Earlier this week The Climate Institute and European think-tank E3G released a first of its kind study assessing the competitiveness of G20 countries — including Australia — as the world transitions to a low-carbon economy. It examines how well they are decoupling economic growth from carbon emissions.
While there are grounds for some optimism, Australia and most other nations are short of the carbon productivity, and competitiveness improvements necessary to stabilise global greenhouse gas concentrations at 450 parts per million (ppm) or lower. Australia’s carbon productivity (roughly the amount of GDP produced per tonne of carbon emissions), is improving but the nation has a low ranking that stems from, among other things, our carbon-intensive exports, low use of clean energy and high consumption of transport fuels.
Crikey’s in-house climate policy watcher and Canberra correspondent, Bernard Keane, pointed out in Monday’s edition that it was not surprising that Australia is underperforming on the index. He went as far as to suggest “bias” against Australia in the report. Before dealing with this directly it is important to reinforce the central point of this analysis.
As Lord Nicolas Stern outlines in the preface to the report, “… the global economic recovery presents an ideal opportunity for countries to shift towards low carbon growth. Countries which don’t seize this opportunity will undermine their future competitiveness and prosperity”.
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As our politicians slug it out over who owns the economic reform legacy of past years, how ready are they for the competitiveness and global challenges of the carbon constrained future? That was the key underlying question The Climate Institute and E3G was asking when it commissioned Vivid Economics to assess low-carbon competitiveness amongst G20 countries.
But what of Crikey’s claim the report is biased against Australia.
Much of what the Crikey article does is highlight reasons why Australia is currently not well prepared for the global low-carbon economy — this is a point on which we entirely agree. This reinforces in our view the need to get on with the economy-wide reforms needed to transform out economy from high carbon to low carbon.
But while it is possible to point to reasons why Australia ranks lower on the low-carbon competitiveness index, it is curious logic to automatically equate this with bias.
The report is about the G20, not just about Australia and Europe. As Vivid Economics were at pains to point out, the approach taken was deliberately designed to minimise subjectivity. The variables in the low carbon competitiveness index were selected on the basis of a statistical analysis to determine which variables are most strongly associated with carbon productivity.
The characteristics of Australia that the Crikey article mention are not unique to Australia, and nor do they automatically consign Australia to be a climate policy dinosaur. For example, Australia has a large geographic area, but it is hardly alone. Other countries considered in the index, such as Canada and Russia, also have widely dispersed populations.
Among other things, Crikey’s article also correctly points out that Australia has higher rates of GDP and population growth than many European countries, but this does not doom Australia to sit at the bottom of the table. Mexico and South Korea, among others, are also fast growing economies with rising populations and perform better than Australia on many indicators.
However, the key weakness in the Crikey article is its focus on the static picture — where countries are situated now — which ignores the opportunities that countries have going forward. High population densities might help explain why some European countries have high levels of carbon productivity, but they do not explain why they have been increasing so fast in recent years. Indeed, starting from a lower base it is Australia that would be expected to be making the largest gains; rather than countries that are already much more carbon efficient.
We could go on, but let’s get back to the main point.
Labor and Liberal risk crashing our national interest if their negotiations on the Carbon Pollution Reduction Scheme succumb to the pressure of big polluters seeking further handouts, free permits or delay. As we have seen recently in the media some in business continue to look back to the Jurassic period and lock us into targets that are against the national interest.
Looking forward to how we can increase financial and investment incentives for clean technologies in developed, but also developing, countries can see Australia accelerate towards greater competitiveness in the emerging global clean energy economy. Ultimately you can’t drive the economy forward while looking in the rear-view mirror, and as the low carbon competitiveness report highlights, the longer we delay “the more costly the eventual transition will be”.
John Connor is CEO of The Climate Institute www.climateinstitute.org.au