Introductory comments in panel “Greening Asia and the Planet”, Global Foundation Summit, May 4 2012

John Connor | CEO, The Climate Institute

Chairman, Secretary General, honourable diplomats and fellow citizens.

Last September I had the pleasure of joining with a Global Foundation tour to China.

Amongst other activities we visited Tianjin's eco-city for 350 000 which is emerging from polluted salt pans and wetlands. The Eco-city's first residents moved in last month

Greener, cleaner urban growth is key not only to "greening asia and the planet", but also to China’s 12th five year plan.

Such growth will require not just green fields development as in Tianjin, but redevelopment of existing urban space, like the docklands site where we are here today. A site populated by many green buildings, with ready commerciable Australian experience!

For the first time in its many thousand year history, China's cities have just become home to more than 50% of its population.  Its urban population is tracking to 80% by 2050

This will and must create vast opportunities in clean technology, clean energy and clean food services and delivery

China’s leaders are preparing for this by setting goals for its cities in its latest five-year plan, which stands out from previous versions for its emphasis on reducing carbon dioxide emissions and pursuing ‘active yet prudent urbanisation’.

This plan identifies seven strategic industries that could drive healthy economic growth while reducing China’s dependency on environmentally destructive industries and fossil fuels. These are smart grids, energy efficiency, green buildings, information and communication, low-emissions transportation and logistics, resource recovery and environmental protection.

Part of China’s strategy to reduce its energy consumption by 16 per cent from 2005 levels in 2015 involves reducing the energy demand from its buildings, which currently consume about 30 per cent of China’s electricity, by constructing green buildings and improving the energy efficiency of existing buildings.

China's cities are also the testing ground for seven pilot emissions trading schemes, this matches growing action across Asia on policies that constrain carbon, price carbon, incentivize renewable energy or drive energy efficiency.

This action ranges from India and Japan's levies on coal to Thailand's top runner energy efficiency program to emissions trading schemes emerging not only in China with South Korea's Parliament passing framework legislation just two days ago

Countries are not doing this just because of their concern on climate change, nor even just because of energy security, independence and air pollution.  These are important drivers economically and politically, but they are also doing this because they are determined to prosper in the challenges of this century.

This is a century where a number of trends are converging, highlighting the urgent need to build a vision of prosperity amongst the growing constraints on natural resources but also constraints on skilled workers and of course greenhouse or carbon emissions

That this century will not only be the Asian century (or Asia/Pacific century) but also the carbon constrained century has been recognized by those well known greenies at BHP, KPMG, GE and banks including Westpac and Deutsche bank amongst others.

In recent weeks KPMG released “Expect the Unexpected" an analysis of10 mega trends driving global business of which climate change was top of the list. 

Deutsche Bank last week released an analysis of policies which ranked countries with the best implementing policies that include market based carbon constraints as well as energy efficiency and renewable energy incentives.

Last month global industrial giant GE along with my organization TCI, in our global Climate Leadership Review (also supported by Pacific Hydro), launched an updated carbon competitiveness index tracking progress from 1995 of G20 nations. 

This index measures 19 indices from clean energy investments to education and infrastructure investments. It ranks countries on their ability to provide prosperity for their citizens in a carbon constrained future

Australia is the only country to go backwards amongst the G20 countries and at 16th is behind Asian trading partners in Japan, South Korea and China. 

Australia's competitiveness, as well as its credibility in providing clean technology, clean energy and clean food to Asia, will be handicapped if we don't get on with the job constraining carbon, incentivizing renewable energy and cutting our historic energy wastefulness.

Greening Asia and the planet, as we surge from 7 billion to 9 billion people in the next few decades, will need a turbo boost in carbon and natural resource competitiveness and productivity. 

This will need not one not only from individual competitiveness but also collective cooperation in meshing national policies with globally coordinated policies on trade, environment and climate.

Out of the ashes of Hypenhagen has emerged, from later UN climate talks like Durban last year, a platform for action and a legally binding global climate agreement by 2015.  This is real progress and potentially removes a key barrier to global cooperation but more is needed.

While nations jostle for competitiveness in the burgeoning clean tech and carbon markets they'll need to lift their cooperation. 

Australia has a vital role to play in maintaining momentum and building ambition by signing up for a second Kyoto commitment, continuing a template legal framework which can be the basis for a global one.

The Climate Institute has also released research which recommends Australia should also leverage its carbon market system with a regional emissions trading coalition.  Such a coalition can not only link to the trading schemes in China and Korea but also link with reforms in Indonesian energy sector and more.

Greening Asia and the planet will need a revitalized approach to competitiveness and cooperation, it will need a fresh vision of prosperity and will need success from the endeavours of organizations like the Global Foundation.

I wish you well here today in your discussions.

John Connor | CEO, The Climate Institute

This opinion piece was originally published in RenewEconomy on 13 April 2012.

Like boy scouts at a bonfire it has all got a bit too exciting.  Green tape, greenhouse gas abatement schemes, feed in tariffs, clean energy funds and the renewable energy target. Now we have a carbon price it all has to go (and wouldn’t that burn well too). Whoosh!

It’s time for a breather. What’s at risk here is in fact some old fashioned business virtues of long term cost effectiveness, investor confidence and competitiveness in growth sectors of the 21st century economy.

While it is appropriate that some policies like NSW’s Greenhouse Gas Abatement Scheme are now ended, others like the renewable energy target or the Clean Energy Finance Corporation shouldn’t be fodder for the fire.

Back in September 2010, BHP CEO Marius Kloppers reminded us that Australia has one of the dirtiest power sectors on the planet when it comes to carbon pollution.  We are ninth dirtiest in fact.

In a global economy which has been volatile, clean energy has continued to be a bright spot with growth continuing. It now accounts for over 40 per cent of global investment in power generation, a 400 per cent growth in investment from less than a decade ago.

While not perfect, the Renewable Energy Target (RET) is an effective, efficient policy mechanism. It helps Australia significantly reduce its emissions, grows jobs and investment, and reduces long term costs.

Long term costs are critical here not only because energy plant is so long lived but because we are talking about a now legislated long term target of 80 per cent reduction in our carbon pollution by 2050.  The atmospheric physics of global warming require greater urgency but even that target requires a lifting of the focus from short term abatement cost comparisons.

Far from rendering the RET unnecessary, the carbon price and the RET are mutually supportive and together produce far better results.

The International Energy Agency has said that a pollution price is fundamental in driving systematic change across the entire economy, but combined with targeted, complementary policies, pollution can be cut even more quickly and, in the long-term, more cheaply.

Independent modelling commissioned by The Climate Institute reached the same conclusion. It found that the RET will reduce the investments required in the electricity sector to meet a long-term pollution target by $5 to $6 billion due to fast-tracked market experience and innovation.

Without the RET and in the absence of higher carbon prices, renewable energy in Australia would take much longer to develop. This would increase the economic costs of reducing emissions in the longer-term and make the structural adjustment to a world moving to clean energy more difficult and more painful. 

Large scale deployment of renewable energy is a precondition for effective climate policy. More than 100 countries now have made the strategic economic decision to invest in clean energy, fostering growth in the industries and technologies that will deliver long-term emission cuts as well as smarter, cleaner and healthier development.

So there’s a real global mega-trend here that Australia could benefit from both here and in regional clean energy investment markets. But investor capacity and confidence is at risk after a turbulent period for clean energy policies.

Some business attacks on the RET are just cynical and costly carbon protectionism. Economic arguments disguise efforts to reduce the amount major polluting industries pay to help the nation move to clean energy. This just shifts the effort on to households and other businesses that would pay higher energy costs than they need to. 

Our research shows that existing subsidies to industry already makes the RET cost households more. While still relatively small, the costs of the RET have been pushed up by around 23 per cent due to these discounts granted to big polluting, trade-exposed industries.

As IPART noted again yesterday aging electricity infrastructure has been the primary driver for rising prices – this was going to happen even in an Australia where the words ‘carbon price’ had never been heard.

In addition, IPART not only confirmed that the electricity price rise from the carbon price was within the designs of the compensation package that will see most households better off. IPART found the additional price impact in 2012/13 of the RET to be zero.

With the RET in place, Australia’s share of electricity coming from renewable energy between 2010 and 2030 will rise to 20 per cent. It will drive thousands of jobs and investments worth tens of billions of dollars in regional areas. In the process, some 30 million tonnes of carbon pollution will be avoided by 2020 – around 15 per cent of current electricity emissions.

The carbon price is necessary but can’t achieve everything on its own. The carbon price and the RET can get us much closer to the emissions reductions and growing investment in clean energy that we need. Neither should be burnt.

John Connor is CEO of The Climate Institute and a former boy scout.

John Connor | CEO, The Climate Institute

This opinion piece was originally published in Climate Spectator on 30 March 2012.

Whether it is cavalier ignorance, reckless indifference or subconscious refusal to engage, it’s been a couple of weeks where the failure to even take a conservative risk management approach to the climate data is yet again infuriating, intriguing or downright sad.

This was brought into stark reality by reports from the CSIRO and the Australian Bureau of Meteorology, the World Meteorological Organisation, experts in the peer reviewed Nature Climate Change and by the Intergovernmental Panel on Climate Change (IPCC).

Collectively these reports demonstrated that climate change is real, can only be explained by human activity, is impacting now and will incur greater costs in extreme weather events and ocean acidification. They link current human and economic suffering to climate change occurring now and project much more if we fail efforts on mitigation and adaptation.

Scientists are speaking with growing confidence and alarm about recent unprecedented extreme weather events around the world. Australia’s recent extremes of droughts, fires, cyclones and floods occur against this clarifying backdrop providing a chilling insight into the future that is almost certainly in store for us.

Australia is already a land of weather extremes—droughts, flooding rains. The latest IPCC report from Wednesday indicates that the risks for our communities and industry, our way of live, are undeniable and here to stay.

Climate change does not just mean warmer weather, it means wilder weather, which we have already seen stretch Australian communities and industries to the limit. Rising carbon pollution is loading the climate dice, making extreme events like the Eastern Australian floods, the Black Saturday bushfires, and the recent, extremely hot drought more and more likely.

The Climate Commission has gone through the IPCC report and pulled out the relevant sections for Australia – that summary can be found here. In short, we can expect worsening heat waves, drought, fire, cyclone, and flood risks, as well as a high risk to coastal communities from sea-level rise.

The journal Nature Climate Change on Sunday published research by the Potsdam Institute for Climate Impact in Germany showing that heat waves and precipitation extremes will increase. The authors look at a list of record breaking extremes and include a table reproduced in reports with Australia’s 2009 heat waves and 2010 floods and their impact. It’s my vote for table of the week (see here).

In the two weeks prior we saw reports from the World Meteorological Organization that found 2011 to be the 11th warmest year since records began in 1850. It confirmed preliminary findings that 2011 was the warmest year on record with a La Niña, which has a cooling influence.

Domestically there was CSIRO’s State of the Climate 2012 report, which found that the level of greenhouse gases in the Earth’s atmosphere is at its highest in 800,000 years.

New global temperature analysis by the Met office and the University of East Anglia in the UK shows that the world has warmed more in the last 10 years than previously thought and Oxford researchers found that global average temperatures could rise to 3°C above late 20th century averages by 2050.

Where this leaves us is frightening to consider.

Countries and companies around the world are beginning to find smarter, cleaner and healthier business and economic development. These reports remind us that we need to urgently speed this up as well as increase our work to minimise the human and economic loss from the consequences of climate change that are already happening or are unavoidable.

As Coumou and Rahmstorf conclude in their Nature Climate Change paper:

“In 1988, Jim Hansen famously stated in a congressional hearing that ‘it is time to stop waffling so much and say that the evidence is pretty strong that the greenhouse effect is here’. We conclude that now, more than 20 years later, the evidence is strong that anthropogenic, unprecedented heat and rainfall extremes are here – and are causing intense human suffering.”

John Connor | CEO, The Climate Institute

Contrary to much mythmaking Australia is not about to have the world’s biggest carbon price.  The Climate Institute’s Global Climate Leadership Review released yesterday included analysis of both countries whose price on carbon is higher than Australia’s and others who are just starting to move to carbon prices and constraints, including China, South Korea and South Africa as well as a prosperity focused analysis of the carbon competitiveness of G20 countries.

Tim Wilson, in Taxed to the max on emissions (20/3/12) misses a key point.

Putting aside for a moment that Australia’s carbon price  is not economy wide and both the New Zealand and Californian emission trading schemes are moving towards greater coverage than Australia, our report stressed the importance of the sectoral composition of the different economies among the G20 nations.

If Sweden or Switzerland put a carbon tax on petrol, that’s 30 per cent of their total emissions covered. In Australia it would only represents around 15 per cent (but growing). This is because in Sweden’s case around 99 per cent of their electricity is zero emission while in Australia that figure is a mere 10 per cent. Again in the case of Sweden, the tax on the burning of ‘oil, coal, natural gas and petrol’ would cover 80 per cent of their emissions. Australia’s current scheme covers round two-thirds.

So let me emphasize that countries are tackling emissions differently to reflect their national circumstances.

The unfortunate reality, which Mr Wilson acknowledges, is that “fossil fuels dominate Australia’s profile”.  The Institute for Public Affairs seems willing to back carbon protectionism and inaction over acting on the risks of our profile and improving our carbon competitiveness.

The measurement of G20 countries carbon competitiveness in the index The Climate Institute commissioned with global giant GE demonstrates Australia is alone in going backwards.  Global companies like GE, Unilever and BHP have recognised carbon will constrained and so do countries from both the developed and developing world.

Around the world, the fact that renewable energy investment now competes with investment in fossil power generation investment is not an accident. It is happening because many countries have recognised that it is their economic interest to move from high pollution to low pollution. It is time, after decades of delay, that Australia starts to do the same.

Business and investors need to embrace the risks and openings of a low-carbon world.

John Connor | CEO, The Climate Institute

This opinion piece was originally published in The Australian on Tuesday 20 March 2012. Tim Wilson of the IPA published an opinion piece in The Australian the same day with numerous criticisms of the report. The Climate Institute's reaction can be found in a letter that was subsequently submitted to The Australian here.

In late 2010 BHP Billiton chief executive Marius Kloppers famously said: "To remain competitive in a future carbonconstrained world, Australia will need to turn into a lower-carbon economy."

That job only got harder since 1995, according to the Climate Institute/ GE 2012 Carbon Competitiveness Index released yesterday.

Australia is the only G20 country that has gone backwards on its low-carbon competitiveness since 1995 and is ranked 16th.

This 2012 update of our 2009 index looks at each country's readiness for, and ability to prosper in, a carbon constrained world. It examines economic structure, the extent of early preparation and indicators of future prosperity such as investment in education and infrastructure.

Although partly obscured by a wall of white noise of short-term political and economic instability, last year ended with important domestic and international achievements.

Achievements, such as Australia's Clean Energy Future package and the UN's Durban Platform, represented real progress among growing global carbon markets and clean energy investments.

Last year was another record year for clean energy investments, which grew to $US260 billion ($245bn). For the first time since 2008, the US was the global leader in terms of total investment in clean energy: $US56bn. China maintained its strong position, with investment rising to $US47bn. India's investment grew the fastest with an increase last year of 52 per cent to a total of $USIObn. Data from Bloomberg New Energy Finance shows that clean energy investments now match fossil fuel investments.

With the CSIRO reporting that we have the highest greenhouse gases for 800,000 years, these investments need to urgently grow but their trajectory is unstoppable.

Unfortunately, in the emerging reality of a carbon-constrained world, Australia risks losing the lucky country tag.

What we have seen as the economic blessings of the past, such as cheap but heavily polluting energy, will soon become the economic curses of the future.

Lower than average investments in infrastructure and declining expenditure on education also affect our ranking.

The recently legislated Clean Energy Future package is a step towards joining lead ranking nations such as France, Britain, Germany, South Korea and Japan or the biggest movers since 1995 such as Mexico and China.

But it will take further leadership from Australian business, politics and the community to turn the advantages of today into the good fortune and prosperity of tomorrow.

Business and institutional investors will need to step up to the risks and opportunities. Additional government policies on energy efficiency, risk disclosure and clean energy will matter.

It is also clear that the countries that are best prepared for the lowcarbon economy are those that are recognising the inextricable link between economic, resource security and/or climate change policies and are taking action accordingly.

More than 100 nations have policies supporting the development of renewable energy or carbon pricing. Carbon taxes and direct prices are already legislated in countries covering about 567 million people and a further 900 million will be covered when schemes begin in China and South Korea by 2015.

While the European Union carbon market deals with oversupply issues and broader economic woes, Australia's starting carbon price of $23 is by no means the world's highest price. Britain's announced floor price is at similar levels and other countries such as Norway, Switzerland and Sweden have higher prices.

It's important to remember that under the transitional arrangements, free permits to tradeexposed companies mean their real price is in the order of $1 to $8 and the revenue raised from the Australian scheme is providing other assistance to energy efficiency, clean energy investments and Australian industries and households.

It is also important to remember that the Australian legislation creates not just a carbon tax but a carbon tap. A pollution tap that in three years will start turning off at least 12 million tonnes of carbon pollution impact a year.

To reflect existing global action and help boost global ambition towards our national interest in a safer climate we'll need greater action. Stronger reductions, new Kyoto commitments, creative linkages of our market with others and a more strategic climate diplomacy all need focus.

For all the relative strength of the Australian economy, we are not immune to global trends. We are reminded of this every day by news reports about the impact of the mining boom and global economic conditions on our exchange rates and our economy.

As one of the developed countries most exposed to climate change, Australia is faced with dual challenges of competitiveness and co-operation. We need to shrug off the competitiveness constraints of our highcarbon economy and lift our cooperation with other nations. We now have the tools, we have the skills, but do we have the character for these challenges?

More detail on the Global Climate Leadership Review including the interactive Low-Carbon Competitiveness Index and video summaries with John Connor, Simon Baptist of Vivid Economics and Jennifer Morgan of WRI are available here.