ourEconomy: Opinion

The Australia trade deal makes a mockery of the UK’s climate ambition

The UK must urgently put the brakes on any deal that doesn’t align with its legally binding climate targets

David Lawrence
8 June 2021, 10.01am
Australia's former PM Tony Abbott, a key adviser on UK trade, is a climate sceptic
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REUTERS/Toby Melville/Alamy

“Killing goats to appease the volcano gods.” This is how former Australian prime minister Tony Abbott described efforts to combat climate change in a 2017 lecture delivered in London. He also reassured his audience at the Global Warming Policy Foundation, a climate-sceptic think tank, that climate change is “probably doing good”, and that the “so-called ‘settled’ science of climate change” was “absolute crap”.

Since then however, Abbott has been busy. The UK is on the verge of signing its first major free trade agreement with Australia. The deal is being hailed as a symbol of post-Brexit success, even though the Department for International Trade itself admits it will deliver limited economic benefits. As one of international trade secretary Liz Truss’s most controversial advisers on the newly established UK Board of Trade, Abbott has played a significant role.

The timing of the UK-Australia deal could not be more embarrassing for a government that hopes to lead the world in combatting climate change. This week the UK hosts the G7 meeting in Cornwall, and in November Glasgow will host the COP26 climate summit. But it’s clear that the Australia trade deal is fundamentally at odds with the UK’s commitments to reduce emissions by 68% by 2030, and achieve net-zero emissions by 2050.

There has rightly been a lot of political attention on Australia’s woefully low food and farming standards, which could undercut Scottish beef and Welsh lamb farmers through cheap imports. However, Australia also lags severely behind other advanced economies when it comes to climate change.

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Australia’s climate record was labelled ‘simply embarrassing’ last year

Australia's climate record was labelled “simply embarrassing” and among the worst of G20 nations last year. The Climate Transparency report, an assessment by 14 organisations released before last year’s G20 summit, said Australia ranked in the bottom bracket in every climate policy area considered except one.

Australia is home to some of the world’s largest energy and mining companies, which have damaged the natural environment and fuelled climate change. Among these is BHP Billiton, an Anglo-Australian mining giant famous for dam collapses and toxic waste spillage.

A UK-Australia trade agreement risks undermining the fight against climate change even further. While the details of the deal haven’t yet been published (not even MPs will get to see it before it is signed), we know that both the UK and Australia are supportive of including Investor-State Dispute Settlement (ISDS) provisions in trade agreements. ISDS allows firms to sue governments for measures that negatively harm their profits – including lost future profits. The system has been exploited by energy firms to challenge all sorts of important environmental regulations, from a ban on fracking in Canada to water pollution controls in Germany.

Given the large pre-existing investment relationship between the UK and Australia, future UK environmental policy will be ripe for investor challenge. It is hard to imagine how the UK might achieve net-zero emissions by 2050 without radical new environmental regulation – from farming to energy production – and yet these are the exact regulations that could be challenged by Australian multinationals.

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The Cumbrian coal mine is a case in point. Its main financial backer is EMR Capital Group, an Australian private equity firm that specialises in coal and mining. If the mine is shut down by Cumbria County Council, as is currently being explored following a damning report from the government’s own Climate Change Committee, this would undoubtedly affect the profitability of the mine’s Australian investors. As things stand, the UK’s climate policies would prevail and the investors would have to have no choice but to stand down. However, if an ISDS clause is agreed as part of the UK-Australia trade deal, this could lead to a challenge that costs taxpayers millions and severely hampers the UK’s transition to net-zero.

Australia is undoubtedly an important ally of the UK. Its cultural, historic and diplomatic ties run deep. However, this does not make it an environmentally friendly trading partner. A country more than 9,000 miles away that specialises in large-scale agriculture, mining and fossil fuel energy production is not a good partner for a government that hopes to be the “greenest ever”. So what should be done?

The UK must urgently reconsider its trade offer to Australia and make any new deal fully contingent on aligning with legally binding climate targets. The government should also produce a full environmental impact assessment and present this to MPs along with the deal before it is ratified. Finally, the deal should receive full parliamentary and public scrutiny, with a guaranteed vote for MPs.

Putting the brakes on a trade deal with Australia won’t be enough to ‘green’ the UK’s trade policy. A far more radical overhaul of our approach to trade deals is needed. However, it will be a clear signal to the UK’s partners that this government is serious about climate change, and demonstrate leadership ahead of the COP26 summit later this year. A green trade agenda would be good for our farmers and food standards at home and create new jobs. Most importantly, it would protect the planet.

The volcano gods are, after all, a jealous bunch.

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