CHINA and the US have struck a landmark climate change deal setting ambitious new targets to cut pollution, including an unprecedented commitment by Beijing to cap its carbon emissions.
With an eye on pushing through a global climate agreement in Paris next year, the surprise deal – negotiated in secret over the past nine months – was jointly announced in Beijing yesterday.
US President Barack Obama announced a target to cut US emissions by 26 to 28 per cent below 2005 levels by 2025, doubling the pace of reduction it had previously targeted for the period from 2005 to 2020.
Chinese leader Xi Jinping pledged to cap its growing carbon emissions by 2030, or earlier if possible, while setting the challenging goal of increasing the share of zero-emission non-fossil fuel to 20pc of the country's energy mix by the same year.
"As the world's two largest economies, energy consumers and emitters of greenhouse gases, we have a special responsibility to lead the global effort against climate change," Mr Obama said.
Describing the agreement as "historic", Mr Obama invoked a famous phrase from former Chinese leader Deng Xiaoping.
"We must seek truth from facts," he said, "and the truth is we have made important progress today for the benefit of both our nations and the benefit of the world."
In what might be interpreted as a veiled reference to Australia, Mr Obama said: "We hope to encourage all major economies to be ambitious - all countries, developing and developed - to work across some of the old divides, so we can conclude a strong global climate agreement next year."
The Environment Minister, Greg Hunt, welcomed the deal. "We have always said that we will consider Australia's post-2020 emissions reduction targets in the lead-up to next year's Paris conference. This will take into account action taken by our major trading partners," he said.
But Labor and the Greens seized on the historic deal to launch a blistering attack on the Abbott government's climate policy, arguing Australia is going backwards in tackling climate change, accusing Prime Minister Tony Abbott of holding "flat earth views" and urging greater emissions reductions.
The deal comes on the eve of the G20 summit in Brisbane, which both the US and Chinese presidents will attend, and significantly ratchets up pressure on Mr Abbott, who has been reluctant to even discuss climate change at the economic summit. Climate change is conspicuously absent from major items on the agenda at the summit.
China's move to cap its emissions growth by 2030, or sooner if possible, has potentially significant implications for Australian exports of coal to China.
It also set an ambitious goal of increasing the share of non-fossil fuels to 20pc of the country's energy mix by 2030. An equivalent target for Australia to the US pledge would be a 30pc reduction in emissions against 2000 levels by 2025.
Earlier this year, Australia scrapped its carbon tax and environmental groups now question whether the Coalition's replacement Direct Action policy can reach the stated target of a five per cent reduction by 2020.
Australia 'going backwards': Shorten
Labor leader Bill Shorten says Australia is going backwards in tackling climate change in the wake of the historic US-China deal.
Mr Shorten said on Wednesday the "historic and ambitious" agreement showed global leadership from the US and China.
"At the G20 this week, Australia will hold the embarrassing title of being the only nation going backwards on climate change. With China and the United States representing around one-third of the global economy and over 40 per cent of global emissions, there will be significant momentum to deal with climate change in Brisbane," he said.
"Tony Abbott fought and fought to stop climate change being discussed at this weekend's G20. If Tony Abbott still refuses to discuss the need to take action on climate change at the G20, he will embarrass Australia in front of the rest of the world.
"Tony Abbott's flat-earth views are out of touch with Australians and out of touch with world leaders. Climate change is not just an environmental issue. It is a security issue and it is absolutely an economic issue. Tony Abbott's failure to recognise this represents a failure of leadership."
Greens leader Christine Milne said the deal should be a "massive wake-up call to Tony Abbott. His continued climate denial and his destruction of the environment is reckless."
Senator Milne lashed Mr Abbott for unwinding climate policies such as the carbon tax and "failing to notice the global economy is changing around him".
Observers said the deal lacked genuine ambition and fell short of what was needed to reverse the course of climate change.
"The two biggest emitters have come to the realisation that they are bound together and have to take actions together," said Li Shuo, senior climate and energy campaigner for Greenpeace East Asia. "However, both sides have yet to reach the goal of a truly game-changing climate relationship."
How the deal happened
Mr Obama was in Beijing to attend the Asia-Pacific Economic Co-operation summit, and stayed to pay a state visit to China at Mr Xi's invitation.
The pair spoke for five hours over a private dinner at the Chinese president's walled compound in central Beijing on Tuesday, where Mr Xi told his guest he hoped they had laid the foundation for a co-operative relationship, or as he put it, "A pool begins with many drops of water".
The pair met again on Wednesday morning before fronting their joint press conference, where Mr Xi made a rare concession by accepting questions from an American journalist.
In his response, Mr Xi defended China's human rights record while acknowledging "it was always a work in progress", denounced Hong Kong's pro-democracy protests as illegal, while brushing off concerns of treatment of foreign journalists working in China – with Bloomberg and New York Times having trouble renewing visas for their correspondents after writing a series of investigative reports on the private wealth of China's elite leaders.
"The party which has created problems should be the one who resolves them," he said.
In Australia, Institute for Energy Economics and Financial Analysis director Tim Buckley said the pact was "deliberately timed to put (climate change) on the agenda for the G20".
"It's not going to be good news for Australia," Mr Buckley said, adding that the country was already being seen "as a bit of a pariah" on climate policy.
Erwin Jackson, deputy chief executive of the Climate Institute, said the deal "makes us like a bit like a roo in a spotlight".
"We've had an obsession with 2020 targets for renewable energy and emissions," he said.
"The world is increasingly focused on post-2020 actions and Australia doesn't currently have any domestic policy that would reduce emissions on the scale being put forward by the US and other major emitters."
Impact on coal industry
Signs that China will curb coal demand won't help Australia's coal exporters, already struggling with a price that has halved in recent years and sunk to $US61.70 a ton this week.
But in the wake of the announcement, Minerals Council chief executive Brendan Pearson predicted China would target its efforts to reducing the use of low quality coal in boilers in buildings and small manufacturing and shift the emphasis to modern, highly efficient centralised supercritical coal-fired power generation.
"This will require high quality coal which Australia is well-placed to supply. In fact, estimates suggest that China's coal fleet will expand by 400 GW by 2040; that's more than the USA's entire coal sector (300 GW)."
The Minerals Council also stressed the prominent role technology would play, under the agreement, in reducing emissions.
Coal is Australia's second largest export to China after iron ore, with sales of just over $9 billion in 2013 according to Department of Foreign Affairs statistics.
Mr Abbott said recently that coal was "good for humanity" and said it had a "big future, as well as a big past".
Green groups have been pressuring the government to announce targets for the post-2020 period after it failed to take deeper cuts to emissions to a special climate summit in New York earlier this year.
The government has committed to reviewing Australia's targets in the new year, but environmental groups warn it is running out of time.
The deal also comes as the government has set out to scale back Australia's renewable energy target. On Tuesday, Labor walked away from negotiations over the RET as neither major party could agree on what Australia's renewable policy should be.