Martijn Wilder AM (OC 1985), Climate Change Lawyer

This interview was conducted by Lyndon Goddard (OC 2007) for the Old Cranbrookians' Association and first appeared in the OCA Newsletter, July 2014.

Martijn Wilder AM is the head of law firm Baker & McKenzie’s global environmental markets practice, and is recognized as one of the world’s top climate change lawyers and a pioneer in the development of legal mechanisms underpinning international carbon markets. Martijn generously took the time out for an interview with the OCA. Against the background of the carbon tax repeal and next year’s climate change summit, discussion inevitably turned to current affairs.

Thank you very much for agreeing to be interviewed.

That’s alright!

Starting with your time at Cranbrook, I understand that you were there for your last two years of high school – what brought you to the school in the first place, what were your impressions of it during that time, and how did it prepare you for your subsequent career?

I think the reason for going to Cranbrook in the first place was that my parents thought it would be a good opportunity for me to have a different experience from what I had been having – I’d been at Mosman High School and for various family reasons, my parents hadn’t been able to send me to a private school.

My cousin had in fact been to Cranbrook so we knew it quite well. I’d actually applied for a scholarship at Scots and got that, but I decided that I wanted to look at Cranbrook instead. It was a lot smaller and seemed a lot friendlier, more liberal than Scots, and I had one or two friends there who played rugby – and I was mad about rugby. So my parents had a chat to Mark Bishop, who said that there was a place for me at Cranbrook, and I said ‘OK, why not!’.

One of the things that I learned from my two years there was adaptability. It’s quite a big change to go from a school where you’re doing very well, you have lots of friends and you’re very happy, to a completely different environment – but that’s what life is about. It was a very different but positive experience to move to Cranbrook.

There were two particular teachers who left an impression on me. One was Martin Pitt, who was not only my Geography teacher but was also my 16As rugby coach and my coach in the 2nds. He was fantastic: from the day I got there till the day I left, I spent a lot of time with Martin. And whenever I’d go back to the school, he’d always remember you by name. The other person was Dr Davies, who was my housemaster in Cutler. He was very steady and a very good mentor. I think between the two of them, they really shaped a lot of my thinking.

What first spurred you into pursuing a career in environmental law? You had an interest in Antarctica from an early age, partly due to your family’s publishing company, and you did a thesis on the economic history of Antarctica at university.

Originally I was actually interested in economics – in fact, I was also interested in book publishing but my dad told me not to go there! – I studied economics at Sydney University and was very interested in economic history, as well as economic theory. I then for various reasons had been doing some things in the environmental area, and I tried to combine economics and the environment. Having done an economics degree, I thought it’d be useful to have a law degree as well; I was very interested in international issues and international law, and so I gravitated in that direction. Law provided me the opportunity of expanding my horizons further.

It was around that time, too, that the Madrid Protocol [which, when agreed in 1991, provided for the comprehensive protection of Antarctica] was signed – was that an extra factor in your interest in environmental law?

Yes, and when you think about the history of Antarctica, there’s a fascinating history of exploration with Sir Douglas Mawson and the Shackelton/Amundsen race to the South Pole. But the interest for me was what the next chapter holds for Antarctica, and since many people were looking into going there to mine, the Protocol really sought to protect the area. In many ways, as an environmental issue, it was postponed [the treaty was made open for review in 50 years]. But there were also other international law issues happening at the time, which I got quite interested in – so my interest moved from Antarctica to the wider global environmental space.

It was a time [the late 1980s to mid-1990s] in international environmental law when a lot of things were happening – you think of the Montreal Protocol a couple of years before the Madrid Protocol, then the Rio Conference in 1992 and then the Kyoto Protocol later that decade. Those were all landmark events in international environmental law. Is there something to be said for the argument that that sort of reformist attitude in the international sphere is no longer present today?

Yes – you had a number of significant developments that came out of the Rio Conference during the period of the early 1990s when I was still studying. As a legal discipline, it was at this time when international environmental law really came into its own. I think that Australia has had, depending on who is in government, a very stop-start approach to international and environmental issues. There’s no doubt that under Robert Hill and Graham Richardson [both former federal Environment Ministers], we did an enormous amount; in recent years, on emissions trading we’ve achieved a lot.

The current government has, what some would say, a much more business-like attitude towards the environment, which is causing a lot of friction and confrontation at the moment. It remains to be seen how that’s going to play out – Australia is adopting a different approach to international negotiations than we’ve had for the last three to four years.

Turning back to your career, you started at the law firm now known as Allens, and then moved to Baker & McKenzie in 1999, when you co-founded the firm’s climate change practice (inspired partly by the Kyoto Protocol a couple of years earlier). The obvious question is, where did you start from? How do you go about creating a new law practice when the law barely exists – and having to conceive new concepts like carbon rights?

To be honest, our practice is where you get a bridge between law, economics, markets and commerce –

– and often politics!

Yes definitely – and in many ways, people always want to look for new opportunities; they want to do deals and engage in commerce. And so a lot of what we have done has been working with people who want to get into new markets and trade commodities and get ahead of the game.

So our work has often been helping those people break into new areas, and you have to have very strong legal contracts to underpin that. One issue is trying to define, in those contracts, what those new areas are – and that’s what leads to the development of new legal frameworks. But it’s like anything: you have an idea, and you pursue it, and keep believing that you can do it.

Was it difficult in those first few years of the practice not only to get work, but also to deal with the teething issues associated with a nascent area of law, and the necessary uncertainty that goes with it?

In one sense, yes, but the fundamental point is that everything we were doing was based on an international agreement which set up a global market to trade carbon. The Kyoto Protocol was the bare bones of an international marketplace, but it was enough – and there were enough people engaged from the outset – to get it moving. In 1997, it set forth a long-term agenda with carbon trading coming in between 2008 and 2012, and then the intention to have a second phase out to 2020.

The Kyoto Protocol established a legal foundation upon which you could build a practice, and though you weren’t necessarily sure which direction it would go, people were certainly investing off the back of those early legal rules. And that was part of the excitement and interest. What made people successful or unsuccessful was choosing the time to ride that wave.

And presumably one aspect of that difficulty was that at least initially, a lot of the ‘action’ was happening overseas.

Yes, absolutely – so when we started this practice, it was James Cameron in our London office and me here in Sydney, as well as one of my colleagues in the USA. And we ran a global practice essentially via the Internet; you couldn’t have done this before that time. We were advising clients all around the world, doing transactions – it didn’t really matter where you were, or where they were: you could be acting for a client in London, doing an investment in Brazil, with technology coming from Asia.

Turning to the current international position, what do you think of the prospects of reaching a global deal at next year’s international climate change conference in Paris?

I think that, in the last two months, the prospects have become greatly enhanced. The reason for that is the UK’s recent signing with China of their bilateral agreement on climate change, and just preceding that, the USA’s agreement with China on a similar basis.

I think that those three players – China, the UK and the US – are driving very hard for an agreement in Paris, and I think it likely that there’ll be some significant breakthroughs there. Relevantly too, the USA has demanded that climate change be part of G20 discussions going forward. I would have been less confident about an outcome in Paris twelve months ago, but I think that these recent developments are so significant.

There was some commentary following the USA’s recent regulatory intervention into carbon emissions to the effect that it was designed to shore up its own negotiating position and put more pressure on China at the Paris conference 

Yes that’s true, though this US policy has been a long time in the making; it’s a well thought-through program by Obama. And when you couple that with what’s been happening in California and a lot of the eastern states [in emissions reduction policies], America has been relatively progressive on climate change.

More specifically, what do you expect will be the outcome of next year’s Paris conference? Can we expect a global emissions trading scheme like Kyoto, or is something falling short of that more likely?

The real unknown is whether or not we’ll have a global agreement that just sets binding targets but lets countries decide how they will make those reductions through domestic measures – I think that’s more likely to happen, only because everybody wants to do what’s right for their own economy. The trick will be the extent to which those domestic regimes become interlinked into the future; that’s where the uncertainty lies at the moment.

Coming back to Australia, the climate change-related legislative impetus has shifted somewhat since the 2013 election – how would you describe the current situation? Has it had an impact on your own practice?

We do very much have an international practice, and it’s focused on representing clients from all around the world. That in itself gives you a very different perspective, because you look at this problem as a global problem and not just as an Australian problem.

The policy in Australia has really been in a state of flux since 1999 when the federal government first released a blueprint for a national emissions trading regime. Every proposed scheme and action since then (except for the current government’s ‘Direct Action’ policy) has been based on this blueprint.

However, the political debate over the issues, which is now likely to culminate in the repeal of the existing emissions trading scheme (it is not a carbon tax), will simply create more investment uncertainty as the policy of the Opposition, the Greens and even (it would appear) the Palmer United Party remains to establish an emissions trading scheme.

One of the successful planks of Australia’s current climate policy is the Clean Energy Finance Corporation (CEFC), of which you are a board member. Until Clive Palmer recently announced his support for the CEFC, it looked unlikely to continue in existence after this year. What would you say to the common criticism of the CEFC that it should not be there to cherry pick investments (using government money) in direct competition with the private sector?

The criticism is inaccurate. The CEFC does not compete with the private sector; it actually leverages private sector finance, especially in areas that are new, such as energy efficiency, and that the private sector is less familiar with.

We also have the ability to provide loans based on longer terms and concessional lending. In this regard, the CEFC plays a critical role, and all of the banks that we deal with would support that. We’re investing in projects around the country that are creating jobs and returning an investment to the taxpayer.

What are the attitudes of the companies that you deal with towards climate policy in Australia?

There are clearly some businesses that would be quite happy to not have any obligation on them to reduce their emissions, but I think that on the whole, most of the businesses that we deal with know that it’s ultimately inevitable that some sort of cap on greenhouse emissions will be put in place. In our experience, most companies would prefer an emissions trading scheme and to have that locked in and have regulatory certainty, especially where our trade-exposed industries are protected as is the case under the current policy.

What makes you optimistic about climate change policy in Australia, notwithstanding that it is necessarily influenced by the prevailing political environment?

Globally, the developments on regulating greenhouse emissions and the care that investors are taking in assessing climate risk demonstrate that there is a significant recognition of the fact that we need action on climate change. In addition, many companies and countries see the opportunities that exist and that action on climate can be in our economic interest.

In addition, we are going to see a lot of impacts from climate change in Australia, and the public is already showing signs that it wants some sort of measures in place. The current polling is showing that 65% of the population wants an ETS or some other cap on emissions, and I think eventually, the politicians in this country will have to realize that we need a bipartisan approach. Ironically, Clive Palmer is pushing that now.

Eventually, I think that saner heads will prevail, and by the time of the next election, the government may have no choice but to look at an emissions trading scheme. Longer term, it is the right thing economically to do. It’d be unfortunate if we lose the scheme as currently legislated, and have to spend the next five years redesigning the entire scheme all over again.

The whole issue has been politicized for far too long, for the wrong reasons, at the expense of the environment and at the expense of the science. We have to have a bipartisan approach founded on good economics and good science, and not based on the views of radio shock jocks and a few ideologue politicians.

Personally, where do you think your next challenges lie, and where do you see your career in ten or so years’ time?

I don’t really think longer term in relation to my career in ten years’ time, mostly because there’s so much to do now! A lot of the work I do is trying to create a better legal environment within which to ensure the future of the planet. We take so many things for granted in Australia, including clean air and clean water – we are very lucky to have those things, and we need to protect what we’ve got. But also, we need to realize that there are some great economic opportunities in this climate area: we can build industries of the future that put us at a great competitive advantage, and we shouldn’t be shy about that.

Thank you very much for your time.

My pleasure.