future clean tech

No. Absolutely not. And yet the conservative Wall Street Journal yesterday implied that America should, in a column entitled, “Down Under: Can the US Learn From Australia’s Emissions Plan?”

It’s easy to see why the Journal is pumped about Australian Prime Minister Kevin Rudd’s “Carbon Pollution Reduction Scheme” (that’s what they’re calling the Aussie ETS): it’s a sop to heavy polluting industry and the conservative opposition that supports it. The amended legislation gives a free ride to the carbon mafia, delaying really significant cuts in CO2 and passing on the residual costs to the average punter. The minimum “guaranteed” reduction is 5% by 2020 – talk about rearranging the deck chairs on the Titanic. Only this time there won’t be an iceberg in sight.

Interestingly, conservative Opposition leader Malcolm Turnbull chose to lay his leadership on the line over this issue. His Liberal Party is severely divided over the legislation and the Liberals’ usual political bedfellows, the Nationals, are united against it.

Turnbull is an ideological descendant of the old, pre-John Howard Liberal Party: liberal on social issues, and to a greater or lesser extent conservative on economic issues. Global warming is a social issue with serious economic repercussions (and, what conservatives tend to discount, serious opportunities) and so it is no surprise that an old-school Liberal like Turnbull would support a sort of diluted version of action on climate change – but action nonetheless.

Turnbull’s dilution of the CPRS bill is worrying enough, but the really interesting thing is that much of his party thinks he’s gone too far. Former Prime Minister John Howard was almost singlehandedly responsible for the conservatisation of Australian politics, and the conservative rump of the party Howard left behind is about to commit collective suicide by declaring war on Turnbull for being too progressive. Turnbull, whose leadership is in serious trouble, is probably the best hope the Opposition has of breaking through the Government’s approval numbers anytime before 2013.

There is no lesson for America here. Australia’s electorate is overwhelmingly in favour of action on climate change, whereas the American electorate is somewhat more divided. I’d like to be able to say that Australia offers a warning to conservatives overseas not to oppose climate change action, but it seems like the Liberal Party, much like the Republican Party, is trending rightward.

From a policy perspective, Australia’s recent experience is a total disaster. It represents a triumph of politics over policy. The US and the EU are both looking at 17% and 20% cuts respectively by 2020, which is nowhere near enough. We need to cut 80% by 2020. Australia’s promising 5%. No lessons here.

Fairfax is reporting, “Deal struck on renewable energy“. Finally, Australia has a renewable energy target (RET): 20% by 2020. Politicians seem to like targets that sound good when you say them. Anyway, by 2020, retailers will be forced to buy at least 20% of their energy from renewable sources.

This target will be enough to give clean energy a big boost. This is actually an unfortunate state of affairs, because it means that the bar was already set too low. Truth be told, the bar wasn’t set anywhere and it will only kick in on January 1, 2010. I maintain that we are perfectly capable of reaching 80% sometime in the 2020s. There is no reason to maintain coal-fired power plants much beyond 2030. I mean, nobody is financing the construction of them today anyway.

That’s because the market anticipates the Emissions Trading Scheme which the Coalition is still dithering over. Now, nobody can say that this Labor Government has a surplus of vision, but the Coalition is another story entirely. It has stalled the introduction of a trading scheme, and contributed to the dilution of this RET:

The Coalition has secured more exemptions for industry from the cost of the RET in the deal struck today. That means households will pay a greater share.

Mr Hunt said heavy-polluting, trade-exposed companies would be exempt from paying either 60 per cent or 90 per cent of the cost of the RET. That’s more of a free ride than the Government originally offered.

The fact that there is now a mandatory 20% renewable target is certainly good news. But a pure RET would not only act as a mandate for renewable energy production, it would also act as a disincentive to dirty, polluting corporations. The Coalition has softened the blow even more for these companies. Any government assistance should be diverted to build the renewables industry – not provide welfare to old dirty anvil industries.

And then there is this nugget from Opposition Environment spokesman, Greg Hunt:

Before today’s deal, the Government had already bowed to some Coalition demands, agreeing to treat coal gas as “renewable”, and separating the RET from the failed ETS.

Mr Hunt said the new deal was “a victory for common sense and a victory for the environment”. It was also a victory for Opposition Leader Malcolm Turnbull, he said.

Of course, if the Opposition thinks that treating coal gas as “renewable” is a “victory” for anything or anyone but the carbon mafia, they are sadly mistaken. Voters will continue to note the Opposition Leader’s reluctance to confront the conservative rump of his own party and its coalition partner. And businesses are even more keenly aware of the undue consideration politicians are giving to the rich, dirty energy industry. This comes off as nothing if not another failure for a beleagured opposition leader.

Regarding the global financial crisis (GFC): the Chinese word for “crisis” consists of two characters, which make up the compound word “problem-opportunity”.

While it is true that credit markets have seized up, and that there are undoubtedly rough economic times ahead, it must also be true that the GFC presents a tremendous “problem-opportunity” for those in the cleantech space.

This would in some sense be true even if governments didn’t provide regulatory and other stimuli for the industry. Good technologies and good business will bring the market to them because they will be appealing to the consumer (think Prius), and/or cheaper than legacy technologies and methods (think LPG).

The bonus for the cleantech industry is that governments around the world are banking (so to speak) on cleantech as the new economic driver. As I’ve mentioned previously, the Obama Administration has put its money where its mouth is. Barack is fair dinkum about cleantech. The Australian government is lagging behind, but in the event that the Rudd Government’s Carbon Pollution Reducation Scheme (CPRS) is passed, and some of the other regulatory elements make it through (such as the new renewable energy production target of 20% by 2020), the cleantech sector will probably boom.

We’re still waiting for the first big cleantech success story in Australia, but it will come. In the meantime, I will mention some of the overseas success stories and local hopes in the next couple of posts. Forget the Global Financial Crisis; think of it as a Global Financial Opportunity.