It is rare for heads of government to portray their countries as irrelevant. But this is how Prime Minister Scott Morrison described Australia's role in global climate action amid its worst fire season on record last summer. His argument was that because Australia accounts for just 1.3 per cent of global carbon dioxide (CO2) emissions, any action it takes is too small to influence global outcomes.
At best, this is selective accounting. Australians are on track to suffer 12 to 24 times more of the damages from climate change than the global average. This exceptional vulnerability is Australia's strongest incentive to accelerate the global climate mitigation effort, invest in domestic resilience and take a leadership role in decarbonising the region at a time when the new Biden administration in Washington expects it.
Juxtaposed against a death toll of at least 33 people and an estimated 1 billion animals in last summer's bushfires, Mr Morrison's "Australia doesn't matter" excuse deserves to be debunked.
Firstly, a simple thought experiment exposes a logical flaw. Imagine that US emissions - at 14 per cent of the global total - were evenly distributed across all 50 US states, and each became an independent country. Each would account for just 0.28 per cent of global emissions. Morrison's argument essentially says that parts of the whole are too small to matter. But dividing up responsibility does not shrink the total emissions.
Secondly, Australians emit 3.37 times more CO2 per capita than the global average citizen, a number that jumps to 4.15 when including more potent greenhouse gases such as methane. As the world's largest exporter of coal, and its second-largest exporter of liquefied natural gas, Australia's fossil fuel exports introduce a further 565.72 megatonnes (Mt) of CO2 into the global supply chain. And in burning an area equivalent to the size of Iceland, last summer's fires released an additional 400 Mt of CO2 - an amount roughly equivalent to Australia's yearly carbon output.
But the key point that Australia's leaders are yet to grasp is that the location of emissions is separate to the impact of climate change, and the outcomes are going to be bad for Australia. The geographic distribution of emissions is driven by specialisation, trade relationships and comparative advantages. Some countries produce carbon-intensive heavy manufacturing goods, while others produce lower-carbon services.
But the geographic distribution of climate damage - storms, floods and fires - is determined by the global climate system. The globalised nature of the causes and consequences of climate change cannot be undone with acrobatic accounting, or an arbitrary and myopic decision for UN treaties to focus solely on national emissions.
Research at the Bennett Institute for Public Policy and the London School of Economics accounts for the country-level impacts of climate change. A new Wealth Economy report describes an accounting method to measure how much individual countries are expected to lose due to global temperature rise.
Building on work by Stanford University climate economists that combines climate models with 50 years of observed environmental-economic data, the Cambridge results indicate that Australia is expected to incur between 4 and 8 per cent of all climate damage. With just one-third of 1 per cent of the global population, Australia's per capita economic losses may be 12 to 24 times that of the average global citizen.
The significance of this startling figure is ignored by Mr Morrison's 1.3 per cent figure. Examining data from a damages perspective shows that Australia has more to gain from global climate action and more to lose from inaction than most. It has a direct and immediate incentive to push for a transition to a low-carbon future.
Erratic climate policy at home has left Australia with a credibility problem on the global stage. But a deliberate and sustained effort to decarbonise and build resilience as a response to the fires could still make it a leader in the Asia-Pacific region. Policy options abound. Canada has a revenue-neutral carbon tax and rebate. Norway's sovereign wealth fund reinvests natural resource rents for future generations and is divesting from fossil fuels to renewables. Australia could combine these, funding decarbonisation with resource rents and environmental taxes via its own sovereign fund.
With a comparative advantage in research, Australia could take a leadership role in developing and diffusing new technologies for green growth across the region. South-east Asia's developing economies face a stark decision: either lock into outdated fossil fuel-based infrastructure and accept the associated congestion, pollution and health consequences, or invest in a cleaner and safer 21st-century low-carbon economy. If Australia phases out fossil fuel exports in favour of human capital exports such as engineering and technology, both sides could gain. Belt and Road Initiative countries may welcome greener infrastructure and technologies, and Australia could gain regional influence and global credibility.
Climate change is a multidimensional challenge that cannot be understood through unidimensional statistics. Focusing on the location of emissions while ignoring consumption patterns and climate impacts creates blind spots. Effective, evidence-led policymaking requires relevant, reliable accounts. Measures of domestic emissions are important, but in isolation can be misleading.
Policymakers need a dashboard of climate accounts. It should include domestic emissions, the implicit imports of foreign emissions (the carbon footprint) and most importantly, an account of what each country stands to lose from continued inaction. This final measure of the massive, disproportionate losses Australia will face conveys the urgent incentive for it to invest in adaptation and resilience at home and lobby hard for regional and global decarbonisation.
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