The US and China together produce around 45 per cent of annual emissions, so clearly much mitigation will need to occur in these places. But the countries are different in national circumstance, with the US highly developed and China rapidly developing. For the US, it is political willingness, not technological and economic capability that determines emissions reductions. But for China, the key is demonstration: we need somebody to show us that emission reductions work without major negative impacts on the growth of the economy and the quality of living.

If Australia takes the lead and demonstrates that a low carbon economy is possible then other countries will simply follow. I can assure you the Chinese will simply follow this kind of lead. If Australia can reduce carbon emissions to the Chinese level, then China will reduce its emissions much further. It’s also in the interest of Australian business to develop first-mover advantage in ‘green’ technology industries.

Australia, in particular, can help China develop sustainably. China, like Australia, is a large country with large distances between centres. China, like Australia, has a coal-dependent energy system. China, like Australia, is highly vulnerable to climate change. And it just so happens that Australia currently has a Prime Minister with a unique ability (amongst national leaders) to speak to the Chinese people.

But Australia can also be a model that discourages the Chinese from making further mitigation efforts. Australia’s per capita emissions are around 4 to 5 times higher than China. For basic necessities, only limited emissions are required and additional emissions are due to luxurious or wasteful lifestyles. Transport in Australia is very much based on private means. Even on the university campus you don’t have bicycle paths. Australians live in stand-alone houses that are very energy intensive compared with multi-story buildings; street lighting is not energy efficient. All sorts of things are not energy efficient. The Chinese people can look to Australia and ask, if Australia is so rich and yet unwilling to make major efforts, why should China make major efforts? It is the behaviour of the rich that need to change in order to demonstrate the way for the others. If Australia can create a low-carbon economy, the impact will not be confined to Australia’s small 2 per cent of global emissions.

The second illusion relates to the perception of China’s efforts. Many people say that because China’s emissions are growing so fast China is not trying, and therefore they should not try. But China has made and continues to make major efforts to reduce emissions.

There are three factors that determine environmental impact. Population, wealth and efficiency. The Chinese people have accepted major sacrifices to control their population. Our effort has avoided around 300 million births – the population of the entire United States. No other country can claim such a sacrifice.

China has also managed to improve efficiency very quickly: energy consumption per unit of GDP has fallen 20 per cent in 5 years. This effort is also unmatched in the world. In the development of renewable energy, China now has major hydro, wind and nuclear programs. The last of these is very much dependent on Australia’s decision to sell uranium to China.

These two illusions need to be dispelled if we are hoping for an ambitious agreement at Copenhagen. Many people around the world have the expectation that Copenhagen will produce something like the Kyoto Protocol – a Copenhagen Protocol for the next commitment period. I’m not so optimistic. The Bali Action Plan was agreed to in late 2007. Under that plan, developed countries are expected to make deep emission cuts and take the lead to demonstrate the feasibility of a low carbon economy. Just having the Bali action plan implemented is the best outcome I’m hoping for.

It does matter what Australia does. Australia’s current official targets are insufficient. The IPCC recommends 25-40 per cent reductions from 1990 levels by 2020 to be on a trajectory to 450ppm. But Australia’s targets represent only a 5-15 per cent reduction from 2000 levels. If Australia is not prepared to make major efforts then China and others will follow an unsustainable path. But if Australia commits to a path that leads toward 450ppm, a good example is set for the rest of the world, including the developing countries, to follow on that path.

China and Australia can work together on climate change. But if we don’t change our strategies, we will also fail together.