The absence of an outcome at the Durban climate change talks has significant implications for the Gillard government and its carbon tax. The substantive issues that need to be resolved to give new life to a global carbon cutting agreement are unresolved.
A full 2½ days before the end of the conference, UN Secretary-General Ban Ki-Moon said a new treaty was ''beyond our reach'' this time around. The Kyoto Protocol's emissions reduction agenda after 2012 is also dead.
So the negotiations amble on with no mutually agreed desirable outcome. On the final day of the Durban talks there will be a face-saving declaration. There always is.
Ministers cannot go home empty handed. For governments tackling public debt mountains and high unemployment rates it will be a relief. They won't have to impose costs on industry that will make them less internationally competitive.
But a failure in Durban creates a nightmare for the Gillard government, which has boxed itself into an impossible policy and political position. In selling the carbon tax package, the government significantly overstated the commitment of other governments taking equivalent action.
As time has gone by it has become clear governments that have already taken action are now seeking to water them down.
New Zealand will do so. Canada is reportedly set to abandon the Kyoto Protocol. Momentum for Europe to weaken its emissions trading scheme is building irrespective of the consequences of the region's debt crisis, though it is compounding the problem.
Countries delaying action until a new international agreement is signed off are likely to defer efforts further. Translated domestically, post-Durban the political spin that other countries will follow Australia's ''leadership'' will be exposed for the hollow rhetoric that it always was and remains.
The only remaining living part of the Kyoto Protocol will be its contribution to international carbon markets, particularly the clean development mechanism (CDM), which allows rich countries to buy emissions reductions in poorer ones. But without a second Kyoto period for cutting emissions, the number of CDM projects has already collapsed.
It's now likely to go into free fall. Buying cheap emissions reductions overseas was central to the government meeting its goals without imposing a significant impost on business and households.
If present price trends continue, successful negotiations to internationally link our emissions trading scheme to Europe's and New Zealand's will ensure the carbon price bumbles along at the $15 per tonne of emissions floor.
To give the Greens credit, at least they were intellectually honest in recognising that Australia needs a high carbon price to radically change behaviour. It's because the main transition needs to occur in our electricity generation.
At present we rely on cheap coal, which means the carbon price gap to gas, the next viable base load technology, is significant.
The carbon price necessary to start Julia Gillard's claim to ''decouple economic growth from carbon pollution growth'' won't be achieved until the price hits at least $40 to $70.
To actually deliver it requires a carbon price closer to between $250 and $500 where, on current prices, less intermittent renewable technologies become viable.
Without a high price, the policy will be ineffective at driving significant emission cuts.
In response, the government can either cut imports of foreign permits or increase its emissions reduction target -- both will force up carbon permit prices.
But such action will be politically and economically unsustainable if other countries aren't also imposing an equivalent high price.
Australia's window of opportunity out of Durban is that there may be a favourable side agreement for reducing emissions through land use, making it easier to achieve our target. Ironically, with an ineffective carbon price the burden of delivering legitimate emissions cuts will fall on regulatory measures in the government's plan that bear similarity to Tony Abbott's direct action policy.
A failure at Durban also compromises the business certainty that the government claimed its scheme would deliver. Without the high carbon price needed to underwrite multi-decade investments to cut emissions reinforced by international action, the uncertainty the business community deplored will persist.
Previously, it was the uncertainty of whether there would be an explicit carbon price. Now the uncertainty comes with its trajectory.
It's a remarkable moment. There is no longer an operational international agreement to cut greenhouse gas emissions.
What's incredible is that our government has allowed Australia to be boxed into this position.
Signs of the failure to secure a new international agreement have been glaringly obvious since at least the 2007 Bali conference. Kyoto was the high water mark and it's been downhill from there.
Durban's failure will ensure Australia's carbon tax package struggles to deliver. Instead, it will be a noose around the political and policy neck of government and the cost neck of businesses.
That's assuming it survives the politics of Canberra.
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