Recent reports have confirmed what has been intuitively and practically evident for many years, namely:

� Carbon emission from human activity is leading to increased atmospheric carbon concentrations. This is very likely to be causing major climate change, particularly temperature increases, which will become dangerous and potentially catastrophic if carbon concentrations are allowed to continue rising.
� The evidence is sufficiently clear that urgent precautionary measures should be taken to reduce human carbon emissions if dangerous consequences are to be avoided.
� The cost of doing nothing far outweighs the cost of action to mitigate and adapt to climate change.

There is a high probability that the peak of global oil production will be reached within the next 5 years. Oil does not run out, but it is the point at which further expansion of oil production becomes impossible because new production is fully offset by the decline of existing production, irrespective of the oil price.

It may take the form of a sharp peak, from which oil availability declines rapidly, or it may be an
undulating plateau spread over a number of years if, for example, oil demand drops as a result of climate change impact.

Climate change and peak oil are inextricably linked. Each one is a major issue in its own right, but their convergence has received minimal attention, which is unfortunate as it is likely to have far greater impact than the sum of the individual parts. Policy must ensure that solutions to the one reinforce, and do not conflict with, solutions to the other.

Globally and nationally there must now be rapid agreement on, and implementation of, measures to stabilise atmospheric carbon concentrations by reducing emissions substantially and to prepare for peak oil. This requires clear, binding, deliverable targets against which to measure policy effectiveness.

Current piecemeal government policy is totally inadequate to meet the challenges of climate change. Emissions trading is now, reluctantly, under discussion but it is only one component of the comprehensive policy required. Peak oil is barely on the agenda, although it may be the issue which has the greatest impact in the short-term.

This paper suggests a comprehensive, integrated policy, at both global and national level, which will provide a coherent response to both issues, built around:
� Stabilising global atmospheric carbon concentrations at 450ppm CO2e by contracting annual global carbon emissions from 8GTC today to 3.5 GTC by 2050
� Equitably allocating the contraction task between nations by converging linearly from today�s unequal per capita emissions to equal per capita emissions globally by a date to be negotiated, say 2040. Australian emissions would have to reduce by 50% by 2025 and 90%
by 2050.
� Using a modified Kyoto Protocol to provide the framework for the contraction and convergence process, and for international emissions trading.
� Meeting the national carbon reduction budget by a system of Tradeable Energy Quotas (TEQs) within Australia.
� Negotiating a global Oil Depletion Protocol to allocate available oil equitably between nations, determining national oil descent budgets and providing for international trading.
� Allocating oil domestically via a similar TEQ concept to emissions reduction. (TEQs are also
applicable to the management of scarce water resources, although this is not the subject of
the current paper).

The transition to a low-carbon economy, stabilising atmospheric carbon concentrations and managing the declining availability of oil, will fundamentally alter the lifestyle of the entire community. It will only be achieved if there is strong leadership and a whole-hearted commitment to achieving these objectives. To build this commitment will require extensive community awareness programmes. Rather than a problem, it is a unique opportunity to set humanity on a new course, built on sustainable principles.

Above all, visionary, principled, long-term leadership is need from government, the community and business. Short-term political or corporate expediency is no longer acceptable; bi-partisan cooperation is essential. Action is required in the next 6-12 months, not in the 3-5 years favoured in political debate.

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Ian Dunlop chaired the Australian Coal Association in 1987-88, chaired the Australian Greenhouse Office Experts Group on Emissions Trading from 1998-2000 and was CEO of the Australian Institute of Company Directors from 1997-2001. He has a particular interest in the interaction of corporate governance, corporate responsibility and sustainability. An engineer by qualification, he holds an MA (Mechanical Sciences) degree from the University of Cambridge, he is a Fellow of the Australian Institute of Company Directors, the Australasian Institute of Mining and Metallurgy, and the Energy Institute (UK), and a Member of the Society of Petroleum Engineers of AIME (USA). He also chairs the Australian National Wildlife Collection Foundation.