ‘trade distorting’. However, ensuring that there were binding provisions on climate change in the deal would have been a step in the right direction, and particularly important given that whilst climate agreements lack enforceability, trade agreements come with all the necessary infrastructure to enforce them.

One of the reasons that Australia can steer the UK off course so easily is the total lack of trade strategy from the UK Government. It’s unclear what the Government actually wants to achieve with all its newfound trade policy freedom. Ministers have splashed taxpayer money on a shiny trade promotion yacht, but there is still no plan for how trade will support climate action, the Sustainable Development Goals, the ‘levelling up agenda’ or a post-Covid recovery.

The UK urgently needs to produce a strategy that sets out how its approach to trade will support its other objectives, particularly its climate goals. This must involve meaningful engagement with ordinary people and civil society, including farmers and environmental groups, to ensure a range of expertise is taken into account. It should influence the choice of which countries we strike deals with and the way that the UK will use negotiations to support climate action.

A glimmer of hope in the UK-Australia deal is that it excludes ‘Investor-to-State Dispute Settlement’ (ISDS): a mechanism that allows companies to sue countries for policies that undermine their profits. ISDS is currently being used to challenge a ban on the exploitation of oil and gas off the coast of Italy and attempts by the Netherlands and Canada to phase out coal-fired power stations. If we are serious about tackling climate change, ISDS is a mechanism that has no place in trade agreements.

However, many other provisions in the UK-Australia deal have implications for our ability to tackle climate change. The impact assessment acknowledges that “By increasing bilateral trade, the agreement is estimated to lead to an average increase in annual greenhouse gas emissions [from transport] of between 0.1 MtCO2e and 0.3 MtCO2e each year between 2020-2035.” It is likely to increase beef exports to the UK, which has been one of the drivers of ongoing deforestation in Australia. The deal bans ‘local content requirements’, provisions which would otherwise allow the Government to ensure that the transition to a low-carbon economy doesn’t negatively impact on workers in carbon-intensive industries. It will extend patent terms, making it harder to share green technology, something that the UNFCCC flags as crucial to achieving climate goals. It will limit the ability of local, regional and national governments to use procurement budgets, for example in schools and hospitals, to achieve climate goals. On the flip side, the deal is unlikely to do anything to support the phase out of fossil fuels.

The urgency of climate change means that we need to use all the tools available to us to support rapid reductions in emissions. Signing a deal with one of the world’s worst climate offenders demonstrates that the Department for International Trade is being allowed to operate in a parallel world where it feels no compunction to align with UK climate commitments. In lieu of a strategy that would ensure trade policy was supportive of its other objectives, the Government is simply racing to sign as many deals as possible, with no apparent consideration for the impact that provisions will have for decades to come.