Many countries can see the writing on the wall.
Following the announcement by the G7 group of nations of a target to transform their energy sectors by 2050 away from fossil fuel dependence - the question that needs to be asked is this - could Prime Minister Tony Abbott and his Government be any more out of step with the rest of the world on climate policy?
This government’s position continues to risk Australia’s environmental and economic future. Even Abbott’s greatest ally in inaction on tackling climate change Canadian Prime Minister Stephen Harper said following the G7 summit: “We've simply got to find a way to create lower-carbon emitting sources of energy. All leaders understand that to achieve these kinds of milestones over the decades to come will require serious technological transformation.”
Last month, the Saudi Arabian Oil Minister stated that “we recognise that eventually, one of these days, we are not going to need fossil fuels.” This stands in stark contrast to our Prime Minister who has famously argued that “coal is good for humanity.”
It is clear our Government doesn’t see the importance of technological transformation as they are committed to abolishing the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency two agencies whose remit is to assist in the growth and development of renewable energy.
Instead of committing to the long term future of these important agencies in the recent Budget the Government set up a $5 billion discount loan fund for ‘infrastructure’ projects in Northern Australia that by their own admission wouldn’t be able to secure commercial finance. These are most likely to be large scale mining projects in Northern Australia.
The Abbott government is currently considering what targets it will commit to for cutting pollution post 2020. This target will set the level of ambition for clean energy development in Australia. It will also demonstrate to what extend Australia will stimulate investment while sending a signal as to whether to expect more support for energy efficiency and clean energy. More likely, it will merely continue the Abbott government’s inaction on climate change.
The lack of commitment to addressing the environmental challenge of climate change also has profound economic consequences. As action movie actor and former Governor of California Arnold Schwarzenegger put it when he was in Australia recently discussing his experience of introducing strong environmental laws into California, “going green and protecting the environment did not hurt the economy, it’s a bunch of nonsense.”
In fact with Australia’s mining boom rapidly coming to an end Australia will need to look for new economic opportunities. Worldwide demand for coal has fallen. In China coal consumption has dropped by 8% this year and imports have dropped 38%. Coal consumption in Europe has now fallen by almost 5%. In America the four largest coal companies are now worth 5.5% of what they were worth in 2010.
Investors can see the writing on the wall. Norway’s Sovereign Wealth fund (worth AUD1.17 trillion) is getting out of coal. Late last week Mercer, a global investment consultant, released a report titled ‘Investing in a time of climate change’ that made it clear annual returns from the coal industry are set to fall dramatically in the coming decade, while returns from renewables investment are set to increase.
The Australian Government’s ideological crusade against renewable energy and effective environmental policy will not only irreversibly damage the environment for future generations - but it also puts at risk our economic prosperity. For example Carnegie Wave energy, which has built a small scale renewable energy wave farm to help power HMAS Stirling naval base, won’t even consider building its first full scale project in Australia because there are more attractive incentives overseas.
Canada and Saudi Arabia at least now acknowledging the challenges ahead. At present, Australia is idly sitting back watching the global economic transformation pass us by while insisting that the future of the Australian economy is in coal. It’s difficult to see how Australia could fall any further behind the rest of the world.
Matthew Rose is an economist for the Australian Conservation Foundation.