Lucky Last – Power Shift is The New Deal

The Rudd government’s emissions trading scheme may have been deferred and international negotiations on climate change treaties may have stalled, but the global transition to a low-carbon economy is actually accelerating.

The shift is being driven as much by the need for energy security and the chance to win a share of the growing market for clean technology as by the desire to curb greenhouse gas emissions.

In this special report, a panel of experts convened by The Australian’s the deal magazine discusses how companies here compare with their international peers and what governments should be doing to provide the right signals and incentives to allow our leading businesses to compete effectively at home and abroad.

Giles Parkinson in The Australian business magazine the deal (20 May 2010):

The Rudd government’s emissions trading scheme may have been deferred and international negotiations on climate change treaties may have stalled, but the global transition to a low-carbon economy is actually accelerating.

The shift is being driven as much by the need for energy security and the chance to win a share of the growing market for clean technology as by the desire to curb greenhouse gas emissions.

In this special report, a panel of experts convened by The Australian‘s the deal magazine discusses how companies here compare with their international peers and what governments should be doing to provide the right signals and incentives to allow our leading businesses to compete effectively at home and abroad.

With the ETS on hold till 2012, where else should the government focus – on energy efficiency, building codes and fuel regulations? Or should there be a grander vision for a clean energy network? And how do you create a sustainable economy in a world with limited resources? Perhaps it’s time to change the measuring stick.

Economic growth, our primary reference point for success or failure, is measured in terms of production and consumption. But even leading bankers think GDP and GNP data are missing a key part of the equation. They want new metrics to help ensure environmental, social and economic losses do not outweigh simple economic gains. Carbon might not be the only external value or commodity we need to factor in.

Present:
Giles Parkinson, News Ltd
Lyndall Crisp, the deal
Oliver Yates, Macquarie
Martijn Wilder, Baker and McKenzie.
Jonathon Jutsen, Energetics.
Brendan Bateman, Clayton Utz
Paul Simshauser, AGL.
David Caspari, HP

GILES PARKINSON: Thank you very much for joining us today. It’s a fairly loose format. We’re going to get everyone to introduce themselves, and then we’ll set the thing rolling with a general question and then follow it up from there. Can we maybe start with David?

DAVID CASPARI: I run HP Enterprises Services business, which is responsible for delivering all of HP’s IT services in Australia and New Zealand, about 10,000 people, one half billion dollar business.

OLIVER YATES: I’m Oliver Yates, I’m from Macquarie. I look after the renewable energy and climate change business at Macquarie. One of my key passions is obviously trying to get forest conservation into a workable commercial form and we have a joint venture with a large NGO to actually achieve that objective and that seems to be moving along well, regardless of the carbon markets.

MARTIJN WILDER: Martijn Wilder, I’m a partner of Baker and McKenzie running their global climate change practice. I’ve been working in the area since about 1997.

JONATHON JUTSEN: Jonathon Jutsen, I’m the founder and the director of Energetics. Been in the field for about thirty years, must be some sort of dinosaur in the field. Still doggedly pursuing energy efficiency and carbon mitigation for commercial and larger businesses.

BRENDAN BATEMAN: Brenton Bateman, partner of Clayton Utz, head up the climate change sustainability group of the firm. The basis is environmental planning. Just listening to Giles, acting for Macquarie generation Land and Environment Court is always interesting when you’re getting a judgment from Pain.

PAUL SIMSHAUSER: Paul Simshauser. I’m the chief economist at AGL and Professor of Finance at Griffith University’s business school. A big part of my job is carbon, carbon policy and renewable policy and so on.

GILES PARKINSON: Terrific. We’re going to start off with a big question. People talk about the major drivers that we’re all inevitably heading towards an economic and energy transformation. What do people think will be the main drivers of that? Will it be climate change? Will it be energy security or will it be a commercial race to seize the green tech/clean tech market? Perhaps we can start with you Oliver?

OLIVER YATES: I think it’s going to be a combination of all of them. The question of sustainability is cutting in and sustainability includes the question of carbon. I think people are recognising that we have a limited global energy resource unless we can make it from renewable sources, so that’s where the oil kind of debate comes in or energy security debate comes in.

People that are recognising that within a world of limited resources, we need to find a new way to power our economy and there will be a carbon price sooner or later, and that if you want to be part of what could potentially be the biggest industry transformation since the steam engine, then you want to position your economies appropriately now so that you can get ahead of the curve. So that’s what I think is happening. I think people see this, China certainly sees it.

China’s industry is moving rapidly towards developing massive production capabilities of green technology equipment and renewable energy equipment and there will be a sudden change in those who are positioning their economy appropriately will actually benefit from this change.

BRENDAN BATEMAN: I think Giles, just butting in there, it’s different for different countries. There are different drivers for different countries and interesting to see that America is moving away from badging its legislation related to climate change, more of energy security. Whereas for Australia that driver is omnipresent. It’s very much we’ve got plentiful resources of cheap coal and other forms of resources that we can use to power our economy, whereas in America it’s not necessarily the case.

For Australia it’s a different directive that’s been pushing us in this direction. I think it has to be climate change. I think we are one of the countries most susceptible to the adverse impacts of climate change and very quickly, and it impacts on a lot of our industries such as tourism.

DAVID CASPARI: If I can just add on that, I think no doubt we’re blessed in Australia with an abundance of natural resource which is driving our economy now, but at the same time we have to take a step back and ask some questions about what the next generation of our economy is post this resource oriented environment.

So clearly climate change is going to be key but there’s a broader question about whether we can seize the opportunity to be a real innovator in this market and perhaps in a way that we might have missed in a couple of other real innovation opportunities over the last couple of decades. You look at solar power and various other things where we innovated but missed the opportunity.

GILES PARKINSON: Yes. I just want to redirect it back on to the international scene and what those drivers are. Do you think Martijn that it is a matter of climate change that is driving international movement now, or do you think it is this race to grab the green tech economy of the 21st century?

MARTIJN WILDER: I agree with Oliver. I though it’s a combination of all of those and I think Brenton is right, you know, different drivers. I think it was Senator Graham, one of the US Republican Senators who said earlier this year that he was worried that with a cap on trades, US business would suffer under the cost of that, but he’s now saying without a price on carbon, he’s worried the US will fall way behind China in terms of its race for the green economy.

I think the other factors you’ve also got to put into the mix are the science. I think the science is fundamental. I think when we look throughout history, science has always driven regulatory changes. It’s also driven a lot of risk policies of corporates. When you look for example at the material the CSIRO put out the week before last about how the science is getting worse and how climate change definitely is occurring, it’s occurring because of human activity. The science will continue to drive policy in a way which companies assess risk.

Also I think population growth will have a significant impact. There’s a limited amount of resources and if you combine what the CSIRO said last week about in areas like Sydney, Brisbane and Melbourne, decreasing rainfall, becoming drier, increasing population, you’ve got to basically find a way to manage that and I think that population and environmental degradation, together with all the other factors, will play a significant role.

For the full version of the debate/forum go to:

www.theaustralian.come.au/politics/climate